Revisiting the interest rate puzzle

This article makes a connection between Lucas` (1978) asset pricing model and the macroeconomic dynamics for some selected countries. Both the relative risk aversion and the impatience for postponing consumption by synthesizing the investor behaviour can help to understand some key macroeconomic issues across countries, such as the savings decision and the real interest rate. I find that the government consumption makes worse the so-called `equity premium-interest rate puzzle`. The first root of the quadratic function for explaining the real interest rate can produce this puzzle, but not the second root. Thus, Mehra and Prescott (1985) identified only one possible solution.

The choice of banking firm: Are the interest rate a significant criteria?

The objective of the research is to know the factors that in Spain determine the choice of banking organization. The obtained results indicate that the dimension of the network of branches is the reason more valued. In spite of the increasing symmetry of the Spanish banking market, the preferences of the clients of the savings banks and those of the banks are not absolutely coincident, being the proximity - the main reason for election- much more valued by the former than by the latter. The existence of divergences in the preferences has also been detected according to the region and the typology of city of residence.

Interest Rate Co-movements, Global Factors and the Long End of the Term Spread

The disconnect between rising short and low long interest rates has been a distinctive feature of the 2000s. Both research and policy circles have argued that international forces, such as global monetary policy (e.g. Rogoff, 2006); international business cycles (e.g. Borio and Filardo, 2007); or a global savings glut (e.g Bernanke, 2005) may be responsible. In this paper, we employ recent advances in panel data econometrics to document the disconnect and link it explicitly to the existence of a global latent factor that dominates the long end of the term spread for the recent period; the saving glut story emerges as the most likely contender for the global factor.

Use of antibiotics in pediatric intensive care and potential savings.

OBJECTIVE: Minimizing unwarranted prescription of antibiotics remains an important objective. Because of the heterogeneity between units regarding patient mix and other characteristics, site-specific targets for reduction must be identified. Here we present a model to address the issue by means of an observational cohort study. SETTING: A tertiary, multidisciplinary, neonatal, and pediatric intensive care unit of a university teaching hospital. PATIENTS: All newborns and children present in the unit (n = 456) between September 1998 and March 1999. Reasons for admission included postoperative care after cardiac surgery, major neonatal or pediatric surgery, severe trauma, and medical conditions requiring critical care. METHODS: Daily recording of antibiotics given and of indications for initiation. After discontinuation, each treatment episode was assessed as to the presence or absence of infection. RESULTS: Of the 456 patients 258 (56.6%) received systemic antibiotics, amounting to 1815 exposure days (54.6%) during 3322 hospitalization days. Of these, 512 (28%) were prescribed as prophylaxis and 1303 for suspected infection. Treatment for suspected ventilator-associated pneumonia accounted for 616 (47%) of 1303 treatment days and suspected sepsis for 255 days (20%). Patients were classified as having no infection or viral infection during 552 (40%) treatment days. The average weekly exposure rate in the unit varied considerably during the 29-week study period (range: 40-77/100 hospitalization days). Patient characteristics did not explain this variation. CONCLUSION: In this unit the largest reduction in antibiotic treatment would result from measures assisting suspected ventilator-associated pneumonia to be ruled out and from curtailing extended prophylaxis.

Non-Commitment and Savings in Dynamic Risk-Sharing Contracts

We characterize the solution to a model of consumption smoothing using financing under non-commitment and savings. We show that, under certain conditions, these two different instruments complement each other perfectly. If the rate of time preference is equal to the interest rate on savings, perfect smoothing can be achieved in finite time. We also show that, when random revenues are generated by periodic investments in capital through a concave production function, the level of smoothing achieved through financial contracts can influence the productive investment efficiency. As long as financial contracts cannot achieve perfect smoothing, productive investment will be used as a complementary smoothing device.

