Money and Liquidity

John Hardman Moore outlines his joint research with Nobu Kiyotaki on the macroeconomic questions to do with the nature of money and liquidity, and the interplay between the financial system and the aggregate economy.

A Producer Theory with Business Risks

In this paper, we consider a producer who faces uninsurable business risks due to incomplete spanning of asset markets over stochastic goods market outcomes, and examine how the presence of the uninsurable business risks affects the producer's optimal pricing and production behaviours. Three key (inter-related) results we find are: (1) optimal prices in goods markets comprise ‘markup’ to the extent of market power and ‘premium’ by shadow price of the risks; (2) price inertia as we observe in data can be explained by a joint work of risk neutralization motive and marginal cost equalization condition; (3) the relative responsiveness of risk neutralization motive and marginal cost equalization at optimum is central to the cyclical variation of markups, providing a consistent explanation for procyclical and countercyclical movements. By these results, the proposed theory of producer leaves important implications both micro and macro, and both empirical and theoretical.

The determinants of sovereign bond yield spreads in the EMU

We use a panel of euro area countries to assess the determinants of long-term sovereign bond yield spreads over the period 1999.01-2010.12. We find that, unlike the period preceding the global financial crisis, European government bond yield spreads are wellexplained by macro- and fiscal fundamentals over the crisis period. We also find that the menu of macro and fiscal risks priced by markets has been significantly enriched since March 2009, including the risk of the crisis’ transmission among EMU member states, international risk and liquidity risk. Finally, we find that sovereign credit ratings are statistically significant in explaining spreads, yet compared to macro- and fiscal fundamentals their role is limited.

Stock Market Liquidity and Macro-Liquidity Shocks: Evidence from the 2007-2009 Financial Crisis

We develop an empirical framework that links micro-liquidity, macro-liquidity and stock prices. We provide evidence of a strong link between macro-liquidity shocks and the returns of UK stock portfolios constructed on the basis of micro-liquidity measures between 1999-2012. Specifically, macro-liquidity shocks, which are extracted on the meeting days of the Bank of England Monetary Policy Committee relative to market expectations embedded in 3-month LIBOR futures prices, are transmitted in a differential manner to the cross-section of liquidity-sorted portfolios, with liquid stocks playing the most active role. We also find that there is a significant increase in shares’ trading activity and a rather small increase in their trading cost on MPC meeting days. Finally, our results emphatically document that during the recent financial crisis the shocks-returns relationship has reversed its sign. Interest rate cuts during the crisis were perceived by market participants as a signal of deteriorating economic prospects and reinforced “flight to safety” trading.

Liquidity, moral hazard and bank crises

Bank crises, by interrupting liquidity provision, have been viewed as resulting in welfare losses. In a model of banking with moral hazard, we show that second best bank contracts that improve on autarky ex ante require costly crises to occur with positive probability at the interim stage. When bank payoffs are partially appropriable, either directly via imposition of fines or indirectly by the use of bank equity as a collateral, we argue that an appropriately designed ex-ante regime of policy intervention involving conditional monitoring can prevent bank crises.

Estimation of the radiation risks in diagnostic procedures to populations and patients

