Delay and Haircuts in Sovereign Debt: Recovery and Sustainability

One of the striking aspects of recent sovereign debt restructurings is, conditional on default, delay length is positively correlated with the size of haircut. In this paper, we develop an incomplete information model of debt restructuring where the prospect of uncertain economic recovery and the signalling about sustainability concerns together generate multi-period delay. The results from our analysis show that there is a correlation between delay length and size of haircut. Such results are supported by evidence. We show that Pareto ranking of equilibria, conditional on default, can be altered once we take into account the ex ante incentive of sovereign debtor. We use our results to evaluate proposals advocated to ensure orderly resolution of sovereign debt crises.

Investment and financing constraints in China: does working capital management make a difference?

We use a panel of over 120,000 Chinese firms of different ownership types over the period 2000-2007 to analyze the linkages between investment in fixed and working capital and financing constraints. We find that those firms characterized by high working capital display high sensitivities of investment in working capital to cash flow (WKS) and low sensitivities of investment in fixed capital to cash flow (FKS). We then construct and analyze firm-level FKS and WKS measures and find that, despite severe external financing constraints, those firms with low FKS and high WKS exhibit the highest fixed investment rates. This suggests that good working capital management may help firms to alleviate the effects of financing constraints on fixed investment.

The EMU sovereign-debt crisis: fundamentals, expectations and contagion

In a research project conducted while visiting the DG-ECFIN in June 2010, we provided a detailed empirical investigation of the EMU sovereign-debt crisis up to February 2010.

Prise en charge de l'ulcère de jambe d'origine veineuse [Management of venous leg ulcers].

Leg ulcers are a major health and economic problem especially in elderly. More than 70% are associated with venous disease. Compressive therapy is the most effective treatment but bandages are often poorly tolerated and well trained nurses are required to apply them effectively. In recent years, the VAC system (vacuum assisted closure) has profoundly changed the wound healing approach. The objective is now to regenerate the tissues and not to replace them with skin grafts which give uncertain results. The other important challenge is to prevent recurrences. New pharmacologic treatments acting on microcirculation and hemostasis would probably appear in the near future opening new therapeutic perspectives.

Brittle cornea syndrome: recognition, molecular diagnosis and management.

Brittle cornea syndrome (BCS) is an autosomal recessive disorder characterised by extreme corneal thinning and fragility. Corneal rupture can therefore occur either spontaneously or following minimal trauma in affected patients. Two genes, ZNF469 and PRDM5, have now been identified, in which causative pathogenic mutations collectively account for the condition in nearly all patients with BCS ascertained to date. Therefore, effective molecular diagnosis is now available for affected patients, and those at risk of being heterozygous carriers for BCS. We have previously identified mutations in ZNF469 in 14 families (in addition to 6 reported by others in the literature), and in PRDM5 in 8 families (with 1 further family now published by others). Clinical features include extreme corneal thinning with rupture, high myopia, blue sclerae, deafness of mixed aetiology with hypercompliant tympanic membranes, and variable skeletal manifestations. Corneal rupture may be the presenting feature of BCS, and it is possible that this may be incorrectly attributed to non-accidental injury. Mainstays of management include the prevention of ocular rupture by provision of protective polycarbonate spectacles, careful monitoring of visual and auditory function, and assessment for skeletal complications such as developmental dysplasia of the hip. Effective management depends upon appropriate identification of affected individuals, which may be challenging given the phenotypic overlap of BCS with other connective tissue disorders.

Indexed versus nominal government debt under inflation and price-level targeting

This paper presents a DSGE model in which long run inflation risk matters for social welfare. Optimal indexation of long-term government debt is studied under two monetary policy regimes: inflation targeting (IT) and price-level targeting (PT). Under IT, full indexation is optimal because long run inflation risk is substantial due to base-level drift, making indexed bonds a much better store of value than nominal bonds. Under PT, where long run inflation risk is largely eliminated, optimal indexation is substantially lower because nominal bonds become a better store of value relative to indexed bonds. These results are robust to the PT target horizon, imperfect credibility of PT and model calibration, but the assumption that indexation is lagged is crucial. From a policy perspective, a key finding is that accounting for optimal indexation has important welfare implications for comparisons of IT and PT.

Disputes, Debt and Equity

We show how the prospect of disputes over firms’ revenue reports promotes debt financing over equity. These findings are presented within a costly state verification model with a risk averse entrepreneur. The prospect of disputes encourages incentive regimes which limit penalties and avoid stochastic monitoring, even when the lender can commit to stochastic enforcement strategies. Consequently, optimal contracts shift away from equity and toward standard debt. For a useful special case of the model, closed form solutions are presented for leverage and consumption allocations under efficient debt contracts.

Clinical review: practical recommendations on the management of perioperative heart failure in cardiac surgery.

