Is lumpy investment really irrelevant for the business cycle?

New-Keynesian (NK) models can only account for the dynamic effects of monetary policy shocks if it is assumed that aggregate capital accumulation is much smoother than it would be the case under frictionless firm-level investment, as discussed in Woodford (2003, Ch. 5). We find that lumpy investment, when combined with price stickiness and market power of firms,can rationalize this assumption. Our main result is in stark contrast with the conclusions obtained by Thomas (2002) in the context of a real business cycle (RBC) model. We use our model to explain the economic mechanism behind this difference in the predictions of RBC and NK theory.

Ejaculation failure on the day of oocyte retrieval for IVF: case report.

Unexpected ejaculation failure on the day of oocyte retrieval for IVF occurs once or twice a year in our Reproductive Medicine Unit, where approximately 500 oocyte retrievals are performed each year. Two clinical situations which occurred in 2001 are presented. In the first case, sperm were finally obtained by epididymal aspiration and resulted in the fertilization of five oocytes by ICSI. The transfer of two fresh embryos did not result in a pregnancy and the three supernumerary zygotes were cryopreserved. The male patient presented an anxio-depressive episode necessitating psychiatric hospitalization 1 week after the oocyte retrieval. In the second case, no sperm were obtained and the four oocytes were therefore lost. The couple went through a crisis in their relationship and tried another cycle of IVF 10 months later, after the preventive cryopreservation of a sperm sample. On the day of oocyte retrieval the patient was unable to produce a fresh sample but three zygotes were obtained through ICSI using the back-up cryopreserved sperm. Two embryos were transferred but no pregnancy ensued. The clinical decision-making processes for these two cases are described, as well as the measures employed to help prevent these unfortunate situations.

On the sources of business cycles in the G-7

This paper examines sources of cyclical movements in output, inflation and the term structure of interest rates. It employs a novel identification approach which uses the sign of the cross correlation function in response to shocks to catalog orthogonal disturbances. We find that demand shocks are the dominant source output, inflation and term structure fluctuations in six of the G-7 countries. Within the class of demand disturbances, nominal shocks are dominant, but their importance declined after 1982. Furthermore, there are no significant differences in the proportion of term structure variability explained by different structural sources at different horizons.

Disability, capacity for work and the business cycle: An international perspective

An important policy issue in recent years concerns the number of people claimingdisability benefits for reasons of incapacity for work. We distinguish between workdisability , which may have its roots in economic and social circumstances, and healthdisability which arises from clear diagnosed medical conditions. Although there is a linkbetween work and health disability, economic conditions, and in particular the businesscycle and variations in the risk of unemployment over time and across localities, mayplay an important part in explaining both the stock of disability benefit claimants andinflows to and outflow from that stock. We employ a variety of cross?country andcountry?specific household panel data sets, as well as administrative data, to testwhether disability benefit claims rise when unemployment is higher, and also toinvestigate the impact of unemployment rates on flows on and off the benefit rolls. Wefind strong evidence that local variations in unemployment have an importantexplanatory role for disability benefit receipt, with higher total enrolments, loweroutflows from rolls and, often, higher inflows into disability rolls in regions and periodsof above?average unemployment. Although general subjective measures of selfreporteddisability and longstanding illness are also positively associated withunemployment rates, inclusion of self?reported health measures does not eliminate thestatistical relationship between unemployment rates and disability benefit receipt;indeed including general measures of health often strengthens that underlyingrelationship. Intriguingly, we also find some evidence from the United Kingdom and theUnited States that the prevalence of self?reported objective specific indicators ofdisability are often pro?cyclical that is, the incidence of specific forms of disability arepro?cyclical whereas claims for disability benefits given specific health conditions arecounter?cyclical. Overall, the analysis suggests that, for a range of countries and datasets, levels of claims for disability benefits are not simply related to changes in theincidence of health disability in the population and are strongly influenced by prevailingeconomic conditions. We discuss the policy implications of these various findings.

Inequality over the business cycle: Estimating income risk using micro-data on consumption

We use CEX repeated cross-section data on consumption and income, to evaluate the nature of increased income inequality in the 1980s and 90s. We decompose unexpected changes in family income into transitory and permanent, and idiosyncratic and aggregate components, and estimate the contribution of each component to total inequality. The model we use is a linearized incomplete markets model, enriched to incorporate risk-sharing while maintaining tractability. Our estimates suggest that taking risk sharing into account is important for the model fit; that the increase in inequality in the 1980s was mainly permanent; and that inequality is driven almost entirely by idiosyncratic income risk. In addition we find no evidence for cyclical behavior of consumption risk, casting doubt on Constantinides and Duffie s (1995) explanation for the equity premium puzzle.

Entrepreneurial success and failure: Confidence and fallible judgement

Excess entry or the high failure rate of market-entry decisions is often attributed tooverconfidence exhibited by entreprene urs. We show analytically that whereas excess entryis an inevitable consequence of imperfect assessments of entrepreneurial skill, it does notimply overconfidence. Judgmental fallibility leads to excess entry even when everyone isunderconfident. Self-selection implies greater confidence (but not necessarilyoverconfidence) among those who start new businesses than those who do not and amongsuccessful entrants than failures. Our results question claims that entrepreneurs areoverconfident and emphasize the need to understand the role of judgmental fallibility inproducing economic outcomes.

