Monetary Policy, Stock Price Misalignments and Macroeconomic Instability

Perhaps the most fundamental prediction of financial theory is that the expected returns on financial assets are determined by the amount of risk contained in their payoffs. Assets with a riskier payoff pattern should provide higher expected returns than assets that are otherwise similar but provide payoffs that contain less risk. Financial theory also predicts that not all types of risks should be compensated with higher expected returns. It is well-known that the asset-specific risk can be diversified away, whereas the systematic component of risk that affects all assets remains even in large portfolios. Thus, the asset-specific risk that the investor can easily get rid of by diversification should not lead to higher expected returns, and only the shared movement of individual asset returns – the sensitivity of these assets to a set of systematic risk factors – should matter for asset pricing. It is within this framework that this thesis is situated. The first essay proposes a new systematic risk factor, hypothesized to be correlated with changes in investor risk aversion, which manages to explain a large fraction of the return variation in the cross-section of stock returns. The second and third essays investigate the pricing of asset-specific risk, uncorrelated with commonly used risk factors, in the cross-section of stock returns. The three essays mentioned above use stock market data from the U.S. The fourth essay presents a new total return stock market index for the Finnish stock market beginning from the opening of the Helsinki Stock Exchange in 1912 and ending in 1969 when other total return indices become available. Because a total return stock market index for the period prior to 1970 has not been available before, academics and stock market participants have not known the historical return that stock market investors in Finland could have achieved on their investments. The new stock market index presented in essay 4 makes it possible, for the first time, to calculate the historical average return on the Finnish stock market and to conduct further studies that require long time-series of data.

Genetic polymorphisms and laboratory variables as predictors of blood pressure response to antihypertensive drugs

Hypertension is one of the major risk factors for cardiovascular morbidity. The advantages of antihypertensive therapy have been clearly demonstrated, but only about 30% of hypertensive patients have their blood pressure (BP) controlled by such treatment. One of the reasons for this poor BP control may lie in the difficulty in predicting BP response to antihypertensive treatment. The average BP reduction achieved is similar for each drug in the main classes of antihypertensive agents, but there is a marked individual variation in BP responses to any given drug. The purpose of the present study was to examine BP response to four different antihypertensive monotherapies with regard to demographic characteristics, laboratory test results and common genetic polymorphisms. The subjects of the present study are participants in the pharmacogenetic GENRES Study. A total of 208 subjects completed the whole study protocol including four drug treatment periods of four weeks, separated by four-week placebo periods. The study drugs were amlodipine, bisoprolol, hydrochlorothiazide and losartan. Both office (OBP) and 24-hour ambulatory blood pressure (ABP) measurements were carried out. BP response to study drugs were related to basic clinical characteristics, pretreatment laboratory test results and common polymorphisms in genes coding for components of the renin-angiotensin system, alpha-adducin (ADD1), beta1-adrenergic receptor (ADRB1) and beta2-adrenergic receptor (ADRB2). Age was positively correlated with BP responses to amlodipine and with OBP and systolic ABP responses to hydrochlorothiazide, while body mass index was negatively correlated with ABP responses to amlodipine. Of the laboratory test results, plasma renin activity (PRA) correlated positively with BP responses to losartan, with ABP responses to bisoprolol, and negatively with ABP responses to hydrochlorothiazide. Uniquely to this study, it was found that serum total calcium level was negatively correlated with BP responses to amlodipine, whilst serum total cholesterol level was negatively correlated with ABP responses to amlodipine. There were no significant associations of angiotensin II type I receptor 1166A/C, angiotensin converting enzyme I/D, angiotensinogen Met235Thr, ADD1 Gly460Trp, ADRB1 Ser49Gly and Gly389Arg and ADRB2 Arg16Gly and Gln27Glu polymorphisms with BP responses to the study drugs. In conclusion, this study confirmed the relationship between pretreatment PRA levels and response to three classes of antihypertensive drugs. This study is the first to note a significant inverse relation between serum calcium level and responsiveness to a calcium channel blocker. However, this study could not replicate the observations that common polymorphisms in angiotensin II type I receptor, angiotensin converting enzyme, angiotensinogen, ADD1, ADRB1, or ADRB2 genes can predict BP response to antihypertensive drugs.

