Fiscal policy, pricing frictions and monetary accommodation

We investigate the theoretical conditions for effectiveness of government consumptionexpenditure expansions using US, Euro area and UK data. Fiscal expansions taking placewhen monetary policy is accommodative lead to large output multipliers in normal times.The 2009-2010 packages need not produce significant output multipliers, may havemoderate debt effects, and only generate temporary inflation. Expenditure expansionsaccompanied by deficit/debt consolidations schemes may lead to short run output gains buttheir success depends on how monetary policy and expectations behave. Trade opennessand the cyclicality of the labor wedge explain cross-country differences in the magnitude ofthe multipliers.

Austerity and anarchy: Budget cuts and social unrest in Europe, 1919-2008

Does fiscal consolidation lead to social unrest? Using cross-country evidencefor the period 1919 to 2008, we examine the extent to which societies becomeunstable after budget cuts. The results show a clear correlation between fiscalretrenchment and instability. Expenditure cuts are particularly potent infueling protests; tax rises have only small and insignificant effects. We test ifthe relationship simply reflects economic downturns, using a recently-developedIMF dataset on exogenous expenditure shocks, and conclude that this is not thecase. While autocracies and democracies show broadly similar responses to budgetcuts, countries with more constraints on the executive are less likely to seeunrest after austerity measures. Growing media penetration does not strengthenthe effect of cut-backs on the level of unrest. We also find that austerity episodesthat result in unrest lead to quick reversals of fiscal policy.

Predictability of drug expenditures: An application using morbidity data

The growth of pharmaceutical expenditure and its prediction is a major concern for policy makers and health care managers. This paper explores different predictive models to estimate future drug expenses, using demographic and morbidity individual information from an integrated healthcare delivery organization in Catalonia for years 2002 and 2003. The morbidity information consists of codified health encounters grouped through the Clinical Risk Groups (CRGs). We estimate pharmaceutical costs using several model specifications, and CRGs as risk adjusters, providing an alternative way of obtaining high predictive power comparable to other estimations of drug expenditures in the literature. These results have clear implications for the use of risk adjustment and CRGs in setting the premiums for pharmaceutical benefits.

Spinning welfare: The gains from process innovation in cotton and car production

Economists and economic historians want to know how much better life is today than in the past.Fifty years ago economic historians found surprisingly small gains from 19th century US railroads,while more recently economists have found relatively large gains from electricity, computers and cellphones. In each case the implicit or explicit assumption is that researchers were measuring the valueof a new good to society. In this paper we use the same techniques to find the value to society ofmaking existing goods cheaper. Henry Ford did not invent the car, and the inventors of mechanisedcotton spinning in the industrial revolution invented no new product. But both made existing productsdramatically cheaper, bringing them into the reach of many more consumers. That in turn haspotentially large welfare effects. We find that the consumer surplus of Henry Ford s production linewas around 2% by 1923, 15 years after Ford began to implement the moving assembly line, while themechanisation of cotton spinning was worth around 6% by 1820, 34 years after its initial invention.Both are large: of the same order of magnitude as consumer expenditure on these items, and as largeor larger than the value of the internet to consumers. On the social savings measure traditionally usedby economic historians, these process innovations were worth 15% and 18% respectively, makingthem more important than railroads. Our results remind us that process innovations can be at least asimportant for welfare and productivity as the invention of new products.

Thermogenic response to an oral glucose load in man: comparison between young and elderly subjects.

To investigate the effect of age and change in body composition on the increase in energy expenditure consecutive to the ingestion of a 75-g glucose load, respiratory exchange measurements were performed on 24 subjects, 12 elderly (mean +/- SEM, 73 +/- 1 yr) and 12 young (25 +/- 1 yr). The body weight was comparable, 62 +/- 2 kg in the elderly group vs 61 +/- 3 in the young, but the body fat content of the elderly group was significantly greater than that of the young (29 +/- 2% vs 19 +/- 2%, p less than 0.001). The elderly group presented a slight glucose intolerance according to the World Health Organization (WHO) criteria, with a 120-min plasma glucose of 149 +/- 9 mg/dl (p less than 0.005 vs young). The postabsorptive resting energy expenditure (REE) was 0.83 +/- 0.03 kcal/min in the elderly group vs 0.98 +/- 0.04 in the young (p less than 0.02); this decrease of 15% was mainly related to the decrease in fat free mass (FFM) in the elderly group, which averaged 14%. The difference was not significant when REE was expressed per kg FFM. The glucose-induced thermogenesis (GIT) expressed as percent of energy content of the load was 6.2 +/- 0.6% in the elderly group and 8.9 +/- 0.9% in the young (p less than 0.05). It is concluded that the glucose-induced thermogenesis is decreased in elderly subjects. However, when expressed per kg FFM, the increment in energy expenditure (EE), in response to the glucose load, is not different in elderly subjects, suggesting that the decrease of thermogenesis may be attributed to the age-related decrease in FFM.

