Asset pricing implications of benchmarking: A two-factor CAPM

In this paper we consider the equilibrium effects of an institutionalinvestor whose performance is benchmarked to an index. In a partialequilibrium setting, the objective of the institutional investor is modeledas the maximization of expected utility (an increasing and concave function,in order to accommodate risk aversion) of final wealth minus a benchmark.In equilibrium this optimal strategy gives rise to the two-beta CAPM inBrennan (1993): together with the market beta a new risk-factor (that wecall active management risk) is brought into the analysis. This new betais deffined as the normalized (to the benchmark's variance) covariancebetween the asset excess return and the excess return of the market overthe benchmark index. Different to Brennan, the empirical test supports themodel's predictions. The cross-section return on the active management riskis positive and signifficant especially after 1990, when institutionalinvestors have become the representative agent of the market.

Do the eealthy risk more money? An experimental comparison

Are poor people more or less likely to take money risks than wealthy folks?We find that risk attraction is more prevalent among the wealthy when theamounts of money at risk are small (not surprising, since ten dollars is asmaller amount for a wealthy person than for a poor one), but, interestingly,for the larger amounts of money at risk the fraction of the nonwealthydisplaying risk attraction exceeds that of the wealthy.We also replicate our previous finding that many people display riskattraction for small money amounts, but risk aversion for large ones. Weargue that preferences yielding risk attraction for small money amounts,together with risk aversion for larger amounts, at all levels of wealth, while contradicting the expected utility hypothesis, may be well-defined,independently of reference points, on the choice space.

When in peril, retrench: Testing the portfolio channel of contagion

One plausible mechanism through which financial market shocks may propagate across countriesis through the impact that past gains and losses may have on investors risk aversion and behavior. This paper presents a stylized model illustrating how heterogeneous changes in investors risk aversion affect portfolio allocation decisions and stock prices. Our empirical findings suggest that when funds returns are below average, they adjust their holdings toward the average (or benchmark) portfolio. In so doing, funds tend to sell the assets of countries in which they were overweight , increasing their exposure to countries in which they were underweight. Based on this insight, the paper constructs an index of financial interdependence which reflects the extent to which countries share overexposed funds. The index helps in explain the pattern of stock market comovement across countries. Moreover, a comparison of this interdependence measure to indices of trade or commercial bank linkages indicates that our index can improve predictions about which countries are more likely to be affected by contagion from crisis centers.

Markups, gaps and the welfare costs of business fluctuations

In this paper we present a simple theory-based measure of the variations in aggregate economic efficiency: the gap between the marginal product of labor and the household s consumption/leisure tradeoff. We show that this indicator corresponds to the inverse of the markup of price over social marginal cost, and give some evidence in support of this interpretation. We then show that, with some auxilliary assumptions our gap variable may be used to measure the efficiency costs of business fluctuations. We find that the latter costs are modest on average. However, to the extent the flexible price equilibrium is distorted,the gross efficiency losses from recessions and gains from booms may be large. Indeed, we find that the major recessions involved large efficiency losses. These results hold for reasonable parameterizations of the Frisch elasticity of labor supply, the coefficient of relative risk aversion, and steady state distortions.

Reflections on gains and losses: A 2x2x7 experiment

We test whether risk attitudes change when losses instead of gains areinvolved. The study of gain-loss asymmetries has been largely confinedto reflected choices, where all the money amounts of a positiveprospect are multiplied by minus one. We define the decomposition reflection = translation + probability switch, and experimentally findboth a translation effect (risk attraction becomes more frequent whengains are translated into losses) and a probability switch effect (riskattraction becomes more frequent when the probability of the best outcomedecreases). Surprisingly, the switch effect is somewhat stronger than thetranslation effect, negating a conventional reflection effect when onestarts with choices between gains with a low probability of the bestoutcome. We conclude by arguing that, while both the translation effectand the switch effect contradict the expected utility hypothesis, thetranslation effect implies a deeper violation of standard preference theory.

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.

Immigration policy with partisan parties

This paper analyzes the political economy of immigration when the salient electoralissue is the level of immigrants and the relevant immigration policy is the expenditurein immigration control. We consider that immigration affects voters? welfarethrough economic and non economic factors. We model political competition `a laWittman with the ideology of parties endogenously determined at equilibrium. Atequilibrium, parties propose different levels of immigration, located to the left and tothe right of the median voter?s ideal point, and combine skilled and unskilled workersamong their constituencies. Numerical simulations provide the levels of immigrationproposed by the two parties and the composition of parties? constituencies as we varythe efficacy of immigration control and the intensity of immigration aversion.

Modification de la composition des cigarettes durant te XXe siècle: rôle de l'industrie du tabac et effet sur la dépendance tabagique [Chemicals added to cigarettes and their effects on tobacco dependence]

This paper summarizes data on the factors involved in addiction and dependence to cigarettes. Nicotine has been intensively studied by the tobacco industry, for instance for its addictive effect at the lowest possible rates. The addition of diammonium phosphate and urea produces an alcalinization of the pH of cigarette smoke, and promotes the absorption and the trans-membrane passage of nicotine. The taste, the smell of smoke, and the visual aspect of the pack of cigarettes are also sensory components that promote addiction. Finally, menthol, sugar, cocoa and liquorice added to cigarettes also play a role in dependence and addiction to cigarettes by, for instance, making an anesthetic effect on the airways.

