Misallocation of capital in a model of endogenous financial intermediation and insurance

In this paper we analyze productivity and welfare losses from capital misallocation in a general equilibrium model of occupational choice and endogenous financial intermediation. We study the effects of borrowing and lending, insurance, and risk sharing on the optimal allocation of resources. We find that financial markets together with general equilibrium effects have large impact on entrepreneurs' entry and firm-size decisions. Efficiency gains are increasing in the quality of financial markets, particularly in their ability to alleviate a financing constraint by providing insurance against idiosyncratic risk.

Location Determinants of New Firms: Does Skill Level of Human Capital Really Matter?

This paper is about the role played by stock of human capital on location decisions of new manufacturing plants. We analyse the effect of several skill levels (from basic school to PhD) on decisions about the location of plants in various industries and, therefore, of different technological levels. We also test whether spatial aggregation level biases the results and determine the most appropriate areas to be considered in analyses of these phenomena. Our main statistical source is the Register of Manufacturing Establishments of Catalonia (REIC), which has plant-level microdata on the locations of new manufacturing plants. Keywords: agglomeration economies, industrial location, human capital, count-data models, spatial econometrics.

A correlation sensitivity analysis of non-life underwriting risk in solvency capital requirement estimation

This paper analyses the impact of using different correlation assumptions between lines of business when estimating the risk-based capital reserve, the Solvency Capital Requirement (SCR), under Solvency II regulations. A case study is presented and the SCR is calculated according to the Standard Model approach. Alternatively, the requirement is then calculated using an Internal Model based on a Monte Carlo simulation of the net underwriting result at a one-year horizon, with copulas being used to model the dependence between lines of business. To address the impact of these model assumptions on the SCR we conduct a sensitivity analysis. We examine changes in the correlation matrix between lines of business and address the choice of copulas. Drawing on aggregate historical data from the Spanish non-life insurance market between 2000 and 2009, we conclude that modifications of the correlation and dependence assumptions have a significant impact on SCR estimation.

Vintage capital growth theory: three breakthroughs

Vintage capital growth models have been at the heart of growth theory in the 60s. This research line collapsed in the late 60s with the so-called embodiment controversy and the technical sophisitication of the vintage models. This paper analyzes the astonishing revival of this literature in the 90s. In particular, it outlines three methodological breakthroughs explaining this resurgence: a growth accounting revolution, taking advantage of the availability of new time series, an optimal control revolution allowing to safely study vintage capital optimal growth models, and a vintage human capital revolution, along with the rise of economic demography, accounting for the vintage structure of human capital similarly to physical capital age structuring. The related literature is surveyed.

How central and connected am I in my family? Bridging and bonding social capital in family configurations of young adults with psychiatric disorders

AIMS: This article explores the structures of relational resources that individuals with psychiatric disorders get from their family configurations using the concept of social capital. METHODS: The research is based on a sample of 54 individuals with psychiatric disorders and behavioural problems, and a comparison sample of 54 individuals without a clinical record matched to the clinical respondents for age and sex. Standard measures of social capital from social network methods are applied on family configurations of individuals from both samples. Differences are tested by variance analysis. RESULTS: Structures of family resources available to individuals with psychiatric disorders are distinct. Individuals with psychiatric disorders perceive themselves as less central in their family configurations and less connected to their family members. Their significant family members are perceived as less connected with each other. As a whole, their family configurations are smaller and do not include spouses or partners. Therefore bridging and bonding social capitals are not readily available for them. CONCLUSION: As family configurations of individuals with psychiatric disorders provide fewer relational resources than other families, they are not able to deal with social integration of individuals with psychiatric disorders on their own.

Clara cells drive eosinophil accumulation in allergic asthma.

Development of allergic asthma is a complex process involving immune, neuronal and tissue cells. In the lung, Clara cells represent a major part of the "immunomodulatory barrier" of the airway epithelium. To understand the contribution of these cells to the inflammatory outcome of asthma, disease development was assessed using an adjuvant-free ovalbumin model. Mice were sensitised with subcutaneous injections of 10 μg endotoxin-free ovalbumin in conjunction with naphthalene-induced Clara cell depletion. Clara epithelial cell depletion in the lung strongly reduced eosinophil influx, which correlated with decreased eotaxin levels and, moreover, diminished the T-helper cell type 2 inflammatory response, including interleukin (IL)-4, IL-5 and IL-13. In contrast, airway hyperresponsiveness was increased. Further investigation revealed Clara cells as the principal source of eotaxin in the lung. These findings are the first to show that Clara airway epithelial cells substantially contribute to the infiltration of eotaxin-responsive CCR3+ immune cells and augment the allergic immune response in the lung. The present study identifies Clara cells as a potential therapeutic target in inflammatory lung diseases such as allergic asthma.

