La Crema: A case study of mutual fire insurance

We analyze a mutual fire insurance mechanism usedin Andorra, which is called La Crema in the locallanguage. This mechanism relies on households'announced property values to determine how much ahousehold is reimbursed in the case of a fire andhow payments are apportioned among other households.The only Pareto eficient allocation reachablethrough the mechanism requires that all householdshonestly report the true value of their property.However, such honest reporting is not an equilibriumexcept in the extreme case where the property valuesare identical for all households. Nevertheless, as the size of the society becomes large, thebenefits from deviating from truthful reportingvanish, and all of the non-degenerate equilibriaof the mechanism are nearly truthful andapproximately Pareto efficient.

Fiat money, intrinsic properties and government transaction policy

Why do people coordinate on the use of valueless piecesof paper as generally accepted money? A possible answeris that these objects have intrinsic properties that make them better candidates to be used as media of exchange. Another answer stresses the fact that unconvertible fiat money will not easily appear unless there is a centralized institution that favors its use.The main objective of the paper is to analyze these questions. In order to do this, we take a model of commodity money in which fiat money does not play any significant role and modify it to examine under which circumstances fiat money might come to circulate as medium of exchange. Some of the results obtained from the model differ in a rather substantial way from previous related literature.

Understanding the effects of government spending on consumption

Recent evidence suggests that consumption rises in response to an increase in government spending. That finding cannot be easily reconciled with existing optimizing business cycle models. We extend the standard new Keynesian model to allow for the presence of rule-of-thumb consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending.

Government consumption and private consumption correlations

This paper examines whether the introduction of government consumptionexpenditure in a standard one good model of the international real businesscycle is sufficient to reconcile the theory with the existing pattern ofinternational consumption and output correlations. I calibrate the model totwo different pairs of countries and generate the simulated distribution ofconsumption and output correlations implied by several specifications of themodel. It is shown that the model can account for existing internationalconsumption correlations only under very specific assumptions about the sizeof effect of government expenditure on agents' utility or the variabilityof government expenditure shocks. Crucial parameters are identified and thesensitivity of the results discussed.

Insurance with frequent trading: A dynamic analysis of efficient insurance markets

This paper extends existing insurance results on the type of insurance contracts needed for insurance market efficiency toa dynamic setting. It introduces continuosly open markets that allow for more efficient asset allocation. It alsoeliminates the role of preferences and endowments in the classification of risks, which is done primarily in terms of the actuarial properties of the underlying riskprocess. The paper further extends insurability to include correlated and catstrophic events. Under these very general conditions the paper defines a condition that determines whether a small number of standard insurance contracts (together with aggregate assets) suffice to complete markets or one needs to introduce such assets as mutual insurance.

Unemployment insurance with endogenous search intensity and precautionary saving

A welfare analysis of unemployment insurance (UI) is performed in a generalequilibrium job search model. Finitely-lived, risk-averse workers smooth consumption over time by accumulating assets, choose search effort whenunemployed, and suffer disutility from work. Firms hire workers, purchasecapital, and pay taxes to finance worker benefits; their equity is the assetaccumulated by workers. A matching function relates unemployment, hiringexpenditure, and search effort to the formation of jobs. The model is calibrated to US data; the parameters relating job search effort to the probability of job finding are chosen to match microeconomic studies ofunemployment spells. Under logarithmic utility, numerical simulation shows rather small welfaregains from UI. Even without UI, workers smooth consumption effectivelythrough asset accumulation. Greater risk aversion leads to substantiallylarger welfare gains from UI; however, even in this case much of its welfareimpact is due not to consumption smoothing effects, but rather to decreased work disutility, or to a variety of externalities.