A sovereign wealth fund to lift Germany's curse of excess savings. CEPS Policy Brief No. 280, 28 August 2012

As an alternative to the present system of intermediation of the German savings surplus, this paper suggests that the risk-adjusted rate of return could be improved by creating a sovereign wealth fund for Germany (designated DESWF), which could invest excess German savings globally. Such a DESWF would offer German savers a secure vehicle paying a guaranteed positive minimum real interest rate, with a top-up when real investment returns allowed. The vehicle would invest the funds in a portfolio that is highly diversified by geography and asset classes. Positive real returns can be expected in the long run based on positive real global growth. Since, in this case, a significant amount of funds would flow outside the euro area, the euro would depreciate, which would help crisis countries presently struggling to revive growth through exports and to close their external deficits so as to recoup their international credit-worthiness. Target imbalances would gradually disappear and German claims abroad would move from nominal claims on the ECB to diversified real and nominal claims on various private and public foreign entities in a variety of asset classes.

Fungicide resistance: the dose rate debate

It makes economic sense to use as little fungicide as possible on a crop. In many settings, it is common to apply less than the manufacturer's recommended dose. If sources of disease are scarce, or conditions are unsuitable for it to increase, the reduced control from a low dose may be adequate. In other cases, a big reduction in dose may cause little reduction in control, again permitting savings - especially for growers prepared to run a little risk. But the label recommendations for most fungicides state that to avoid resistance, a full dose must always be used. Are individual cost-savings therefore endangering everyone's access to an exceptionally useful tool? The emergence of fungicide resistance is evolution in action. In all cases, it involves the genetic replacement of the original susceptible population of the pathogen by a new population with genetically distinct biochemistry, which confers resistance. The resistant biochemistry originates in rare genetic mutations, so rare that initially the population is hardly altered. Replacement of susceptible forms by resistant ones happens because, with fungicide present, the resistant form multiplies more rapidly than the susceptible form. The key point to notice is that only the relative rates of multiplication of the resistant and susceptible types are involved in the evolution of resistance. The absolute rates are irrelevant.

Why foreign savings fail to cause growth

Este artigo é uma formalização da crítica à estratégia do crescimento com poupança externa que um de seus autores vem sendo fazendo nos últimos anos. Apesar dos países de renda média serem pobres de capital, os déficits em conta corrente (poupança externa), financiado seja por empréstimos ou por investimentos externos diretos, não irá aumentar a taxa de acumulação de capital ou terá pouco impacto sobre ela, uma vez que os déficits de conta corrente estarão associados taxas de câmbio apreciadas, ordenados e salários aumentados artificialmente e altos níveis de consumo. Consequentemente, a taxa de substituição da poupança externa pela interna será relativamente alta, e o país será obrigado não a investir e crescer, mas a consumir. Apenas quando há grandes oportunidades de investimento, estimuladas por uma ampla diferença entre a taxa de lucro esperada e a taxa de juros de longo prazo, a propensão marginal ao consumo diminuirá suficientemente, a ponto de o lucro adicional originário do fluxo de capital estrangeiro ser usado para investimento, ao invés de para consumo. Neste caso especial, a taxa de substituição de poupança externa pela interna tenderá a ser menor e a poupança interna contribuirá positivamente para o crescimento

Variable dose rate application of herbicides using optical sensors

The aim of this study was to develop and evaluate a variable dose rate application of herbicides using an online electronic control based system with optical sensors for weed detection in forested areas. The proposed concept was to apply a basic dose on 100% of the area (aiming to control small weeds) and to apply a complementary patch-spraying dose only on areas with higher weed infestation. For that purpose, a conventional spray boom was adjusted to apply 40% of the herbicide dose on the full area and the optical sensors were used to control the application of the complementary dose (60%) only on areas with higher infestation. The results showed that the system performed adequately. Field applications presented herbicide savings around 20 to 30%, with a similar weed control performance as compared to the full dose application on 100% of the area.

