Universal banking, competition and risk in a macro model

A stylized macroeconomic model is developed with an indebted, heterogeneous Investment Banking Sector funded by borrowing from a retail banking sector. The government guarantees retail deposits. Investment banks choose how risky their activities should be. We compared the benefits of separated vs. universal banking modelled as a vertical integration of the retail and investment banks. The incidence of banking default is considered under different constellations of shocks and degrees of competitiveness. The benefits of universal banking rise in the volatility of idiosyncratic shocks to trading strategies and are positive even for very bad common shocks, even though government bailouts, which are costly, are larger compared to the case of separated banking entities. The welfare assessment of the structure of banks may depend crucially on the kinds of shock hitting the economy as well as on the efficiency of government intervention.

Spot inversion in the Heston model

We analyse the Heston stochastic volatility model under an inversion of spot. The result is that under the appropriate measure changes the resulting process is again a Heston type process whose parameters can be explicitly determined from those of the original process. This behaviour can be interpreted as some measure of sanity of the Heston model but does not seem to be a general feature of stochastic volatility processes.

How private is private information? The ability to spot deception in an economic game

We provide experimental evidence on the ability to detect deceit in a buyer-seller game with asymmetric information. Sellers have private information about the buyer's valuation of a good and sometimes have incentives to mislead buyers. We examine if buyers can spot deception in face-to-face encounters. We vary (1) whether or not the buyer can interrogate the seller, and (2) the contextual richness of the situation. We find that the buyers' prediction accuracy is above chance levels, and that interrogation and contextual richness are important factors determining the accuracy. These results show that there are circumstances in which part of the information asymmetry is eliminated by people's ability to spot deception.

The rise and fall of piecework–timework wage differentials: market volatility, labor heterogeneity, and output pricing

Based on detailed payroll data of blue collar male and female labor in Britain’s engineering and metal working industrial sectors between the mid-1920s and mid-1960s, we provide empirical evidence in respect of several central themes in the piecework-timework wage literature. The period covers part of the heyday of pieceworking as well as the start of its post-war decline. We show the importance of relative piece rate flexibility during the Great Depression as well as during the build up to WWII and during the war itself. We account for the very significant decline in the differentials after the war. Labor market topics include piecework pay in respect of compensating differentials, labor heterogeneity, and the transaction costs of pricing piecework output.

An Empirical Assessment of Optimal Monetary Policy Delegation in the Euro Area

We estimate a New Keynesian DSGE model for the Euro area under alternative descriptions of monetary policy (discretion, commitment or a simple rule) after allowing for Markov switching in policy maker preferences and shock volatilities. This reveals that there have been several changes in Euro area policy making, with a strengthening of the anti-inflation stance in the early years of the ERM, which was then lost around the time of German reunification and only recovered following the turnoil in the ERM in 1992. The ECB does not appear to have been as conservative as aggregate Euro-area policy was under Bundesbank leadership, and its response to the financial crisis has been muted. The estimates also suggest that the most appropriate description of policy is that of discretion, with no evidence of commitment in the Euro-area. As a result although both ‘good luck’ and ‘good policy’ played a role in the moderation of inflation and output volatility in the Euro-area, the welfare gains would have been substantially higher had policy makers been able to commit. We consider a range of delegation schemes as devices to improve upon the discretionary outcome, and conclude that price level targeting would have achieved welfare levels close to those attained under commitment, even after accounting for the existence of the Zero Lower Bound on nominal interest rates.

An Empirical Assessment of Optimal Monetary Policy Delegation in the Euro Area

We estimate a New Keynesian DSGE model for the Euro area under alternative descriptions of monetary policy (discretion, commitment or a simple rule) after allowing for Markov switching in policy maker preferences and shock volatilities. This reveals that there have been several changes in Euro area policy making, with a strengthening of the anti-inflation stance in the early years of the ERM, which was then lost around the time of German reunification and only recovered following the turnoil in the ERM in 1992. The ECB does not appear to have been as conservative as aggregate Euro-area policy was under Bundesbank leadership, and its response to the financial crisis has been muted. The estimates also suggest that the most appropriate description of policy is that of discretion, with no evidence of commitment in the Euro-area. As a result although both ‘good luck’ and ‘good policy’ played a role in the moderation of inflation and output volatility in the Euro-area, the welfare gains would have been substantially higher had policy makers been able to commit. We consider a range of delegation schemes as devices to improve upon the discretionary outcome, and conclude that price level targeting would have achieved welfare levels close to those attained under commitment, even after accounting for the existence of the Zero Lower Bound on nominal interest rates.