Since 1895, when X-rays were discovered, ionizing radiation became part of our life. Its use in medicine has brought significant health benefits to the population globally. The benefit of any diagnostic procedure is to reduce the uncertainty about the patient's health. However, there are potential detrimental effects of radiation exposure. Therefore, radiation protection authorities have become strict regarding the control of radiation risks.¦There are various situations where the radiation risk needs to be evaluated. International authority bodies point to the increasing number of radiologic procedures and recommend population surveys. These surveys provide valuable data to public health authorities which helps them to prioritize and focus on patient groups in the population that are most highly exposed. On the other hand, physicians need to be aware of radiation risks from diagnostic procedures in order to justify and optimize the procedure and inform the patient.¦The aim of this work was to examine the different aspects of radiation protection and investigate a new method to estimate patient radiation risks.¦The first part of this work concerned radiation risk assessment from the regulatory authority point of view. To do so, a population dose survey was performed to evaluate the annual population exposure. This survey determined the contribution of different imaging modalities to the total collective dose as well as the annual effective dose per caput. It was revealed that although interventional procedures are not so frequent, they significantly contribute to the collective dose. Among the main results of this work, it was shown that interventional cardiological procedures are dose-intensive and therefore more attention should be paid to optimize the exposure.¦The second part of the project was related to the patient and physician oriented risk assessment. In this part, interventional cardiology procedures were studied by means of Monte Carlo simulations. The organ radiation doses as well as effective doses were estimated. Cancer incidence risks for different organs were calculated for different sex and age-at-exposure using the lifetime attributable risks provided by the Biological Effects of Ionizing Radiations Report VII. Advantages and disadvantages of the latter results were examined as an alternative method to estimate radiation risks. The results show that this method is the most accurate, currently available, to estimate radiation risks. The conclusions of this work may guide future studies in the field of radiation protection in medicine.¦-¦Depuis la découverte des rayons X en 1895, ce type de rayonnement a joué un rôle important dans de nombreux domaines. Son utilisation en médecine a bénéficié à la population mondiale puisque l'avantage d'un examen diagnostique est de réduire les incertitudes sur l'état de santé du patient. Cependant, leur utilisation peut conduire à l'apparition de cancers radio-induits. Par conséquent, les autorités sanitaires sont strictes quant au contrôle du risque radiologique.¦Le risque lié aux radiations doit être estimé dans différentes situations pratiques, dont l'utilisation médicale des rayons X. Les autorités internationales de radioprotection indiquent que le nombre d'examens et de procédures radiologiques augmente et elles recommandent des enquêtes visant à déterminer les doses de radiation délivrées à la population. Ces enquêtes assurent que les groupes de patients les plus à risque soient prioritaires. D'un autre côté, les médecins ont également besoin de connaître le risque lié aux radiations afin de justifier et optimiser les procédures et informer les patients.¦Le présent travail a pour objectif d'examiner les différents aspects de la radioprotection et de proposer une manière efficace pour estimer le risque radiologique au patient.¦Premièrement, le risque a été évalué du point de vue des autorités sanitaires. Une enquête nationale a été réalisée pour déterminer la contribution des différentes modalités radiologiques et des divers types d'examens à la dose efficace collective due à l'application médicale des rayons X. Bien que les procédures interventionnelles soient rares, elles contribuent de façon significative à la dose délivrée à la population. Parmi les principaux résultats de ce travail, il a été montré que les procédures de cardiologie interventionnelle délivrent des doses élevées et devraient donc être optimisées en priorité.¦La seconde approche concerne l'évaluation du risque du point de vue du patient et du médecin. Dans cette partie, des procédures interventionnelles cardiaques ont été étudiées au moyen de simulations Monte Carlo. La dose délivrée aux organes ainsi que la dose efficace ont été estimées. Les risques de développer des cancers dans plusieurs organes ont été calculés en fonction du sexe et de l'âge en utilisant la méthode établie dans Biological Effects of Ionizing Radiations Report VII. Les avantages et inconvénients de cette nouvelle technique ont été examinés et comparés à ceux de la dose efficace. Les résultats ont montré que cette méthode est la plus précise actuellement disponible pour estimer le risque lié aux radiations. Les conclusions de ce travail pourront guider de futures études dans le domaine de la radioprotection en médicine.

Schistosomiasis mansoni in Bananal (State of São Paulo, Brazil): IV. Study on the public awareness of its risks in the Palha District

A rather high prevalence of mansoni schistosomiasis has been observed in some localities of Bananal, State of São Paulo, during the past decade. The highest prevalence of schistosomiasis was found in the Palha District; it was thus considered adequate for an evaluation of public awareness of the risks involved in acquiring schistosomiasis, a likely outcome of certain behavior patterns. We interviewed 542 district-dwellers. The 5-to-39 age-group constituted 65.5% of the whole sample. Concerning the infection, 69.2% had hearsay information; 46.1% know the infection; 69.6% know how it is acquired; 31.5% know about the symptoms and 57.1% know what can be done to avoid infection; 17.7% declared to have acquired the infection at least once in their lifetime; 62.3% reported total or partial immersion in collections of water of Bananal, once or twice a week, 53.9% of these for bathing or fishing. Although most (91.7%) households have treated running water, are connected to the sewage network or have septic tanks, 9% of the people interviewed use to defecate on the field. It became clear that the educational messages aimed at this population had not been adequate, having failed to fulfil any expectations. The local people received only piecemeal and subjective information about their problem. The control of schistosomiasis requires an integrated practice, which includes the analysis of macro-determinant factors, such as basic sanitation, habitation, education and health care. In short, we require a multidisciplinary vision of the mechanisms of transmission of the infection, which depends upon adequate planning and well trained personnel, intent on their educational work, to attain satisfactory results.