Reprisals remembered: German-Greek conflict and car sales during the Euro crisis

During the Greek debt crisis after 2010, the German government insisted on harshausterity measures. This led to a rapid cooling of relations between the Greekand German governments. We compile a new index of public acrimony betweenGermany and Greece based on newspaper reports and internet search terms. Thisinformation is combined with historical maps on German war crimes during theoccupation between 1941 and 1944. During months of open conflict between Germanand Greek politicians, German car sales fell markedly more than those of cars fromother countries. This was especially true in areas affected by German reprisals duringWorldWar II: areas where German troops committed massacres and destroyed entirevillages curtailed their purchases of German cars to a greater extent during conflictmonths than other parts of Greece. We conclude that cultural aversion was a keydeterminant of purchasing behavior, and that memories of past conflict can affecteconomic choices in a time-varying fashion. These findings are compatible withbehavioral models emphasizing the importance of salience for individual decision-making.

Heerfordt syndrome with unilateral facial nerve palsy: a rare presentation of sarcoidosis.

BACKGROUND: Heerfordt syndrome is rare and is characterized by fever, uveitis, parotid gland enlargement, and facial nerve palsy. We hereby present a case of Heerfordt syndrome with unilateral facial nerve palsy as a presentation of sarcoidosis. HISTORY AND SIGNS: A 29-year-old male patient from Sri Lanka presented with eye redness OU, blurred vision OD, fever, headache, night sweat, fatigue, and weight loss (5 kg over 1 month). Examination revealed mild anterior uveitis OU, mild vitritis OD, fundus whitish lesions OU, left otalgia, taste disorders, bilateral parotid gland enlargement, and left facial nerve palsy. Work-up for infection or tumour was negative. Chest computed tomography and transbronchial lymph node biopsy set the diagnosis of sarcoidosis. THERAPY AND OUTCOME: The patient recovered completely within 2 months under therapy with prednisone and azathioprine. One year after onset of treatment, no recurrence was noted. CONCLUSIONS: Heerfordt syndrome is a rare manifestation of neurosarcoidosis and has to be included in the differential diagnosis of facial nerve palsy.

Meadow Saffron Used as a Spice

Introduction: Intoxications with colchicine usually occur by ingestion of meadow saffron leaves (Colchicum autumnale) which are mistakenly collected for alimentary purposes instead of the leaves of crow garlic (Allium ursinum). Colchicine, the main alkaloid of Colchicum autumnale, is present in all parts of the plant. We report a rarer source of mistake, i.e. between the flowers of Colchicum autumnale and Crocus sativus. The similarity in this case is limited to the appearance of the flowers, but Colchicum autumnale, which is also flowering in autumn, lacks the crimson stigma from which the saffron spice is derived from Crocus sativus. Case report: A 47-year-old woman collected the stamens of a flower resembling Crocus sativus for use as saffron. Her knowledge about Crocus sativus was limited to having seen this plant previously at a museum of saffron (Mund, Switzerland). She prepared a meal with rice using three pinches of ''saffron'' for ten tablespoons of rice. She and her 8-year-old child, both ate the usual amount of rice (6 and 2 tablespoons, respectively). The 2 brothers (4- and 9-years-old) only ate 3 teaspoons of rice each. A slightly bitter taste and the absence of a yellow colouration were peculiar. Three to four hours after the meal, the mother developed nausea and contacted the Swiss Toxicological Information Centre, suspecting a plant misidentification. All family members were referred to the regional university hospital for administration of oral activated charcoal. No other symptoms were reported, notably no symptoms in the 8-year-old boy and his brothers. Colchicine serum concentration (blood sample obtained 15 hours after ingestion) measured by HPLC-mass spectrometry was 0.36 mg/L for the mother, and 0.13 mg/L for the 8-year-old child, respectively (therapeutic levels: 0.30-2.5 mg/L). Conclusion: This report demonstrates that a significant amount of colchicine may be absorbed even after ingestion of very small quantities of Colchicum autumnale, which in this case was confused with Crocus sativus. Serum colchicine concentrations in the sub-/therapeutic range can be quantified by HPLC-mass spectrometry, which allows a very sensitive and specific detection of this alkaloid in blood and urine.

BINGO, January 2010

Fruits and veggies provide the unrivaled combination of great taste, nutrition and abundant variety. With all the great choices available, incorporating fruits and veggies into your day is easy! BINGO game produced by Iowa Department of Public Health.

BINGO, February 2010

Fruits and veggies provide the unrivaled combination of great taste, nutrition and abundant variety. With all the great choices available, incorporating fruits and veggies into your day is easy! BINGO game produced by Iowa Department of Public Health.

BINGO, March 2010

Fruits and veggies provide the unrivaled combination of great taste, nutrition and abundant variety. With all the great choices available, incorporating fruits and veggies into your day is easy! BINGO game produced by Iowa Department of Public Health.

BINGO, April 2010

Fruits and veggies provide the unrivaled combination of great taste, nutrition and abundant variety. With all the great choices available, incorporating fruits and veggies into your day is easy! BINGO game produced by Iowa Department of Public Health.