Ratings since the Asian Crisis

Asia, Financial crisis

Debt overhang, liquidity constraints and adjustment incentives

Investment in most heavily indebted countries has been weak since 1982. Several papers (Krugman, 1988; Corden, 1988; Sachs, 1989) have subsequently established the debt overhang proposition: the existence of a heavy debt burden reduces the incentive to invest.1 This proposition has given an important rationale for the 1989 shift in international debt management, emphasizing debt relief rather than new money for problem debtors. This paper will raise doubts against the debt overhang proposition: Its analytical implications are found to be ambiguous, its empirical content is found to be weak. We conclude, that investment in the average debtor country is likely to benefit more from new lending than from debt reduction.

Virtual chemical reactions for drug design

Two methods for the fast, fragment-based combinatorial molecule assembly were developed. The software COLIBREE® (Combinatorial Library Breeding) generates candidate structures from scratch, based on stochastic optimization [1]. Result structures of a COLIBREE design run are based on a fixed scaffold and variable linkers and side-chains. Linkers representing virtual chemical reactions and side-chain building blocks obtained from pseudo-retrosynthetic dissection of large compound databases are exchanged during optimization. The process of molecule design employs a discrete version of Particle Swarm Optimization (PSO) [2]. Assembled compounds are scored according to their similarity to known reference ligands. Distance to reference molecules is computed in the space of the topological pharmacophore descriptor CATS [3]. In a case study, the approach was applied to the de novo design of potential peroxisome proliferator-activated receptor (PPAR gamma) selective agonists. In a second approach, we developed the formal grammar Reaction-MQL [4] for the in silico representation and application of chemical reactions. Chemical transformation schemes are defined by functional groups participating in known organic reactions. The substructures are specified by the linear Molecular Query Language (MQL) [5]. The developed software package contains a parser for Reaction-MQL-expressions and enables users to design, test and virtually apply chemical reactions. The program has already been used to create combinatorial libraries for virtual screening studies. It was also applied in fragmentation studies with different sets of retrosynthetic reactions and various compound libraries

Delinquent Mortgages, Neglected Swimming Pools, and West Nile Virus, California

Adjustable rate mortgages and the downturn in the California housing market caused a 300% increase in notices of delinquency in Bakersfield, Kern County. This led to large numbers of neglected swimming pools, which were associated with a 276% increase in the number of human West Nile virus cases during the summer of 2007

Loans or Grants?

We argue in this paper that cancelling the debt of the poorest countries was a good thing, but that it should not imply that the debt instrument should be foregone. Debt and debt cancellations are indeed two complementary instruments which, if properly managed, perform better than either loans or grants taken in isolation. The core of the intuition, which we develop in a simple two-period model, relates to the fact that the poorest countries are also the most volatile, so that contingent facilities, explicitly incorporating debt cancellation mechanisms, are a valuable instrument.grants, loans, developing countries

Innovative Approaches to Funding the Millennium Development Goals

There are now a wide array of proposals for new forms of financing the Millennium Development Goals, of which this Policy Brief discusses the ninearguably most "popular". Such proposals can be sorted according to their funding source. Firstly, a number of global taxes have been suggested, such as currency transaction taxes, environmental taxes, a brain drain tax, an international airport tax, taxation of ocean fishing, taxation of arms exports, a "bit" tax on computer use, or a luxury goods tax. Another broad group of funding proposals involvesthe private sector, either public-private alliances or exclusively individuals,corporate entities and the civil society. Here the focus is on topic-specific global funds, a shift of charitable giving towards the Millennium Development Goals orGlobal Premium Bonds and lotteries to stimulate private funding. Thirdly, thereare proposals that can be categorised under financial engineering (if not money creation), such as a development-focused allocation of Special Drawing Rights at the IMF, the International Finance Facility, and the use of public guarantees to stimulate private funding