Acute cardiovascular dysfunction occurs perioperatively in more than 20% of cardiosurgical patients, yet current acute heart failure (HF) classification is not applicable to this period. Indicators of major perioperative risk include unstable coronary syndromes, decompensated HF, significant arrhythmias and valvular disease. Clinical risk factors include history of heart disease, compensated HF, cerebrovascular disease, presence of diabetes mellitus, renal insufficiency and high-risk surgery. EuroSCORE reliably predicts perioperative cardiovascular alteration in patients aged less than 80 years. Preoperative B-type natriuretic peptide level is an additional risk stratification factor. Aggressively preserving heart function during cardiosurgery is a major goal. Volatile anaesthetics and levosimendan seem to be promising cardioprotective agents, but large trials are still needed to assess the best cardioprotective agent(s) and optimal protocol(s). The aim of monitoring is early detection and assessment of mechanisms of perioperative cardiovascular dysfunction. Ideally, volume status should be assessed by 'dynamic' measurement of haemodynamic parameters. Assess heart function first by echocardiography, then using a pulmonary artery catheter (especially in right heart dysfunction). If volaemia and heart function are in the normal range, cardiovascular dysfunction is very likely related to vascular dysfunction. In treating myocardial dysfunction, consider the following options, either alone or in combination: low-to-moderate doses of dobutamine and epinephrine, milrinone or levosimendan. In vasoplegia-induced hypotension, use norepinephrine to maintain adequate perfusion pressure. Exclude hypovolaemia in patients under vasopressors, through repeated volume assessments. Optimal perioperative use of inotropes/vasopressors in cardiosurgery remains controversial, and further large multinational studies are needed. Cardiosurgical perioperative classification of cardiac impairment should be based on time of occurrence (precardiotomy, failure to wean, postcardiotomy) and haemodynamic severity of the patient's condition (crash and burn, deteriorating fast, stable but inotrope dependent). In heart dysfunction with suspected coronary hypoperfusion, an intra-aortic balloon pump is highly recommended. A ventricular assist device should be considered before end organ dysfunction becomes evident. Extra-corporeal membrane oxygenation is an elegant solution as a bridge to recovery and/or decision making. This paper offers practical recommendations for management of perioperative HF in cardiosurgery based on European experts' opinion. It also emphasizes the need for large surveys and studies to assess the optimal way to manage perioperative HF in cardiac surgery.

Delay and Haircuts in Sovereign Debt: Recovery and Sustainability

One of the striking aspects of recent sovereign debt restructurings is, conditional on default, delay length is positively correlated with the size of "haircut", which is size of creditor losses. In this paper, we develop an incomplete information model of debt restructuring where the prospect of uncertain economic recovery and the signalling about sustainability concerns together generate multi-period delay. The results from our analysis show that there is a correlation between delay length and size of haircut. Such results are supported by evidence. We show that Pareto ranking of equilibria, conditional on default, can be altered once we take into account the ex ante incentive of sovereign debtor. We use our results to evaluate proposals advocated to ensure orderly resolution of sovereign debt crises.

The management of iron deficiency in inflammatory bowel disease--an online tool developed by the RAND/UCLA appropriateness method.

BACKGROUND: Iron deficiency is a common and undertreated problem in inflammatory bowel disease (IBD). AIM: To develop an online tool to support treatment choice at the patient-specific level. METHODS: Using the RAND/UCLA Appropriateness Method (RUAM), a European expert panel assessed the appropriateness of treatment regimens for a variety of clinical scenarios in patients with non-anaemic iron deficiency (NAID) and iron deficiency anaemia (IDA). Treatment options included adjustment of IBD medication only, oral iron supplementation, high-/low-dose intravenous (IV) regimens, IV iron plus erythropoietin-stimulating agent (ESA), and blood transfusion. The panel process consisted of two individual rating rounds (1148 treatment indications; 9-point scale) and three plenary discussion meetings. RESULTS: The panel reached agreement on 71% of treatment indications. 'No treatment' was never considered appropriate, and repeat treatment after previous failure was generally discouraged. For 98% of scenarios, at least one treatment was appropriate. Adjustment of IBD medication was deemed appropriate in all patients with active disease. Use of oral iron was mainly considered an option in NAID and mildly anaemic patients without disease activity. IV regimens were often judged appropriate, with high-dose IV iron being the preferred option in 77% of IDA scenarios. Blood transfusion and IV+ESA were indicated in exceptional cases only. CONCLUSIONS: The RUAM revealed high agreement amongst experts on the management of iron deficiency in patients with IBD. High-dose IV iron was more often considered appropriate than other options. To facilitate dissemination of the recommendations, panel outcomes were embedded in an online tool, accessible via http://ferroscope.com/.

Trends in self-reported prevalence and management of hypertension, hypercholesterolemia and diabetes in Swiss adults, 1997-2007.

Switzerland has a low mortality rate from cardiovascular diseases, but little is known regarding prevalence and management of cardiovascular risk factors (CV RFs: hypertension, hypercholesterolemia and diabetes) in the general population. In this study, we assessed 10-year trends in self-reported prevalence and management of cardiovascular risk factors in Switzerland. data from three national health interview surveys conducted between 1997 and 2007 in representative samples of the Swiss adult population (49,261 subjects overall). Self-reported CV RFs prevalence, treatment and control levels were computed. The sample was weighted to match the sex - and age distribution, geographical location and nationality of the entire adult population of Switzerland. self-reported prevalence of hypertension, hypercholesterolemia and diabetes increased from 22.1%, 11.9% and 3.3% in 1997 to 24.1%, 17.4% and 4.8% in 2007, respectively. Prevalence of self-reported treatment among subjects with CV RFs also increased from 52.1%, 18.5% and 50.0% in 1997 to 60.4%, 38.8% and 53.3% in 2007 for hypertension, hypercholesterolemia and diabetes, respectively. Self-reported control levels increased from 56.4%, 52.9% and 50.0% in 1997 to 80.6%, 75.1% and 53.3% in 2007 for hypertension, hypercholesterolemia and diabetes, respectively. Finally, screening during the last 12 months increased from 84.5%, 86.5% and 87.4% in 1997 to 94.0%, 94.6% and 94.1% in 2007 for hypertension, hypercholesterolemia and diabetes, respectively. in Switzerland, the prevalences of self-reported hypertension, hypercholesterolemia and diabetes have increased between 1997 and 2007. Management and screening have improved, but further improvements can still be achieved as over one third of subjects with reported CV RFs are not treated.