Metabolic cost of growth in very low-birth-weight infants.

Forty-eight measurements of energy expenditure were performed in 15 very low-birth-weight infants during the first 6 wk of life. Their mean birth weight and gestation age was 1223 g and 31 wk respectively. Their mean weight gain was 11.2 g/kg . d (range: -6.6 to +15.9 g/kg . d.). The mean energy expenditure increased from 170 kJ/kg . d (wk 1) to 252 kJ/kg . d (wk 6). There was a significant relationship between weight gain and energy expenditure (r = 0.58, P less than 0.001) and also between the net increase in body weight gain and the net increase in energy expenditure (r = 0.80, P less than 0.001). From the slopes of these regression lines, the metabolic cost of growth was found to be approximately 2.3 kJ/g of weight gain. Carbohydrate oxidation represented 80% of energy expenditure at the second wk and decreased to 65% the 6th wk, whereas lipid oxidation during the same period increased from 14 to 30% and the relative protein oxidation remained unchanged, covering 5-6% of the energy expended.

Step count is associated with lower nighttime systolic blood pressure and increased dipping.

BACKGROUND: Higher nighttime blood pressure (BP) and the loss of nocturnal dipping of BP are associated with an increased risk for cardiovascular events. However, the determinants of the loss of nocturnal BP dipping are only beginning to be understood. We investigated whether different indicators of physical activity were associated with the loss of nocturnal dipping of BP. METHODS: We conducted a cross-sectional study of 103 patients referred for 24-hour ambulatory monitoring of BP. We measured these patients' step count (SC), active energy expenditure (AEE), and total energy expenditure simultaneously, using actigraphs. RESULTS: In our study population of 103 patients, most of whom were hypertensive, SC and AEE were associated with nighttime systolic BP in univariate (SC, r = -0.28, P < 0.01; AEE, r = -0.20, P = 0.046) and multivariate linear regression analyses (SC, coefficient beta = -5.37, P < 0.001; AEE, coefficient beta = -0.24, P < 0.01). Step count was associated with both systolic (r = 0.23, P = 0.018) and diastolic (r = 0.20, P = 0.045) BP dipping. Nighttime systolic BP decreased progressively across the categories of sedentary, moderately active, and active participants (125mm Hg, 116mm Hg, 112mm Hg, respectively; P = 0.002). The degree of BP dipping of BP increased progressively across the same three categories of activity (respectively 8.9%, 14.6%, and 18.6%, P = 0.002, for systolic BP and respectively 12.8%, 18.1%, and 22.2%, P = 0.006, for diastolic BP). CONCLUSIONS: Step count is continuously associated with nighttime systolic BP and with the degree of BP dipping independently of 24-hour mean BP. The combined use of an actigraph for measuring indicators of physical activity and a device for 24-hour measurement of ambulatory BP may help identify patients at increased risk for cardiovascular events in whom increased physical activity toward higher target levels may be recommended.

Diversity and regional inequalities: Assessing the outcomes of the Spanish 'System of Health Care Services'

The consolidation of a universal health system coupled with a process of regionaldevolution characterise the institutional reforms of the National Health System(NHS) in Spain in the last two decades. However, scarce empirical evidence hasbeen reported on the effects of both changes in health inputs, outputs andoutcomes, both at the country and at the regional level. This paper examinesthe empirical evidence on regional diversity, efficiency and inequality ofthese changes in the Spanish NHS using cross-correlation, panel data andexpenditure decomposition analysis. Results suggest that besides significantheterogeneity, once we take into account region-specific needs there is evidenceof efficiency improvements whilst inequalities in inputs and outcomes, althoughmore visible , do not appear to have increased in the last decade. Therefore,the devolution process in the Spanish Health System offers an interesting casefor the experimentation of health reforms related to regional diversity butcompatible with the nature of a public NHS, with no sizeable regionalinequalitiest.

Review of the literature on reference pricing

This paper reviews the literature on reference pricing (RP) in pharmaceutical markets. The RP strategy for cost containment of expenditure on drugs is analyzed as part of the procurement mechanism. We review the existing literature and the state-of-the-art regarding RP by focusing on its economic effects. In particular, we consider: (1) the institutional context and problem-related factors which appear to underline the need to implement an RP strategy; i.e., its nature, characteristics and the sort of health care problems commonly addressed; (2) how RP operates in practice; that is, how third party-payers (the insurers/buyers) have established the RP systems existing on the international scene (i.e., information methods, monitoring procedures and legislative provisions); (3)the range of effects resulting from particular RP strategies (including effects on choice of appropriate pharmaceuticals, insurer savings, total drug expenditures, prices of referenced and non-referenced products and dynamic efficiency; (4) the market failures which an RP policy is supposed to address and the main advantages and drawbacks which emerge from an analysis of its effects. Results suggest that RP systems achieve better their postulated goals (1) if cost inflation in pharmaceuticals is due to high prices rather than to the excess of prescription rates, (2) when the larger is the existing difference in prices among equivalent drugs, and (3) more important is the actual market for generics.