Insurance and safety after September 11, 2001: Coming to grips with the costs and threats of terrorism

This chapter, originally written as a consequence of the terrorist attacksof September 11, 2001, provides an elementary, everyday introduction tothe concepts of risk and insurance. Conceptually, risk has two dimensions:a potential loss, and the chance of that loss being realized. People can,however, transfer risk to insurance companies against the payment ofso-called premiums. In practice, however, one needs accurate assessmentsof both losses and probabilities to judge whether premiums are appropriate.For many risks, this poses little problem (e.g., life insurance); however,it is difficult to assess risks of many other kinds of events such as actsof terrorism. It is emphasized, that through evolution and learning, peopleare able to handle many of the common risks that they face in life. Butwhen people lack experience (e.g., new technologies, threats of terrorism),risk can only be assessed through imagination. Not surprisingly, insurancecompanies demand high prices when risks are poorly understood. In particular,the cost of insurance against possible acts of terrorism soared afterSeptember 11. How should people approach risk after the events of that day?Clearly, the world needs to protect itself from the acts of terrorists andother disturbed individuals. However, it is also important to address the root causes of such antisocial movements. It is, therefore, suggested thatprograms addressed at combatting ignorance, prejudice, and socialinequalities may be more effective premiums for reducing the risk ofterrosrtism than has been recognized to date.

Insurance with frequent trading

This paper looks at the dynamic management of risk in an economy with discrete time consumption and endowments and continuous trading. I study how agents in such an economy deal with all the risk in the economy and attain their Pareto optimal allocations by trading in a few natural securities: private insurance contracts and a common set of derivatives on the aggregate endowment. The parsimonious nature ofthe implied securities needed for Pareto optimality suggests that insuch contexts complete markets is a very reasonable assumption.

A positive theory of geographic mobility and social insurance

This paper presents a tractable dynamic general equilibrium model thatcan explain cross-country empirical regularities in geographical mobility,unemployment and labor market institutions. Rational agents vote overunemployment insurance (UI), taking the dynamic distortionary effects ofinsurance on the performance of the labor market into consideration.Agents with higher cost of moving, i.e., more attached to their currentlocation, prefer more generous UI. The key assumption is that an agent'sattachment to a location increases the longer she has resided there. UIreduces the incentive for labor mobility and increases, therefore, thefraction of attached agents and the political support for UI. The mainresult is that this self-reinforcing mechanism can give rise to multiplesteady-states-one 'European' steady-state featuring high unemployment,low geographical mobility and high unemployment insurance, and one'American' steady-state featuring low unemployment, high mobility andlow unemployment insurance.

Banks, government bonds, and default: what do the data say?

We use data from Bankscope to analyze the holdings of public bonds by over 18,000 banks located in 185 countries and the role of these bonds in 18 sovereign debt crises over the period 1998-2012. We find that: (i) banks hold a sizeable share of their assets in government bonds (about 9% on average), particularly in less financially developed countries; (ii) during sovereign crises, banks on average increase their bondholdings by 1% of their assets, but this increase is concentrated among larger and more profitable banks, and; (iii) the correlation between a bank's holdings of public bonds and its future loans is positive in normal times, but turns negative during defaults. A 10% increase in bank bond-holdings during default is associated with a 3.2% reduction in future loans, and bonds bought in normal times account for 75% of this effect. Our results are consistent with the view that there is a liquidity benefit for banks to hold public bonds in normal times, which is critical for understanding bank fragility during sovereign crises.

State Government E85 Use Plan, December 31, 2007

Governor Culver issued Executive Order 3 on June 21st, 2007. The Executive Order directs that at least 60 percent of fuel purchases in state flexible fuel vehicles be E85 by June 30, 2009. The Order also directed “the Director of the Office of Energy Independence, in consultation with the Director of Administrative Services, shall submit a State Government E85 Use Plan.” The following recommendations are immediate actions that can be taken to ensure that the state reaches the Governor’s goal of 60 percent E85 fuel use by June 30, 2009

2009 State of Iowa Employee Benefits Handbook, October 2008

Examples of the information available include: • Links to health and dental plans • Health plan comparisons • Health and Dependent Care Flexible Spending Account information • Deferred Compensation information • Life and Long Term Disability insurance information • Link to Employee Assistance Program (EAP) Web site • Link to Employee Discount Program • Link to Wellness Web site which includes information about - Smoking Cessation Program - Prescription Drug information - Wellness activities

Audit report on the Northeast Iowa Schools Insurance Trust for the year ended June 30, 2008

Audit report on the Northeast Iowa Schools Insurance Trust for the year ended June 30, 2008

Social and medical vulnerability factors of emergency department frequent users in a universal health insurance system