The Monetary policy rules and the inflation process in open emerging

This paper has three objectives. First, it aims at revealing the logic of interest rate setting pursued by monetary authorities of 12 new EU members. Using estimation of an augmented Taylor rule, we find that this setting was not always consistent with the official monetary policy. Second, we seek to shed light on the inflation process of these countries. To this end, we carry out an estimation of an open economy Philips curve (PC). Our main finding is that inflation rates were not only driven by backward persistency but also held a forward-looking component. Finally, we assess the viability of existing monetary arrangements for price stability. The analysis of the conditional inflation variance obtained from GARCH estimation of PC is used for this purpose. We conclude that inflation targeting is preferable to an exchange rate peg because it allowed decreasing the inflation rate and anchored its volatility.

Bilateral symmetry of radial pulse in high-level tennis players: implications for the validity of central aortic pulse wave analysis.

BACKGROUND: Reconstruction of the central aortic pressure wave from the noninvasive recording of the radial pulse with applanation tonometry has become a standard tool in the field of hypertension. It is not presently known whether recording the radial pulse on the dominant or the nondominant side has any effect on such reconstruction. METHOD: We carried out radial applanation tonometry on both forearms in young, healthy, male volunteers, who were either sedentary (n = 11) or high-level tennis players (n = 10). The purpose of including tennis players was to investigate individuals with extreme asymmetry between the dominant and nondominant upper limb. RESULTS: In the sedentary individuals, forearm circumference and handgrip strength were slightly larger on the dominant (mean +/- SD respectively 27.9 +/- 1.5 cm and 53.8 +/- 10 kg) than on nondominant side (27.3 +/- 1.6 cm, P < 0.001 vs. dominant, and 52.1 +/- 11 kg, P = NS). In the tennis players, differences between sides were more conspicuous (forearm circumference: dominant 28.0 +/- 1.7 cm nondominant 26.4 +/- 1.5 cm, P < 0.001; handgrip strength 61.4 +/- 10.8 vs. 53.4 +/- 9.7 kg, P < 0.001). We found that in both sedentary individuals and tennis players, the radial pulse had identical shape on both sides and, consequently, the reconstructed central aortic pressure waveforms, as well as derived indices of central pulsatility, were not dependent on the side where applanation tonometry was carried out. CONCLUSION: Evidence from individuals with maximal asymmetry of dominant vs. nondominant upper limb indicates that laterality of measurement is not a methodological issue for central pulse wave analysis carried out with radial applanation tonometry.

School composition effects in Spain

Drawing on PISA data of 2006, this study examines the impact of socio-economic school composition on science test score achievement for Spanish students in compulsory secondary schools. We define school composition in terms of the average parental human capital of students in the same school. These contextual peer effects are estimated using a semi-parametric methodology, which enables the spillovers to affect all the parameters of the educational production function. We also deal with the potential problem of self-selection of student into schools, using an artificial sorting that we argue to be independent from unobserved student’s abilities. The results indicate that the association between socio-economic school composition and test score results is clearly positive and significantly higher when computed with the semi-parametric approach. However, we find that the endogenous sorting of students into schools plays a fundamental role, given that the spillovers are significantly reduced when this selection process is ruled out from our measure of school composition effects. Specifically, the estimations suggest that the contextual peer effects are moderately positive only in those schools where the socio-economic composition is considerably elevated. In addition, we find some evidence of asymmetry of how the external effects and the sorting process actually operate, which seem affect in a different way males and females as well as high and low performance students.

Stability and change in party preferences.

This article analyses stability and volatility of party preferences using data from the Swiss Household-Panel (SHP), which, for the first time, allow studying transitions and stability of voters over several years in Switzerland. Analyses cover the years 1999- 2007 and systematically distinguish changes between party blocks and changes within party blocks. The first part looks at different patterns of change, which show relatively high volatility. The second part tests several theories on causes of such changes applying a multinomial random-effects model. Results show that party preferences stabilise with their duration and with age and that the electoral cycle, political sophistication, socio-structural predispositions, the household-context as well as party size and the number of parties each explain part of electoral volatility. Different results for withinand between party-block changes underlie the importance of that differentiation.