IPH Response to Dept of Justice and Equality Review of the Code of Practice on the Sale and Display of Alcohol in Mixed Trading Premises

IPH responded to the Department of Justice, Equality and Defence review of the voluntary Code of Practice for the display and sale of alcohol in supermarkets, convenience stores and similar mixed trading outlets. The voluntary Code was introduced in 2008 as an alternative to the statutory rules for structural separation of alcohol products in mixed trading outlets which are set out in section 9 of the Intoxicating Liquor Act 2008. Interested bodies and individuals were invited to submit comments on the Compliance Report for 2011 and on the effectiveness of the voluntary approach to structural separation by 20th December 2011. The Minister said he intended to also seek the views of the Minister for Health and the Joint Oireachtas Committee on Justice, Defence and Equality before reaching any decision on whether to bring the statutory rules in the 2008 Act into operation.

Spatial and temporal dynamics of jasmonate synthesis and accumulation in Arabidopsis in response to wounding.

A new metabolite profiling approach combined with an ultrarapid sample preparation procedure was used to study the temporal and spatial dynamics of the wound-induced accumulation of jasmonic acid (JA) and its oxygenated derivatives in Arabidopsis thaliana. In addition to well known jasmonates, including hydroxyjasmonates (HOJAs), jasmonoyl-isoleucine (JA-Ile), and its 12-hydroxy derivative (12-HOJA-Ile), a new wound-induced dicarboxyjasmonate, 12-carboxyjasmonoyl-l-isoleucine (12-HOOCJA-Ile) was discovered. HOJAs and 12-HOOCJA-Ile were enriched in the midveins of wounded leaves, strongly differentiating them from the other jasmonate metabolites studied. The polarity of these oxylipins at physiological pH correlated with their appearance in midveins. When the time points of accumulation of different jasmonates were determined, JA levels were found to increase within 2-5 min of wounding. Remarkably, these changes occurred throughout the plant and were not restricted to wounded leaves. The speed of the stimulus leading to JA accumulation in leaves distal to a wound is at least 3 cm/min. The data give new insights into the spatial and temporal accumulation of jasmonates and have implications in the understanding of long-distance wound signaling in plants.

Solvency Capital estimation and Risk Measures

This paper examines why a financial entity’s solvency capital estimation might be underestimated if the total amount required is obtained directly from a risk measurement. Using Monte Carlo simulation we show that, in some instances, a common risk measure such as Value-at-Risk is not subadditive when certain dependence structures are considered. Higher risk evaluations are obtained for independence between random variables than those obtained in the case of comonotonicity. The paper stresses, therefore, the relationship between dependence structures and capital estimation.

Productivity and human capital: a business-level analysis

This paper aims to analyse the impact of human capital on business productivity, focusing the analysis on the possible effect of the complementarity that exists between human capital and new production technologies, particularly advanced manufacturing technologies (AMTs) for the specific case of small and medium enterprises (SMEs) in Catalonia. Additionally, following the theory of skill-biased technological change, the paper analyses whether technological change produces bias exclusively in the skills required for managers, or whether the bias extends to the skills required of production staff. With this objective, we have compared the possible existence of complementarity between AMTs and the level of human capital for different occupational groups. The results confirm the complementary relationship between human capital and new production technologies. The results by occupational group confirm that to maximise the productivity of new technologies, skilled staff are needed both in management and production, with managers and professionals as well as skilled operatives playing a vital role. Keywords: human capital, process technologies, complementarity, business productivity. (JEL D24, J24, O30).

Wage effects from changes in local human capital in Britain

This paper examines the impact of local human capital on individuals’ wages through external effects. Employing wage regressions, it is found that changes in individuals’ wages are positively associated with changes in the shares of high-paid occupation workers in the British travel-to-work-areas for the late 1990s. I examine this positive association for different occupational groups (defined by pay) in order to disentangle between production function and consumer demand driven theoretical explanations. The wage effect is found to be stronger and significant for the bottom-paid occupational quintile compared to the middle-paid ones, and using also sectoral controls the paper argues to provide evidence for the existence of consumer demand effects.

Response to the Office of Fair Trading on the Care Home Market (PDF 36 KB)

Response to the Office of Fair Trading on the Care Home Market

Activity in inferior parietal and medial prefrontal cortex signals the accumulation of evidence in a probability learning task.

In an uncertain environment, probabilities are key to predicting future events and making adaptive choices. However, little is known about how humans learn such probabilities and where and how they are encoded in the brain, especially when they concern more than two outcomes. During functional magnetic resonance imaging (fMRI), young adults learned the probabilities of uncertain stimuli through repetitive sampling. Stimuli represented payoffs and participants had to predict their occurrence to maximize their earnings. Choices indicated loss and risk aversion but unbiased estimation of probabilities. BOLD response in medial prefrontal cortex and angular gyri increased linearly with the probability of the currently observed stimulus, untainted by its value. Connectivity analyses during rest and task revealed that these regions belonged to the default mode network. The activation of past outcomes in memory is evoked as a possible mechanism to explain the engagement of the default mode network in probability learning. A BOLD response relating to value was detected only at decision time, mainly in striatum. It is concluded that activity in inferior parietal and medial prefrontal cortex reflects the amount of evidence accumulated in favor of competing and uncertain outcomes.

HSS (F)2004 04/04 - Revised Cost of Capital Rate in Fees and Charges Recovery Policy (PDF 51 KB)

HSS (F)2004 04/04 - Revised Cost of Capital Rate in Fees and Charges Recovery Policy