Why Does the Paper-Bill Spread Predict Real Economic Activity?

Evidence based on the past three decades of U.S. experience shows that the difference between the interest rates on commercial paper and Treasury bills has consistently borne a systematic relationship to subsequent fluctuations of nonfinancial economic activity. This interest rate spread typically widens in advance of recessions, and narrows again before recoveries. The relationship remains valid even after allowance for other financial variables that previous researchers have often advanced as potential business cycle predictors. This paper provides support for each of three different explanations for this predictive power of the paper?bill spread. First, changing perceptions of default risk exert a clearly recognizable influence on the spread. This influence is all the more discernable after allowance for effects associated with the changing volume of paper issuance when investors view commercial paper and Treasury bills as imperfect portfolio substitutes -- a key assumption for which the evidence introduced here provides support. Second, again under conditions of imperfect substitutability, a widening paper-bill spread is also a symptom of the contraction in bank lending due to tighter monetary policy. Third, there is also evidence of a further role for independent changes in the behavior of borrowers in the commercial paper market due to their changing cash requirements over the course of the business cycle.

Economic Activity and the Short-term Credit Markets: An Analysis of Prices and Quantities

macroeconomics, economic activity, short-term, credit markets, price, quantities

A Price Target for U.S. Monetary Policy? Lessons from the Experience with Money Growth Targets

macroeconomics, Price Target, U.S. Monetary Policy, Money Growth Targets

Time-Varying Risk Perceptions and the Pricing of Risky Assets

Empirical results based on two different statistical approaches lead to several conclusions about the role of time-varying asset risk assessments in accounting for what, on the basis of many earlier studies, appear to be time-varying differentials in ex ante asset returns. First, both methods indicate sizeable changes over time in variance-covariance structures conditional on past information. These changing conditional variance-covariance structures in turn imply sizeable changes over time in asset demand behavior, and hence in the market-clearing equilibrium structure of ex ante asset returns. Second, at least for some values of the parameter indicating how rapidly investors discount the information contained in past observations, the implied ex ante excess returns bear non-negligible correlation to observed ex post excess returns on either debt or equity. The percentage of the variation of ex post excess returns explained by the implied time-varying ex ante excess returns is comparable to values to which previous researchers have interpreted as warranting rejection of the hypothesis that risk premia are constant over time. Third, although for long-term debt the two statistical methods used here give sharply different answers to the question of how much relevance market participants associate with past observations in assessing future risks, for equities both methods agree in indicating extremely rapid discounting of more distant observations -- so much so that in neither case do outcomes more than a year in the past matter much at all. While the paper's other conclusions are plausible enough, the finding of such an extremely short "memory" on the part of equity investors suggests that the standard representation of equity risk by a single normally distributed disturbance is overly restrictive.

Indicator Properties of the Paper-Bill Spread: Lessons from Recent Experiences

A feature of U.S. post-war business cycle experience that is by now widely documented is the tendency of the spread between the respective interest rates on commercial paper and Treasury bills to widen shortly before the onset of recessions. By contrast, the paper- bill spread did not anticipate the 1990-91 recession. Empirical work presented in this paper supports two (not mutually exclusive) explanations for this departure from past experience. First, at least part of the paper-bill spread's predictive content with respect to business cycle fluctuations stems from its role as an indicator of monetary policy, but the 1990-91 recession was unusual in post-war U.S. experience in not being immediately precipitated by tight monetary policy. Second, movements of the spread during the few years just prior to the 1990-91 recession were strongly influenced by changes in the relative quantities of commercial paper, bank CDs and Treasury bills that occurred for reasons unrelated to the business cycle. This latter finding in particular sheds light on the important role of imperfect substitutability of different short-term debt instruments in investors portfolios, and highlights the burdens associated with using relative interest rate relationships as business cycle indicators.

Prevalence and predictors of overweight and obesity among Cameroonian women in a national survey and relationships with waist circumference and inflammation in Yaoundé and Douala.