Smooth Transition Patterns in the Realized Stock- Bond Correlation

Abstract: We analyze the realized stock-bond correlation. Gradual transitions between negative and positive stock-bond correlation is accommodated by the smooth transition regression (STR) model. The changes in regime are de…ned by economic and …financial transition variables. Both in sample and out-of- sample results document that STR models with multiple transition variables outperform STR models with a single transition variable. The most important transition variables are the short rate, the yield spread, and the VIX volatility index. Keywords: realized correlation; smooth transition regressions; stock-bond correlation; VIX index JEL Classifi…cations: C22; G11; G12; G17

Hemispheric processing of differently valenced and self-relevant attachment words in middle-aged married and separated individuals

The reliance in experimental psychology on testing undergraduate populations with relatively little life experience, and/or ambiguously valenced stimuli with varying degrees of self-relevance, may have contributed to inconsistent findings in the literature on the valence hypothesis. To control for these potential limitations, the current study assessed lateralised lexical decisions for positive and negative attachment words in 40 middle-aged male and female participants. Self-relevance was manipulated in two ways: by testing currently married compared with previously married individuals and by assessing self-relevance ratings individually for each word. Results replicated a left hemisphere advantage for lexical decisions and a processing advantage of emotional over neutral words but did not support the valence hypothesis. Positive attachment words yielded a processing advantage over neutral words in the right hemisphere, while emotional words (irrespective of valence) yielded a processing advantage over neutral words in the left hemisphere. Both self-relevance manipulations were unrelated to lateralised performance. The role of participant sex and age in emotion processing are discussed as potential modulators of the present findings.

Imaging EEG synchronization in schizophrenia patients with S-estimator

Recently a new measure of the cooperative behavior of simultaneous time series was introduced (Carmeli et al. NeuroImage 2005). This measure called S-estimator is defined from the embedding dimension in a state space. S-estimator quantifies the amount of synchronization within a data set by comparing the actual dimensionality of the set with the expected full dimensionality of the asynchronous set. It has the advantage of being a multivariate measure over traditionally used in systems neuroscience bivariate measures of synchronization. Multivariate measures of synchronization are of particular interest for applications in the field of modern multichannel EEG research, since they easily allow mapping of local and/or regional synchronization and are compatible with other imaging techniques. We applied Sestimator to the analysis of EEG synchronization in schizophrenia patients vs. matched controls. The whole-head mapping with S-estimator revealed a specific pattern of local synchronization in schizophrenia patients. The differences in the landscape of synchronization included decreased local synchronization in the territories over occipital and midline areas and increased synchronization over temporal areas. In frontal areas, the S-estimator revealed a tendency for an asymmetry: decreased S-values over the left hemisphere were adjacent to increased values over the right hemisphere. Separate calculations showed reproducibility of this pattern across the main EEG frequency bands. The maintenance of the same synchronization landscape across EEG frequencies probably implies the structural changes in the cortical circuitry of schizophrenia patients. These changes are regionally specific and suggest that schizophrenia is a misconnectivity rather than hypo- or hyper-connectivity disorder.

Seasonal analysis of the number of aeropiles in Anocentor nitens (Neumann, 1897) (Acari: Ixodidae) from the State of Rio de Janeiro, Brazil

Variation between aeropile numbers of the right and left peritrematic plate in male and female Anocentor nitens (Neumann, 1897) is reported from a site in Brazil. From January to December 1998, 146 males and 247 females of A. nitens were recovered from Equus caballus L. in Silva Jardim District, State of Rio de Janeiro. Asymmetry of numbers of aeropiles between right and left plates occurred in 83.6% of the males and 82.2% of the females. Differences in the number of aeropiles between the sexes were not significant. Quantitative variation of aeropiles was correlated to the period of recovery, with significant asymmetry detected in August-September and November-December, mainly in males. Results suggest an adaptation, especially in the male ticks, that expresses itself as greater variation in the number of aeropiles in some periods of the year.

Testing kin selection with sex allocation data in eusocial hymenoptera

Sex allocation data in eusocial Hymenoptera (ants, bees and wasps) provide an excellent opportunity to assess the effectiveness of kin selection, because queens and workers differ in their relatedness to females and males. The first studies on sex allocation in eusocial Hymenoptera compared population sex investment ratios across species. Female-biased investment in monogyne (= with single-queen colonies) populations of ants suggested that workers manipulate sex allocation according to their higher relatedness to females than males (relatedness asymmetry). However, several factors may confound these comparisons across species. First, variation in relatedness asymmetry is typically associated with major changes in breeding system and life history that may also affect sex allocation. Secondly, the relative cost of females and males is difficult to estimate across sexually dimorphic taxa, such as ants. Thirdly, each species in the comparison may not represent an independent data point, because of phylogenetic relationships among species. Recently, stronger evidence that workers control sex allocation has been provided by intraspecific studies of sex ratio variation across colonies. In several species of eusocial Hymenoptera, colonies with high relatedness asymmetry produced mostly females, in contrast to colonies with low relatedness asymmetry which produced mostly males. Additional signs of worker control were found by investigating proximate mechanisms of sex ratio manipulation in ants and wasps. However, worker control is not always effective, and further manipulative experiments will be needed to disentangle the multiple evolutionary factors and processes affecting sex allocation in eusocial Hymenoptera.