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.

Intergenerational persistence in health in developing countries : the penalty of gender inequality?

This paper is motivated to investigate the often neglected payoff to investments in the health of girls and women in terms of next generation outcomes. This paper investigates the intergenerational persistence of health across time and region as well as across the distribution of maternal health. It uses comparable microdata on as many as 2.24 million children born of about 0.6 million mothers in 38 developing countries in the 31 year period, 1970–2000. Mother's health is indicated by her height, BMI and anemia status. Child health is indicated by mortality risk and anthropometric failure. We find a positive relationship between maternal and child health across indicators and highlight non-linearities in these relationships. The results suggest that both contemporary and childhood health of the mother matter and that the benefits to the next generation are likely to be persistent. Averaging across the sample, persistence shows a considerable decline over time. Disaggregation shows that the decline is only significant in Latin America. Persistence has remained largely constant in Asia and has risen in Africa. The paper provides the first cross-country estimates of the intergenerational persistence in health and the first estimates of trends.

The paradox of nationalism: the common denominator of radical right and radical left euroscepticism

What can explain the strong euroscepticism of radical parties of both the right and the left? This article argues that the answer lies in the paradoxical role of nationalism as a central element in both party families, motivating opposition towards European integration. Conventionally, the link between nationalism and euroscepticism is understood solely as a prerogative of radical right-wing parties, whereas radical left-wing euroscepticism is associated with opposition to the neoliberal character of the European Union.This article contests this view. It argues that nationalism cuts across party lines and constitutes the common denominator of both radical right-wing and radical left-wing euroscepticism. It adopts a mixed-methods approach, combining intensive case study analysis with quantitative analysis of party manifestos. First, it traces the link between nationalism and euroscepticism in Greece and France in order to demonstrate the internal validity of the argument. It then undertakes a cross-country statistical estimation to assess the external validity of the argument and its generalisability across Europe.

Paths to development: Is there a Bangladesh surprise?

Using aggregate indices of education, health, demographic, and gender equality outcomes, we empirically investigate the hypothesis that Bangladesh achieved a higher level of social development compared with countries of similar level of per capita income. Stylized facts and cross-country regression results support this hypothesis for a broad range of dimensions. Further tests show that such achievements do not simply reflect income-mediated channels and social expenditure programs. We conclude by speculating on the role of Bangladesh’s development to sustain the process of growth and on the role of governance and institutional quality for the nexus between growth and development.

The effect of the national setting on employment practice: the case of downsizing

Although there is now a sizeable body of academic literature that tries to explain cross-country differences in terms of corporate control, capital market development, investor protection and politics, there is as yet very little literature on the degrees of protection accorded to other corporate stakeholders such as employees, based on a systematic comparison of firm level evidence. We find that both theories of legal origin and the varieties of capitalism approach are poor predictors of the relative propensity of firms to make redundancies in different settings. However, the political orientation of the government in place and even more so the nature of the electoral system are relatively good explanators of this propensity. In other words, political structures and outcomes matter more than more rigid institutional features such as legal origin. We explore the reasons for this, drawing out the implications for both theory and practice.

How do multilateral institutions influence individual perceptions of international affairs? Evidence from Europe and Asia

To date there has been no systematic study of the relationship between individuals’ opinions of different institutions and their perceptions of world affairs. This article tries to fill this gap by using a large cross-country data set comprising nine EU members and seven Asian nations and instrumental variable bivariate probit regression analysis. Controlling for a host of factors, the article shows that individuals’ confidence in multilateral institutions affects their perceptions of whether or not their country is being treated fairly in international affairs. This finding expands upon both theoretical work on multilateral institutions that has focused on state actors’ rationale for engaging in multilateral cooperation and empirical work that has treated confidence in multilateral institutions as a dependent variable. The article also shows that individuals’ confidence in different international organizations has undifferentiated effects on their perceptions of whether or not their country is being treated fairly in international affairs, though individuals more knowledgeable about international affairs exhibit slightly different attitudes. Finally, the article demonstrates significant differences in opinion across Europe and Asia.

Entrepreneurial activity across European cities

The importance of entrepreneurship as a driving force in the economic development has been widely recognised. Respectively, a growing number of empirical studies have focused on explaining variation in entrepreneurial activity at various spatial levels with the majority of them taking either a cross-country perspective or looking at the inter-regional differences. More recent studies on entrepreneurship have shifted their focus to examining cross-city variation in entrepreneurship. However, overall, given limited city-level data availability, scarce work has been undertaken so far on cross-city entrepreneurship within the spatially oriented entrepreneurship research. Furthermore, to our best knowledge, no empirical studies exist on entrepreneurship in European cities and our paper aims to fill this gap

Bank loan terms and conditions: is there a macro effect?

We examine whether macroeconomic factors contain significant information for bank loan contracting terms and conditions (T&Cs), over and above that of standard firm-specific or country-level institutional factors. Our estimation is based on a seemingly unrelated mixed-processes methodology that accommodates two salient data properties: (i) the fact that loan contract terms are determined jointly as a single lending contract, and (ii) the fact that the elements of loan T&Cs are generated by different distributional formats. Our findings indicate that cross-country variation accounts for a significant portion of observed variation in loan T&Cs. In addition, macroeconomic fundamentals significantly explain the “package” of loan T&Cs offered to corporate borrowers, with this effect being distinct from any influence that T&Cs receive from firm-specific factors, and also from country-specific institutional factors.