Sources and propagation of international cycles: Common shocks or transmission?

This paper studies the generation and transmission of international cycles in a multi-country model with production and consumption interdependencies. Two sources of disturbance are considered and three channels of propagation are compared. In the short run the contemporaneous correlation of disturbances determines the main features of the transmission. In the medium run production interdependencies account for the transmission of technology shocks and consumption interdependencies account for the transmission of government shocks. Technology disturbances, which are mildly correlated across countries, are more successful than government expenditure disturbances in reproducing actual data. The model also accounts for the low cross country consumption correlations observed in the data.

The sustainable debts of Philip II: A reconstruction of Castile's fiscal position, 1566-1596

The defaults of Philip II have attained mythical status as the origin of sovereigndebt crises. We reassess the fiscal position of Habsburg Castile, derivingcomprehensive estimates of revenue, debt, and expenditure from new archivaldata. The king s debts were sustainable. Primary surpluses were large and rising.Debt-to-revenue ratios remained broadly unchanged during Philip s reign.Castilian finances in the sixteenth century compare favorably with those of otherearly modern fiscal states at the height of their imperial ambitions, includingBritain. The defaults of Philip II therefore reflected short-term liquidity crises,and were not a sign of unsustainable debts.

The economic tragedy of the XXth Century: Growth in Africa

The dismal growth performance of Africa is the worst economic tragedy ofthe XXth century. We document the evolution of per capita GDP for thecontinent as a whole and for subset of countries south of the Saharadesert. We document the worsening of various income inequality indexesand we estimate poverty rates and headcounts. We then analyze some ofthe central robust determinants of economic growth reported bySala-i-Martin, Doppelhofer and Miller (2003) and project the annual growthrates Africa would have enjoyed if these key determinants had taken OECDrather than African values. Expensive investment goods, low levels ofeducation, poor health, adverse geography, closed economies, too muchpublic expenditure and too many military conflicts are seen as keyexplanations of the economic tragedy.

Cost-containment in health care: The case of Spain from the eighties up to 1997

The purpose of this paper is to provide an overview of the evolutionof health care expenditure in Spain during the period 1980-1997, andhenceforth to comment on the cost containment measures put forwardto control its growth. The paper is divided into three separatesections. The first offers a brief description of the Spanish HealthCare System, with emphasis placed on the issue of expenditure controland health planning targets. The second part outlines a set of costcontainment measures that has accompanied the process of extendinguniversal health care coverage which occurred during the mentionedperiod and which has helped keep public expenditure under control.Finally, the third part describes some of the more recent proposalsfor reform of the Spanish Health Care Sector.

Finance versus costs for teaching hospitals in Spain

In this paper we analyse the observed systematic differences incosts for teaching hospitals (THhenceforth) in Spain. Concernhas been voiced regarding the existence of a bias in thefinancing of TH s has been raised once prospective budgets arein the arena for hospital finance, and claims for adjusting totake into account the legitimate extra costs of teaching onhospital expenditure are well grounded. We focus on theestimation of the impact of teaching status on average cost. Weused a version of a multiproduct hospital cost function takinginto account some relevant factors from which to derive theobserved differences. We assume that the relationship betweenthe explanatory and the dependent variables follows a flexibleform for each of the explanatory variables. We also model theunderlying covariance structure of the data. We assumed twoqualitatively different sources of variation: random effects andserial correlation. Random variation refers to both general levelvariation (through the random intercept) and the variationspecifically related to teaching status. We postulate that theimpact of the random effects is predominant over the impact ofthe serial correlation effects. The model is estimated byrestricted maximum likelihood. Our results show that costs are 9%higher (15% in the case of median costs) in teaching than innon-teaching hospitals. That is, teaching status legitimatelyexplains no more than half of the observed difference in actualcosts. The impact on costs of the teaching factor depends on thenumber of residents, with an increase of 51.11% per resident forhospitals with fewer than 204 residents (third quartile of thenumber of residents) and 41.84% for hospitals with more than 204residents. In addition, the estimated dispersion is higher amongteaching hospitals. As a result, due to the considerable observedheterogeneity, results should be interpreted with caution. From apolicy making point of view, we conclude that since a higherrelative burden for medical training is under public hospitalcommand, an explicit adjustment to the extra costs that theteaching factor imposes on hospital finance is needed, beforehospital competition for inpatient services takes place.