Factsheet: the health risks of second-hand smoke

This factsheet summarises why one person's smoking can be harmful to others, by highlighting the health risks of second-hand smoke to adults and children.

Exercise aggravates cardiovascular risks and mortality in rats with disrupted nitric oxide pathway and treated with recombinant human erythropoietin.

Chronic administration of recombinant human erythropoietin (rHuEPO) can generate serious cardiovascular side effects such as arterial hypertension (HTA) in clinical and sport fields. It is hypothesized that nitric oxide (NO) can protect from noxious cardiovascular effects induced by chronic administration of rHuEPO. On this base, we studied the cardiovascular effects of chronic administration of rHuEPO in exercise-trained rats treated with an inhibitor of NO synthesis (L-NAME). Rats were treated or not with rHuEPO and/or L-NAME during 6 weeks. During the same period, rats were subjected to treadmill exercise. The blood pressure was measured weekly. Endothelial function of isolated aorta and small mesenteric arteries were studied and the morphology of the latter was investigated. L-NAME induced hypertension (197 ± 6 mmHg, at the end of the protocol). Exercise prevented the rise in blood pressure induced by L-NAME (170 ± 5 mmHg). However, exercise-trained rats treated with both rHuEPO and L-NAME developed severe hypertension (228 ± 9 mmHg). Furthermore, in these exercise-trained rats treated with rHuEPO/L-NAME, the acetylcholine-induced relaxation was markedly impaired in isolated aorta (60% of maximal relaxation) and small mesenteric arteries (53%). L-NAME hypertension induced an internal remodeling of small mesenteric arteries that was not modified by exercise, rHuEPO or both. Vascular ET-1 production was not increased in rHuEPO/L-NAME/training hypertensive rats. Furthermore, we observed that rHuEPO/L-NAME/training hypertensive rats died during the exercise or the recovery period (mortality 51%). Our findings suggest that the use of rHuEPO in sport, in order to improve physical performance, represents a high and fatal risk factor, especially with pre-existing cardiovascular risk.

Blood transfusion and iatrogenic risks in Mexico city: anti-Trypanosoma cruzi seroprevalence in 43,048 blood donors, evaluation of parasitemia, and electrocardiogram findings in seropositive

Iatrogenous transmission of Trypanosoma cruziby blood transfusion was suggested as a potential risk by Pellegrino (1949). Seropositive blood donors in Mexico were first reported in 1978, however, limited information is available due to small sampling, the use of heterogeneous serologic assays, and geographically limited studies. A wide survey carried out in 18 out of the 32 states of Mexico, showed a national mean of 1.6% seropositive among 64,969 donors, ranging from 0.2 to 2.8%. In the present study, we have screened 43,048 voluntary blood donors in a period of five years at the Instituto Nacional de Cardiología I. Chávez, a concentration hospital located in Mexico city which serves mainly the metropolitan area and accepts from all over the country. Standardized ELISA and IIF were used to identify seropositive individuals in addition to hemoculture, PCR and standard 12 lead ECG tests that were applied to a group of seropositive patients (29/161). The result showed a seropositivity of 0.37% (161/43,048). From the group of seropositive individuals 40% (12/29) were potential carriers of T. cruzi at the donation time and 5/29 had subclinical ECG abnormalities. Parasitological tests performed in 70 erythrocyte and platelet fractions from seropositive units (70/161) showed negative results. Our findings strongly support T. cruzi screening in the transfusion medicine practice and identify subclinical heart disease among seropositive blood donors.

Health Risks and Health Inequalities in Housing: an Assessment Tool

This tool is designed to assess the health risks of housing and the residential environment at the scale of a neighbourhood, housing stock or administrative area. For each health risk, the tool enables a judgement to be recorded about the level of health risk attributable to unhealthy or unsafe housing conditions, and for this to be compared with the adequacy of local practice in mitigating the risk.