Information on the distribution and predictors of obesity in Africa is needed to identify populations at risk and explore intervention options. Our objectives were to (a) examine the prevalence and geographic distribution of overweight and obesity among Cameroonian women; (b) evaluate change in anthropometric indicators among urban women between 2009 and 2012; (c) examine associations between household and individual characteristics and overweight and obesity; and (d) examine relationships between body mass index (BMI), abdominal obesity, and inflammation. We analysed data from a nationally representative survey conducted in 3 geographic strata (North, South, and Yaoundé/Douala) in Cameroon in 2009 and a survey in Yaoundé/Douala in 2012. Participants selected for this analysis were nonpregnant women, ages 15-49 years (n = 704 in 2009; n = 243 in 2012). In 2009, ~8% of women were underweight (BMI < 18.5) and 32% overweight or obese (BMI ≥ 25.0). Underweight was most common in the North (19%) and overweight and obesity in the South (40%) and Yaoundé/Douala (49%). Prevalence of BMI ≥ 25.0 in Yaoundé/Douala did not differ in 2012 compared with 2009 (55.5% vs. 48.7%; P = 0.16). Residence in urban areas, greater maternal age, and TV ownership were independently related to overweight and obesity in national and stratified analyses. In Yaoundé/Douala in 2012, 48% (waist-to-hip ratio > 0.85) to 73% (waist circumference > 80 cm) had abdominal obesity. Body mass index was positively associated with abdominal obesity and inflammation. Though causal inferences cannot be drawn, these findings indicate population subgroups at greatest risk for overweight and associated health consequences in Cameroon

Vitamin A Status of Women and Children in Yaoundé and Douala, Cameroon, is Unchanged One Year after Initiation of a National Vitamin A Oil Fortification Program.

Vitamin A (VA) fortification of cooking oil is considered a cost-effective strategy for increasing VA status, but few large-scale programs have been evaluated. We conducted representative surveys in Yaoundé and Douala, Cameroon, 2 years before and 1 year after the introduction of a mandatory national program to fortify cooking oil with VA. In each survey, 10 different households were selected within each of the same 30 clusters (n = ~300). Malaria infection and plasma indicators of inflammation and VA (retinol-binding protein, pRBP) status were assessed among women aged 15-49 years and children aged 12-59 months, and casual breast milk samples were collected for VA and fat measurements. Refined oil intake was measured by a food frequency questionnaire, and VA was measured in household oil samples post-fortification. Pre-fortification, low inflammation-adjusted pRBP was common among children (33% <0.83 µmol/L), but not women (2% <0.78 µmol/L). Refined cooking oil was consumed by >80% of participants in the past week. Post-fortification, only 44% of oil samples were fortified, but fortified samples contained VA concentrations close to the target values. Controlling for age, inflammation, and other covariates, there was no difference in the mean pRBP, mean breast milk VA, prevalence of low pRBP, or prevalence of low milk VA between the pre- and post-fortification surveys. The frequency of refined oil intake was not associated with VA status indicators post-fortification. In sum, after a year of cooking oil fortification with VA, we did not detect evidence of increased plasma RBP or milk VA among urban women and preschool children, possibly because less than half of the refined oil was fortified. The enforcement of norms should be strengthened, and the program should be evaluated in other regions where the prevalence of VA deficiency was greater pre-fortification

Advances in ME/CFS: Past, Present, and Future

The forerunner of what is today termed myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) was described by the U.S. Public Health Service in 1934. At the present time, we still do not know its cause and/or how to detect it by routine clinical laboratory tests. In consequence, the pathological nature of ME/CFS has been overlooked and the disease has been stigmatized by being mislabeled as psychosomatic or somatoform illness. Such misperceptions of the disease have led to insufficient research exploration of the disease and minimal to absent patient care. A 2015 Institute of Medicine report on the illness declared ME/CFS a disease affecting up to 2.5 million Americans and chastised the U.S. government for doing little to research the disease and to support its patients. Clinicians who currently treat this disease declare it to be more devastating than HIV/AIDS. A comparison of the histories of the two diseases, an examination of the current status of the two diseases, and a listing of the accomplishments that would be needed for ME/CFS to achieve the same level of treatment and care as currently experienced by patients with HIV/AIDS is provided