Equilibrium Exchange Rate Hedging

In a one-period model where each investor consumes a single good, and where borrowing and lending are private and real, there is a universal constant that tells how much each investor hedges his foreign investments. The constant depends only on average risk tolerance across investors. The same constant applies to every real foreign investment held by every investor. Foreign investors are those with different consumption goods, not necessarily those who live in different countries. In equilibrium, the price of the world market portfolio will adjust so that the constant will be related to an average of world market risk premia, an average of world market volatilities, and an average of exchange rate volatilities, where we take the averages over all investors. The constant will not be related to exchange rate means or covariances. In the limiting case when exchange risk approaches zero, the constant will be equal to one minus the ratio of the variance of the world market return to its mean. Jensen's inequality, or "Siegel's paradox," makes investors want significant amounts of exchange rate risk in their portfolios. It also makes investors prefer a world with more exchange rate risk to a similar world with less exchange rate risk.

The Tax Advantages of Pension Fund Investments in Bonds

I believe that every tax-paying firm's defined benefit pension fund portfolio should be invested entirely in bonds (or insurance contracts). Although the firm's pension funds are legally distinct from the firm, there is a close tie between the performance of the pension fund investments and the firm's cash flows. Sooner or later, gains or losses In pension fund portfolios will mean changes in the firm's pension contributions. Shifting from stocks to bonds in the pension funds will increase the firm's debt capacity, because it will reduce the volatility of the firm's future cash flows. Shifting from stocks to bonds in the pension funds will give an indirect tax benefit equal to the firm's marginal tax rate times the interest on the bonds. There is no indirect tax benefit if the pension funds are invested in stocks. Fully implementing the plan will mean shifting all of the stocks in the pension fund to fixed income investments, and putting all new contributions into fixed income investments. Shifting $2 million from stocks to bonds has a present value for the firm's stockholders of about$1 million. Shifting from stocks to bonds in the pension funds will reduce the firm's leverage. To offset this, the firm can issue more debt than it otherwise would have issued. The money raised can be invested in the firm or used to buy back the firm's stock. This version of the plan, with more bonds in the pension fund and more debt on the firm's balance sheet, is equivalent to the following transactions: (1)sell a portfolio of stocks on which no taxes are paid, and buy the firm's stock on which no taxes are paid; and (2) issue the firm's bonds at an after—tax interest rate, and buy other firm's bonds at a before-tax interest rate.

General Equilibrium and Business Cycles

The general equilibrium models in this paper, with complete markets, can give the major features of business cycles. The models include real investment, but information is costless and is available to everyone at the same time. Fluctuations in the match between resources and wants across many sectors create major fluctuations in output and unemployment, because moving resources from one sector to another is costly. Fluctuations in the demand for the services of durable goods causes much larger fluctuations in the output of durables, and causes unemployment that takes the form of temporary layoffs. Since specialized factors cooperate in producing goods and services, it makes sense to lay people off in groups rather than lowering wages and waiting for them to quit. Similarly, a vacancy is created when a specialized factor is missing from such a group. Technology comes with varying levels of risk and expected return associated with the degree of specialization. More specialization means more severe fluctuations and a higher average level of unemployment, along with a higher average level of output and growth. Monetary policy, interest rates, and fiscal policy have no special roles to play in the model.

When Is a Positive Income Tax Optimal?

When will the optimal mix of a constant income tax with a constant consumption tax involve a positive income tax? The assumptions of the model in which this question is asked include (1) identical individuals with coincident lifetimes who work in every period; (2) initial endowments of physical capital; (3) fixed government expenditures; and (4) government borrowing (or lending) that goes to zero when the world ends. In a model like this, we can ignore the transition problem. If we allow the constant tax on income from capital and the constant tax on wage income to be at different rates, we can ask a further question. When will the optimal mix of all three taxes (including the consumption tax) involve a positive tax on either income from capital or wage income?

A community of physicians : the rural New York medical practices of David Hanford (1816-1844), Jonathan Johnson (1823-1829), and George M. Teeple (1847-1872)

Manuscript records open a window to past events and cultures, often serving as a source of information the like of which is not available in printed form. An examination and analysis of three rural New York State physician\u27s case record books, maintained during the nineteenth century, provides insight not only into the evolution practice of medicine, but also serves to highlight the differences between rural and urban routines. Case records produced during the first half of the nineteenth century, such as those of David Hanford, who practiced between 1816 and 1844, and Jonathan Johnson, who left records of his medical practice dating from 1827-1829, demonstrate aggressive plans of treatment. These two physicians were representative of the time in which they practiced, as they frequently applied techniques of bleeding, and prescribed copious quantities of pharmaceuticals. George M. Teeple, whose case records cover the period from 1847-1872, was much less aggressive in his application for medical therapeutics. He preferred to rely on the power of nature. These medical records, when compared not only to each other, but also to published accounts or urban practices, define rural medical practice

Rotavirus vaccine and diarrhea mortality: quantifying regional variation in effect size

<p>Abstract</p> <p>Background</p> <p>Diarrhea mortality remains a leading cause of child death and rotavirus vaccine an effective tool for preventing severe rotavirus diarrhea. New data suggest vaccine efficacy may vary by region.</p> <p>Methods</p> <p>We reviewed published vaccine efficacy trials to estimate a regional-specific effect of vaccine efficacy on severe rotavirus diarrhea and hospitalizations. We assessed the quality of evidence using a standard protocol and conducted meta-analyses where more than 1 data point was available.</p> <p>Results</p> <p>Rotavirus vaccine prevented severe rotavirus episodes in all regions; 81% of episodes in Latin America, 42.7% of episodes in high-mortality Asia, 50% of episodes in sub-Saharan Africa, 88% of episodes low-mortality Asia and North Africa, and 91% of episodes in developed countries. The effect sizes observed for preventing severe rotavirus diarrhea will be used in <it>LiST</it> as the effect size for rotavirus vaccine on rotavirus-specific diarrhea mortality.</p> <p>Conclusions</p> <p>Vaccine trials have not measured the effect of vaccine on diarrhea mortality. The overall quality of the evidence and consistency observed across studies suggests that estimating mortality based on a severe morbidity reduction is highly plausible.</p

Does Age Affect the Response to Zinc Therapy for Diarrhoea in Bangladeshi Infants?

The benefit of zinc for the treatment of diarrhoea in a cluster-randomized trial of children, aged 3–59 months, living in rural Bangladesh was previously reported. Here, the benefits of zinc stratified by age—3–5 months, 6–11 months, and 12–59 months—are reported. Although the sample sizes in the stratified groups were too small to detect statistical significance in the 3–5-month and 6–11-month age-groups, the trends suggest that there may be a benefit of zinc for the treatment of diarrhoea on the duration of diarrhoea and on subsequent morbidity and mortality. Additional research is needed to better understand the effect of zinc for the treatment of diarrhoea among infants aged less than six months

Quantifying the Association between Campylobacter Infection and Guillain-Barré Syndrome: A Systematic Review

Guillain-Barré Syndrome (GBS) is a neurologic disease that causes ascending paralysis and is triggered by a preceding bacterial or viral infection. Several studies have shown that patients with GBS have a recent history of infection due to Campylobacter jejuni. A literature review of published studies that reported rates of Campylobacter infection before or in conjunction with GBS was done. These reported data were used for calculating the proportion of GBS cases who tested positive for Campylobacter compared to the control population and the incidence of GBS among patients infected with Campylobacter. Results of the analysis suggest that 31% of 2,502 GBS cases included in these papers are attributable to Campylobacter infection