Does money matter in shaping domestic business cycles? An international investigation (with appendices)

We study the contribution of money to business cycle fluctuations in the US,the UK, Japan, and the Euro area using a small scale structural monetary business cycle model. Constrained likelihood-based estimates of the parameters areprovided and time instabilities analyzed. Real balances are statistically importantfor output and inflation fluctuations. Their contribution changes over time. Models giving money no role provide a distorted representation of the sources of cyclicalfluctuations, of the transmission of shocks and of the events of the last 40 years.

Keeping up with the Joneses: An international asset pricing model

We derive an international asset pricing model that assumes local investorshave preferences of the type "keeping up with the Joneses." In aninternational setting investors compare their current wealth with that oftheir peers who live in the same country. In the process of inferring thecountry's average wealth, investors incorporate information from the domesticmarket portfolio. In equilibrium, this gives rise to a multifactor CAPMwhere, together with the world market price of risk, there existscountry-speciffic prices of risk associated with deviations from thecountry's average wealth level. The model performs signifficantly better, interms of explaining cross-section of returns, than the international CAPM.Moreover, the results are robust, both for conditional and unconditionaltests, to the inclusion of currency risk, macroeconomic sources of risk andthe Fama and French HML factor.

A theory of international conflict management and sanctioning

In this paper we analyze sanctioning policies in international law. We develop a model of international military conflict where the conflicting countries can be a target of international sanctions. These sanctions constitute an equilibrium outcome of an international political market for sanctions, where different countries trade political influence. We show that the level of sanctions in equilibrium is strictly positive but limited, in the sense that higher sanctions would exacerbate the military conflict, not reduce it. We then propose an alternative interpretation to the perceived lack of effectiveness of international sanctions, by showing that the problem might not be one of undersanctioning but of oversanctioning.

International Update, July/August 2008

International Business Development News

International Update, September-October 2008

Business Development news from the Iowa International Office Trade Team.

Combating corruption in international business transactions

We analyze the impact of different types of international conventions thatrequire signatory countries to penalize domestic firms that are found tohave bribed foreign public officials. We analyze enforcement of penaltiesunder a convention styled after the OECD's 'Convention on Combating Briberyof Foreign Public Officials in International Business Transactions', in whichsignatory countries commit to prosecuting firms that have bribed publicofficials of any foreign country. We compare the results with the case inwhich the convention requires signatory countries to commit to prosecutingfirms that have bribed public officials of signatory countries only.We argue that the second type of convention is more likely to ensureenforcement of penalties on firms found to have bribed foreign publicofficials.

Flexible multivariate GARCH modeling with an application to international stock markets

The goal of this paper is to estimate time-varying covariance matrices.Since the covariance matrix of financial returns is known to changethrough time and is an essential ingredient in risk measurement, portfolioselection, and tests of asset pricing models, this is a very importantproblem in practice. Our model of choice is the Diagonal-Vech version ofthe Multivariate GARCH(1,1) model. The problem is that the estimation ofthe general Diagonal-Vech model model is numerically infeasible indimensions higher than 5. The common approach is to estimate more restrictive models which are tractable but may not conform to the data. Our contributionis to propose an alternative estimation method that is numerically feasible,produces positive semi-definite conditional covariance matrices, and doesnot impose unrealistic a priori restrictions. We provide an empiricalapplication in the context of international stock markets, comparing thenew estimator to a number of existing ones.

The structural dynamics of output growth and inflation: some international evidence

We examine the dynamics of output growth and inflation in the US, Euro area and UK using a structural time varying coefficient VAR. There are important similarities in structural inflation dynamics across countries; output growth dynamics differ. Swings in the magnitude of inflation and output growth volatilities and persistences are accounted for by a combination of three structural shocks. Changes over time in the structure of the economy are limited and permanent variations largely absent. Changes in the volatilities of structural shocks matter.

Effects of a treatment gap during adjuvant chemotherapy in node-positive breast cancer: results of International Breast Cancer Study Group (IBCSG) Trials 13-93 and 14-93.

BACKGROUND: The International Breast Cancer Study Group (IBCSG) conducted two complementary randomized trials to assess whether a treatment-free gap during adjuvant chemotherapy influenced outcome. PATIENTS AND METHODS: From 1993 to 1999, IBCSG Trials 13-93 and 14-93 enrolled 2215 premenopausal and postmenopausal women with axillary node-positive, operable breast cancer. All patients received cyclophosphamide (Cytoxan, C) plus either doxorubicin (Adriamycin, A) or epirubicin (E) for four courses followed immediately (No Gap) or after a 16-week delay (Gap) by classical cyclophosphamide, methotrexate, and fluorouracil (CMF) for three courses. The median follow-up was 7.7 years. RESULTS: The Gap and No-Gap groups had similar disease-free survival (DFS) and overall survival (OS). No identified subgroup showed a statistically significant difference, but exploratory subgroup analysis noted a trend towards decreased DFS for Gap compared with No Gap for women with estrogen receptor (ER)-negative tumors not receiving tamoxifen, especially evident during the first 2 years. CONCLUSIONS: A 16-week gap between adjuvant AC/EC and CMF provided no benefit and may have increased early recurrence rates in patients with ER-negative tumors.

Development and use of a high-fidelity simulator for fetal endotracheal balloon occlusion (FETO) insertion and removal.

Objectives The objective of this article is to describe the development of an anatomically accurate simulator in order to aid the training of a perinatal team in the insertion and removal of a fetal endoscopic tracheal occlusion (FETO) balloon in the management of prenatally diagnosed congenital diaphragmatic hernia. Methods An experienced perinatal team collaborated with a medical sculptor to design a fetal model for the FETO procedure. Measurements derived from 28-week fetal magnetic resonance imaging were used in the development of an anatomically precise simulated airway within a silicone rubber preterm fetal model. Clinician feedback was then used to guide multiple iterations of the model with serial improvements in the anatomic accuracy of the simulator airway. Results An appropriately sized preterm fetal mannequin with a high-fidelity airway was developed. The team used this model to develop surgical skills with balloon insertion, and removal, and to prepare the team for an integrated response to unanticipated delivery with the FETO balloon still in situ. Conclusions This fetal mannequin aided in the ability of a fetal therapy unit to offer the FETO procedure at their center for the first time. This model may be of benefit to other perinatal centers planning to offer this procedure.

International Update, November-December 2008

International Business news from the Iowa Department of Economic Development.

Basic indicators for better governance in international sport (BIBGIS) : an assessment tool for international sport governing bodies

This working paper presents the Basic Indicators for Better Governance in International Sport (BIBGIS) as a tool to assess and measure the state of governance of international sport governing bodies. The working paper is organised as follows. We start by presenting different definitions of governance and some examples of principles of good governance in sport and critique them. We then introduce our approach which is based on a limited number of indicators divided among seven dimensions and apply it to the International Olympic Committee (IOC) and other international sport governing bodies. Although our approach can also be used to benchmark the governance of different sport organisations, we demonstrate that it faces limitations. We conclude with suggested next steps for future BIBGIS developments.