Global trends in interest rates Del Negro, Marco; Giannone, Domenico; Giannoni, Marc P. ...
Journal of international economics,
05/2019, Letnik:
118
Journal Article
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The trend in the world real interest rate for safe and liquid assets fluctuated close to 2% for more than a century, but has dropped significantly over the past three decades. This decline has been ...common among advanced economies, as trends in real interest rates across countries have converged over this period. It was driven by an increase in the convenience yield for safety and liquidity and by lower global economic growth.
The unheavenly chorus Schlozman, Kay Lehman; Verba, Sidney; Brady, Henry E
2012., 20120409, 2012, 2012-04-09, 20120101
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Politically active individuals and organizations make huge investments of time, energy, and money to influence everything from election outcomes to congressional subcommittee hearings to local school ...politics, while other groups and individual citizens seem woefully underrepresented in our political system.The Unheavenly Chorusis the most comprehensive and systematic examination of political voice in America ever undertaken--and its findings are sobering.
The Unheavenly Chorusis the first book to look at the political participation of individual citizens alongside the political advocacy of thousands of organized interests--membership associations such as unions, professional associations, trade associations, and citizens groups, as well as organizations like corporations, hospitals, and universities. Drawing on numerous in-depth surveys of members of the public as well as the largest database of interest organizations ever created--representing more than thirty-five thousand organizations over a twenty-five-year period--this book conclusively demonstrates that American democracy is marred by deeply ingrained and persistent class-based political inequality. The well educated and affluent are active in many ways to make their voices heard, while the less advantaged are not. This book reveals how the political voices of organized interests are even less representative than those of individuals, how political advantage is handed down across generations, how recruitment to political activity perpetuates and exaggerates existing biases, how political voice on the Internet replicates these inequalities--and more.
In a true democracy, the preferences and needs of all citizens deserve equal consideration. Yet equal consideration is only possible with equal citizen voice.The Unheavenly Chorusreveals how far we really are from the democratic ideal and how hard it would be to attain it.
Deviations from Covered Interest Rate Parity DU, WENXIN; TEPPER, ALEXANDER; VERDELHAN, ADRIEN
The Journal of finance (New York),
June 2018, Letnik:
73, Številka:
3
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We find that deviations from the covered interest rate parity (CIP) condition imply large, persistent, and systematic arbitrage opportunities in one of the largest asset markets in the world. ...Contrary to the common view, these deviations for major currencies are not explained away by credit risk or transaction costs. They are particularly strong for forward contracts that appear on banks' balance sheets at the end of the quarter, pointing to a causal effect of banking regulation on asset prices. The CIP deviations also appear significantly correlated with other fixed income spreads and with nominal interest rates.
We show that conventional dynamic term structure models (DTSMs) estimated on recent U.S. data severely violate the zero lower bound (ZLB) on nominal interest rates and deliver poor forecasts of ...future short rates. In contrast, shadow-rate DTSMs account for the ZLB by construction, capture the resulting distributional asymmetry of future short rates, and achieve good forecast performance. These models provide more accurate estimates of the most likely path for future monetary policy—including the timing of policy liftoff from the ZLB and the pace of subsequent policy tightening. We also demonstrate the benefits of including macroeconomic factors in a shadow-rate DTSM when yields are constrained near the ZLB.
The uncovered interest parity puzzle concerns the empirical regularity that high interest rate countries tend to have high expected returns on short term deposits. A separate puzzle is that high real ...interest rate countries tend to have currencies that are stronger than can be accounted for by the path of expected real interest differentials under uncovered interest parity. These two findings have apparently contradictory implications for the relationship of the foreign-exchange risk premium and interest-rate differentials. We document these puzzles, and show that existing models appear unable to account for both. A model that might reconcile the findings is discussed.
Interest Rates under Falling Stars Bauer, Michael D.; Rudebusch, Glenn D.
The American economic review,
05/2020, Letnik:
110, Številka:
5
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Macro-finance theory implies that trend inflation and the equilibrium real interest rate are fundamental determinants of the yield curve. However, empirical models of the term structure of interest ...rates generally assume that these fundamentals are constant. We show that accounting for time variation in these underlying long-run trends is crucial for understanding the dynamics of Treasury yields and predicting excess bond returns. We introduce a new arbitrage-free model that captures the key role that long-run trends play in determining interest rates. The model also provides new, more plausible estimates of the term premium and accurate out-of-sample yield forecasts.