Income inequality in the process of economic development : An empirical approach

This thesis studies the effect of income inequality on economic growth. This is done by analyzing panel data from several countries with both short and long time dimensions of the data. Two of the chapters study the direct effect of inequality on growth, and one chapter also looks at the possible indirect effect of inequality on growth by assessing the effect of inequality on savings. In Chapter two, the effect of inequality on growth is studied by using a panel of 70 countries and a new EHII2008 inequality measure. Chapter contributes on two problems that panel econometric studies on the economic effect of inequality have recently encountered: the comparability problem associated with the commonly used Deininger and Squire s Gini index, and the problem relating to the estimation of group-related elasticities in panel data. In this study, a simple way to 'bypass' vagueness related to the use of parametric methods to estimate group-related parameters is presented. The idea is to estimate the group-related elasticities implicitly using a set of group-related instrumental variables. The estimation results with new data and method indicate that the relationship between income inequality and growth is likely to be non-linear. Chapter three incorporates the EHII2.1 inequality measure and a panel with annual time series observations from 38 countries to test the existence of long-run equilibrium relation(s) between inequality and the level of GDP. Panel unit root tests indicate that both the logarithmic EHII2.1 inequality measure and the logarithmic GDP per capita series are I(1) nonstationary processes. They are also found to be cointegrated of order one, which implies that there is a long-run equilibrium relation between them. The long-run growth elasticity of inequality is found to be negative in the middle-income and rich economies, but the results for poor economies are inconclusive. In the fourth Chapter, macroeconomic data on nine developed economies spanning across four decades starting from the year 1960 is used to study the effect of the changes in the top income share to national and private savings. The income share of the top 1 % of population is used as proxy for the distribution of income. The effect of inequality on private savings is found to be positive in the Nordic and Central-European countries, but for the Anglo-Saxon countries the direction of the effect (positive vs. negative) remains somewhat ambiguous. Inequality is found to have an effect national savings only in the Nordic countries, where it is positive.

Interest in university studies : Its role and relation to other motivational variables

This dissertation empirically explored interest as a motivational force in university studies, including the role it currently plays and possible ways of enhancing this role as a student motivator. The general research questions were as follows: 1) What role does interest play in university studies? 2) What explains academic success if studying is not based on interest? 3) How do different learning environments support or impede interest-based studying? Four empirical studies addressed these questions. Study 1 (n=536) compared first-year students explanations of their disciplinary choices in three fields: veterinary medicine, humanities and law. Study 2 (n=28) focused on the role of individual interest in the humanities and veterinary medicine, fields which are very different from each other as regards their nature of studying. Study 3 (n=52) explored veterinary students motivation and study practices in relation to their study success. Study 4 (n=16) explored veterinary students interest experience in individual lectures on a daily basis. By comparing different fields and focusing on one study field in more detail, it was possible to obtain a many-sided picture of the role of interest in different learning environments. Questionnaires and quantitative methods have often been used to measure interest in academic learning. The present work is based mostly on qualitative data, and qualitative methods were applied to add to the previous research. Study 1 explored students open-ended answers, and these provided a basis for the interviews in Study 2. Study 3 explored veterinary students portfolios in a longitudinal setting. For Study 4, a diary including both qualitative and quantitative measures was designed to capture veterinary students interest experience. Qualitative content analysis was applied in all four studies, but quantitative analyses were also added. The thesis showed that university students often explain their disciplinary choices in terms of interest. Because interest is related to high-quality learning, the students seemed to have a good foundation for successful studies. However, the learning environments did not always support interest-based studying; Time-management and coping skills were found to be more important than interest in terms of study success. The results also indicated that interest is not the only motivational variable behind university studies. For example, future goals are needed in order to complete a degree. Even so, the results clearly indicated that it would be worth supporting interest-based studying both in professionally and generally oriented study fields. This support is important not only to promote high-quality learning but also meaningful studying, student well-being, and life-long learning.

The decline of malaria in Finland – the impact of the vector and social variables

Background: Malaria was prevalent in Finland in the 18th century. It declined slowly without deliberate counter-measures and the last indigenous case was reported in 1954. In the present analysis of indigenous malaria in Finland, an effort was made to construct a data set on annual malaria cases of maximum temporal length to be able to evaluate the significance of different factors assumed to affect malaria trends. Methods: To analyse the long-term trend malaria statistics were collected from 1750–2008. During that time, malaria frequency decreased from about 20,000 – 50,000 per 1,000,000 people to less than 1 per 1,000,000 people. To assess the cause of the decline, a correlation analysis was performed between malaria frequency per million people and temperature data, animal husbandry, consolidation of land by redistribution and household size. Results: Anopheles messeae and Anopheles beklemishevi exist only as larvae in June and most of July. The females seek an overwintering place in August. Those that overwinter together with humans may act as vectors. They have to stay in their overwintering place from September to May because of the cold climate. The temperatures between June and July determine the number of malaria cases during the following transmission season. This did not, however, have an impact on the longterm trend of malaria. The change in animal husbandry and reclamation of wetlands may also be excluded as a possible cause for the decline of malaria. The long-term social changes, such as land consolidation and decreasing household size, showed a strong correlation with the decline of Plasmodium. Conclusion: The indigenous malaria in Finland faded out evenly in the whole country during 200 years with limited or no counter-measures or medication. It appears that malaria in Finland was basically a social disease and that malaria trends were strongly linked to changes in human behaviour. Decreasing household size caused fewer interactions between families and accordingly decreasing recolonization possibilities for Plasmodium. The permanent drop of the household size was the precondition for a permanent eradication of malaria.