Savings, investment and growth in the global age: analytical and policy issues

Includes bibliography

On track for solar grade silicon through a siemens process-type laboratory reactor: operating conditions and energy savings

Polysilicon cost impacts significantly on the photovoltaics (PV) cost and on the energy payback time. Nowadays, the besetting production process is the so called Siemens process, polysilicon deposition by chemical vapor deposition (CVD) from Trichlorosilane. Polysilicon purification level for PV is to a certain extent less demanding that for microelectronics. At the Instituto de Energía Solar (IES) research on this subject is performed through a Siemens process-type laboratory reactor. Through the laboratory CVD prototype at the IES laboratories, valuable information about the phenomena involved in the polysilicon deposition process and the operating conditions is obtained. Polysilicon deposition by CVD is a complex process due to the big number of parameters involved. A study on the influence of temperature and inlet gas mixture composition on the polysilicon deposition growth rate, based on experimental experience, is shown. Moreover, CVD process accounts for the largest contribution to the energy consumption of the polysilicon production. In addition, radiation phenomenon is the major responsible for low energetic efficiency of the whole process. This work presents a model of radiation heat loss, and the theoretical calculations are confirmed experimentally through a prototype reactor at our disposal, yielding a valuable know-how for energy consumption reduction at industrial Siemens reactors.

The Crowding-out Effect of Mandatory Labour Market Pension Schemes on Private Savings. Evidence from renters in Denmark. CEPS Working Document No. 389, February 2014

This paper aims to estimate the crowding-out effect of the Danish mandatory labour market pension reforms begun in 1993 on the level of total household savings for renters. The effect is identified via a large panel of individual administrative records utilising the differences in speed, timing and sectoral coverage of the implementation of the reform in the period 1997 to 2005. Little substitutability was found between current mandatory labour market pension savings and private voluntary savings. Each euro paid into mandatory labour market pension accounts results in a reduction in private savings of approximately 0 to 30 cents, depending on age. This low rate of substitution is only, to a minor extent, explained by liquidity constraints. The results point to mandatory pension savings having a large effect on total household savings. Thus, pension reforms that introduce mandatory savings have macroeconomic implications.

Larry Summers’ interest rate conundrum. CEPS Hi-level Brief, 16 January 2014

Larry Summers has attracted much attention recently for invoking old theories of secular stagnation to explain the persistence of low interest rates in the recent past. The German economist Carl Christian von Weizsäcker has pointed to a retirement savings glut as the cause for low rates. In the view of Thomas Mayer, however, as expressed in this High-Level Brief, these theses lack both theoretical and empirical support and he offers as an alternative explanation the fall-out from the recent credit boom-bust cycle.

Municipal aggregation in Illinois : an estimate of the potential costs and savings from municipal aggregation for selected Illinois communities : a report to the Illinois General Assembly /

"This report addresses the potential benefits of municipal aggregation of retail electric customers as a means for customers to benefit from the Electric Service Customer Choice and Rate Relief Law of 1997 (Public Act 90-561), referred to in this report as the Customer Choice Law. This report was authorized by the General Assembly on June 26, 2002, in Public Act 92-0585."--P. ii.

Rising longevity, education, savings, and growth

This paper examines the impact of declines in adult mortality on growth in an overlapping generations model. With public education and imperfect annuity markets, a decline in mortality affects growth through three channels. First, it raises the saving rate and thereby increases the rate of physical capital accumulation. Second, it reduces accidental bequests, lowers investment, and thereby lowers the rate of physical capital accumulation. Third, it may lead the median voter to increase the tax rate for public education initially but lower the tax rate in a later stage. Starting from a high mortality rate as found in many Third World populations, the net effect of a decline in mortality is to raise the growth rate. However, starting from a low mortality rate such as is found in most industrial populations, the net effect of a further decline in mortality is to reduce the growth rate. The findings appear consistent with recent empirical evidence. (C) 2002 Elsevier Science B.V All rights reserved.