Review of Targeted Small Business (TSB) procurement activities for the period July 1, 2007 through September 30, 2007

Review of Targeted Small Business (TSB) procurement activities for the period July 1, 2007 through September 30, 2007

Crossing the Rio Grande: Migrations, business cycles and the welfare state

In this paper we study the macroeconomic effects of an inflow oflow-skilled workers into an economy where there is capital accumulation and two types of agents. We find that there are substantial dynamic effects following unexpected migrations with adjustments that resemble those triggered by a sudden disruption of the capital stock. We look at the interrelations between these dynamic effects and three different fiscal systems for the redistribution of income and find that these schemes can change the dynamics and lead to prolonged periods of adjustments. Theaggregate welfare implications are sensitive to the welfare system: while there are welfare gains without redistribution, these gains may be turned into costs when the state engages in redistribution.

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.

Are these classical business cycles?

The aim of this paper is to test formally the classical business cyclehypothesis, using data from industrialized countries for the timeperiod since 1960. The hypothesis is characterized by the view that the cyclical structure in GDP is concentrated in the investment series: fixed investment has typically a long cycle, while the cycle in inventory investment is shorter. To check the robustness of our results, we subject the data for 15 OECD countries to a variety of detrending techniques. While the hypothesis is not confirmed uniformly for all countries, there is a considerably high number for which the data display the predicted pattern. None of the countries shows a pattern which can be interpreted as a clear rejection of the classical hypothesis.

Skill-biased technological change and the business cycle

Over the past two decades, technological progress in the United States hasbeen biased towards skilled labor. What does this imply for business cycles?We construct a quarterly skill premium from the CPS and use it to identifyskill-biased technology shocks in a VAR with long-run restrictions. Hours fallin response to skill-biased technology shocks, indicating that at least part of thetechnology-induced fall in total hours is due to a compositional shift in labordemand. Skill-biased technology shocks have no effect on the relative price ofinvestment, suggesting that capital and skill are not complementary in aggregateproduction.

Managing Social-Business Tensions: A Review and Research Agenda for Social Enterprise

In a world filled with poverty, environmental degradation, and moral injustice, social enterprises offer a ray of hope. These organizations seek to achieve social missions through business ventures. Yet social missions and business ventures are associated with divergent goals, values, norms, and identities. Attending to them simultaneously creates tensions, competing demands, and ethical dilemmas. Effectively understanding social enterprises therefore depends on insight into the nature and management of these tensions. While existing research recognizes tensions between social missions and business ventures, we lack any systematic analysis. Our paper addresses this issue. We first categorize the types of tensions that arise between social missions and business ventures, emphasizing their prevalence and variety. We then explore how four different organizational theories offer insight into these tensions, and we develop an agenda for future research. We end by arguing that a focus on social-business tensions not only expands insight into social enterprises, but also provides an opportunity for research on social enterprises to inform traditional organizational theories. Taken together, our analysis of tensions in social enterprises integrates and seeks to energize research on this expanding phenomenon.

Inflammatory markers and incident heart failure risk in older adults: the Health ABC (Health, Aging, and Body Composition) study.

OBJECTIVES: The purpose of this study was to evaluate the association between inflammation and heart failure (HF) risk in older adults. BACKGROUND: Inflammation is associated with HF risk factors and also directly affects myocardial function. METHODS: The association of baseline serum concentrations of interleukin (IL)-6, tumor necrosis factor-alpha, and C-reactive protein (CRP) with incident HF was assessed with Cox models among 2,610 older persons without prevalent HF enrolled in the Health ABC (Health, Aging, and Body Composition) study (age 73.6 +/- 2.9 years; 48.3% men; 59.6% white). RESULTS: During follow-up (median 9.4 years), HF developed in 311 (11.9%) participants. In models controlling for clinical characteristics, ankle-arm index, and incident coronary heart disease, doubling of IL-6, tumor necrosis factor-alpha, and CRP concentrations was associated with 29% (95% confidence interval: 13% to 47%; p < 0.001), 46% (95% confidence interval: 17% to 84%; p = 0.001), and 9% (95% confidence interval: -1% to 24%; p = 0.087) increase in HF risk, respectively. In models including all 3 markers, IL-6, and tumor necrosis factor-alpha, but not CRP, remained significant. These associations were similar across sex and race and persisted in models accounting for death as a competing event. Post-HF ejection fraction was available in 239 (76.8%) cases; inflammatory markers had stronger association with HF with preserved ejection fraction. Repeat IL-6 and CRP determinations at 1-year follow-up did not provide incremental information. Addition of IL-6 to the clinical Health ABC HF model improved model discrimination (C index from 0.717 to 0.734; p = 0.001) and fit (decreased Bayes information criterion by 17.8; p < 0.001). CONCLUSIONS: Inflammatory markers are associated with HF risk among older adults and may improve HF risk stratification.

The credit ratings game

The collapse of so many AAA-rated structured finance products in 2007-2008has brought renewed attention to the causes of ratings failures and the conflicts of interestin the Credit Ratings Industry. We provide a model of competition among Credit RatingsAgencies (CRAs) in which there are three possible sources of conflicts: 1) the CRA conflictof interest of understating credit risk to attract more business; 2) the ability of issuersto purchase only the most favorable ratings; and 3) the trusting nature of some investorclienteles who may take ratings at face value. We show that when combined, these give riseto three fundamental equilibrium distortions. First, competition among CRAs can reducemarket efficiency, as competition facilitates ratings shopping by issuers. Second, CRAs aremore prone to inflate ratings in boom times, when there are more trusting investors, andwhen the risks of failure which could damage CRA reputation are lower. Third, the industrypractice of tranching of structured products distorts market efficiency as its role is to deceivetrusting investors. We argue that regulatory intervention requiring: i) upfront paymentsfor rating services (before CRAs propose a rating to the issuer), ii) mandatory disclosure ofany rating produced by CRAs, and iii) oversight of ratings methodology can substantiallymitigate ratings inflation and promote efficiency.