Objectifs - Identifier les facteurs de vulnérabilité sociaux et médicaux associés au recours multiple aux consultations des urgences. - Déterminer si les patients à recours multiple sont plus à même de combiner ces facteurs dans un système d'assurance universelle. Méthode Il s'agit d'une étude cas-contrôle rétrospective basée sur l'étude de dossiers médico-administratifs comparant des échantillons randomisés de patients à recours multiple à des patients n'appartenant pas à cette catégorie, au sein des urgences du Centre Hospitalier Universitaire Vaudois et de la Policlinique Médicale Universitaire de Lausanne. Les auteurs ont défini les patients à recours multiple comme comptabilisant au moins quatre consultations aux urgences durant les douze mois précédents. Les patients adultes (>18 ans) ayant consulté les urgences entre avril 2008 et mars 2009 (période d'étude) étaient inclus ; ceux quittant les urgences sans décharge médicale étaient exclus. Pour chaque patient, le premier dossier d'urgence informatisé inclus dans la période d'étude était sélectionné pour l'extraction des données. Outre les variables démographiques de base, les variables d'intérêt comprennent des caractéristiques sociales (emploi, type de résidence) et médicales (diagnostic principal aux urgences). Les facteurs sociaux et médicaux significatifs ont été utilisés dans la construction d'un modèle de régression logistique, afin de déterminer les facteurs associés avec le recours multiple aux urgences. De plus, la combinaison des facteurs sociaux et médicaux a été étudiée. Résultats Au total, 359/Γ591 patients à recours multiple et 360/34'263 contrôles ont été sélectionnés. Les patients à recours multiple représentaient moins d'un vingtième de tous les patients des urgences (4.4%), mais engendraient 12.1% de toutes les consultations (5'813/48'117), avec un record de 73 consultations. Aucune différence en termes d'âge ou de genre n'est apparue, mais davantage de patients à recours multiples étaient d'une nationalité autre que suisse ou européenne (n=117 [32.6%] vs n=83 [23.1%], p=0.003). L'analyse multivariée a montré que les facteurs de vulnérabilité sociaux et médicaux les plus fortement associés au recours multiple aux urgences étaient : être sous tutelle (Odds ratio [OR] ajusté = 15.8; intervalle de confiance [IC] à 95% = 1.7 à 147.3), habiter plus proche des urgences (OR ajusté = 4.6; IC95% = 2.8 à 7.6), être non assuré (OR ajusté = 2.5; IC95% = 1.1 à 5.8), être sans emploi ou dépendant de l'aide sociale (OR ajusté = 2.1; IC95% = 1.3 à 3.4), le nombre d'hospitalisations psychiatriques (OR ajusté = 4.6; IC95% = 1.5 à 14.1), ainsi que le recours à au moins cinq départements cliniques différents durant une période de douze mois (OR ajusté = 4.5; IC95% = 2.5 à 8.1). Le fait de comptabiliser deux sur quatre facteurs sociaux augmente la vraisemblance du recours multiple aux urgences (OR ajusté = 5.4; IC95% = 2.9 à 9.9) ; des résultats similaires ont été trouvés pour les facteurs médicaux (OR ajusté = 7.9; IC95% = 4.6 à 13.4). La combinaison de facteurs sociaux et médicaux est fortement associée au recours multiple aux urgences, puisque les patients à recours multiple étaient dix fois plus à même d'en comptabiliser trois d'entre eux (sur un total de huit facteurs, IC95% = 5.1 à 19.6). Conclusion Les patients à recours multiple aux urgences représentent une proportion modérée des consultations aux urgences du Centre Hospitalier Universitaire Vaudois et de la Policlinique Médicale Universitaire de Lausanne. Les facteurs de vulnérabilité sociaux et médicaux sont associés au recours multiple aux urgences. En outre, les patients à recours multiple sont plus à même de combiner les vulnérabilités sociale et médicale que les autres. Des stratégies basées sur le case management pourraient améliorer la prise en charge des patients à recours multiple avec leurs vulnérabilités afin de prévenir les inégalités dans le système de soins ainsi que les coûts relatifs.

Governor's Task Force on Efficiencies and Cost-Effectiveness in Iowa State Government,Final Report, December 1983

A special task force was formed and worked through its various committees to uncover and investigate possible areas for cutting costs and saving money in State Government operations. A total of 81 recommendations are made in this report, with potential savings of over $32 million during the next several years.