We show how to price the time series and cross section of the term structure of interest rates using a three-step linear regression approach. Our method allows computationally fast estimation of term ...structure models with a large number of pricing factors. We present specification tests favoring a model using five principal components of yields as factors. We demonstrate that this model outperforms the Cochrane and Piazzesi (2008) four-factor specification in out-of-sample exercises but generates similar in-sample term premium dynamics. Our regression approach can also incorporate unspanned factors and allows estimation of term structure models without observing a zero-coupon yield curve.
ABSTRACT
We show that maturity transformation does not expose banks to interest rate risk—it hedges it. The reason is the deposit franchise, which allows banks to pay deposit rates that are low and ...insensitive to market interest rates. Hedging the deposit franchise requires banks to earn income that is also insensitive, that is, to lend long term at fixed rates. As predicted by this theory, we show that banks closely match the interest rate sensitivities of their interest income and expense, and that this insulates their equity from interest rate shocks. Our results explain why banks supply long‐term credit.
Antiepileptic drugs have been used for treating different types of neuropathic pain, and sometimes fibromyalgia. Our understanding of quality standards in chronic pain trials has improved to include ...new sources of potential bias. Individual Cochrane reviews using these new standards have assessed individual antiepileptic drugs. An early review from this group, originally published in 1998, was titled 'Anticonvulsants for acute and chronic pain'. This overview now covers the neuropathic pain aspect of that original review, which was withdrawn in 2009.
To provide an overview of the relative analgesic efficacy of antiepileptic drugs that have been compared with placebo in neuropathic pain and fibromyalgia, and to report on adverse events associated with their use.
We included reviews published in theCochrane Database of Systematic Reviews up to August 2013 (Issue 7). We extracted information from each review on measures of efficacy and harm, and methodological details concerning the number of participants, the duration of studies, and the imputation methods used, in order to judge potential biases in available data.We analysed efficacy data for each painful condition in three tiers, according to outcome and freedom from known sources of bias. The first tier met current best standards - at least 50% pain intensity reduction over baseline (or its equivalent), without the use of last observation carried forward (LOCF) for dropouts, an intention-to-treat (ITT) analysis, in parallel group studies with at least 200 participants lasting eight weeks or more. The second tier used data from at least 200 participants where one or more of the above conditions were not met. The third tier of evidence related to data from fewer than 200 participants, or with several important methodological problems that limited interpretation.
No studies reported top tier results.For gabapentin and pregabalin only we found reasonably good second tier evidence for efficacy in painful diabetic neuropathy and postherpetic neuralgia. In addition, for pregabalin, we found evidence of efficacy in central neuropathic pain and fibromyalgia. Point estimates of numbers needed to treat for an additional beneficial effect (NNTs) were in the range of 4 to 10 for the important outcome of pain intensity reduction over baseline of 50% or more.For other antiepileptic drugs there was no evidence (clonazepam, phenytoin), so little evidence that no sensible judgement could be made about efficacy (valproic acid), low quality evidence likely to be subject to a number of biases overestimating efficacy (carbamazepine), or reasonable quality evidence indicating little or no effect (lamotrigine, oxcarbazepine, topiramate). Lacosamide recorded such a trivial statistical superiority over placebo that it was unreliable to conclude that it had any efficacy where there was possible substantial bias.Any benefits of treatment came with a high risk of adverse events and withdrawal because of adverse events, but serious adverse events were not significantly raised, except with oxcarbazepine.
Clinical trial evidence supported the use of only gabapentin and pregabalin in some neuropathic pain conditions (painful diabetic neuropathy, postherpetic neuralgia, and central neuropathic pain) and fibromyalgia. Only a minority of people achieved acceptably good pain relief with either drug, but it is known that quality of life and function improved markedly with the outcome of at least 50% pain intensity reduction. For other antiepileptic drugs there was no evidence, insufficient evidence, or evidence of a lack of effect; this included carbamazepine. Evidence from clinical practice and experience is that some patients can achieve good results with antiepileptics other than gabapentin or pregabalin.There is no firm evidence to answer the important pragmatic questions about which patients should have which drug, and in which order the drugs should be used. There is a clinical effectiveness research agenda to provide evidence about strategies rather than interventions, to produce the overall best results in a population, in the shortest time, and at the lowest cost to healthcare providers.
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