Cross-country effects of regulatory capital arbitrage

One reason for the recent asset price bubbles in many developed countries could be regulatory capital arbitrage. Regulatory and legal changes can help traditional banks to move their assets off their balance sheets into the lightly regulated shadows and thus enable regulatory arbitrage through the securitized sector. This paper adopts a global vector autoregression (GVAR) methodology to assess the effects of regulatory capital arbitrage on equity prices, house prices and economic activity across 11 OECD countries/ regions. A counterfactual experiment disentangles the effects of regulatory arbitrage following a change in the net capital rule for investment banks in April 2004 and the adoption of the Basel II Accord in June 2004. The results provide evidence for the existence of an international finance multiplier, with about half of the countries overshooting U.S. impulse responses. The counterfactual shows that regulatory arbitrage via the U.S. securitized sector may enhance the cross-country reallocation of capital from housing markets towards equity markets.

Public real estate and the term structure of interest rates: a cross-country study

Using a variation of the Nelson-Siegel term structure model we examine the sensitivity of real estate securities in six key global markets to unexpected changes in the level, slop and curvature of the yield curve. Our results confirm the time-sensitive nature of the exposure and sensitivity to interest rates and highlight the importance of considering the entire term structure of interest rates. One issue that is of particular of interest is that despite the 2007-9 financial crisis the importance of unanticipated interest rate risk weakens post 2003. Although the analysis does examine a range of markets the empirical analysis is unable to provide definitive evidence as to whether REIT and property-company markets display heightened or reduced exposure.

Obesity and health in Europeans aged 50 years and older

Background: Obesity is increasing globally across all population groups. Limited data are available on how obesity patterns differ across countries. Objective: To document the prevalence of obesity and related health conditions for Europeans aged 50 years and older, and to estimate the association between obesity and health outcomes across 10 European countries. Methods: Data were obtained from the 2004 Survey of Health, Ageing and Retirement in Europe, a cross-national survey of 22 777 Continental Europeans over the age of 50 years. The health outcomes included self-reported health, disability, doctor-diagnosed chronic health conditions and depression. Multivariate regression analysis was used to predict health outcomes across weight classes (defined by body mass index [BMI] from self-reported weight and height) in the pooled sample and individually in each country. Results: The prevalence of obesity (BMI >= 30) ranged from 12.8% in Sweden to 20.2% in Spain for men and from 12.3% in Switzerland to 25.6% in Spain for women. Adjusting for compositional differences across countries changed little in the observed large heterogeneity in obesity rates throughout Europe. Compared with normal weight individuals, men and women with greater BMI had significantly higher risks for all chronic health conditions examined except heart disease in overweight men. Depression was linked to obesity in women only. Particularly pronounced risks of impaired health and chronic health conditions were found among severely obese people. The effects of obesity on health did not vary significantly across countries. Conclusions: Cross-country differences in the prevalence of obesity in older Europeans are substantial and exceed socio-demographic differentials in excessive body weight. Obesity is associated with significantly poorer health outcomes among Europeans aged 50 years and over, with effects similar across countries. Large heterogeneity in obesity throughout Europe should be investigated further to identify areas for effective public policy. (C) 2007 Published by Elsevier Ltd on behalf of The Royal Institute of Public Health.