nep-ias New Economics Papers
on Insurance Economics
Issue of 2007‒01‒06
two papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Contrasting Inequalities: Comparing Correlates of Health in Canada and the United States By Hugh Armstrong; Wallace Clement; Zhiqiu Lin; Steven Prus
  2. The Pricing of Credit Default Swaps During Distress By Jochen R. Andritzky; Manmohan Singh

  1. By: Hugh Armstrong; Wallace Clement; Zhiqiu Lin; Steven Prus
    Abstract: Comparative health studies consistently find that Canadians on average are healthier than Americans. Comparing health status within and between Canada and the United States provides key insights into the distribution of inequalities in these two countries. Canada’s universal health care insurance system contrasts with the mixed system of the United States: universal care for seniors, private health care insurance for many, and no or intermittent coverage for others. These countries are also notably different in the extent of income and racial/ethnic inequalities. It is within this context that this study compares the relative strength of the relationships between social, economic, and demographic factors (sex, age, marital status, income, education, country of birth, and race/ethnicity) and health status in Canada and the United States. Evidence drawn from the 2002-2003 Joint Canada/United States Survey of Health reveals that the correlations between these factors, above all country of birth and race/ethnicity, and health are relatively stronger in the United States, reflecting differences in health care access and racial/ethnic-based inequalities between the countries. The study findings are suggestive of the effects of universal access to health care and more equitable distribution of other social resources in protecting the health of the general population.
    Keywords: self-reported health, United States, Canada, health insurance, income, race, ethnicity, age, sex
    JEL: I11 I18
    Date: 2006–12
    URL: http://d.repec.org/n?u=RePEc:mcm:sedapp:167&r=ias
  2. By: Jochen R. Andritzky; Manmohan Singh
    Abstract: Credit default swaps (CDS) provide the buyer with insurance against certain types of credit events by entitling him to exchange any of the bonds permitted as deliverable against their par value. Unlike bonds, whose risk spreads are assumed to be the product of default risk and loss rate, CDS are par instruments, and their spreads reflect the partial recovery of the delivered bond's face value. This paper addresses the implications of the difference between bond and CDS spreads and shows the extent to which the recovery assumption matters for determining CDS spreads. A no-arbitrage argument is applied to extract recovery rates from CDS and bond markets, using data from Brazil's distress in 2002-03. Results are related to the observation that preemptive restructurings are now more common than straight defaults in sovereign bond markets and that this leads to a decoupling of CDS and bond spreads.
    Keywords: Credit default swaps , Brazil , recovery value , default risk , Credit risk , Brazil , Risk premium , Bond markets , Prices ,
    Date: 2006–11–17
    URL: http://d.repec.org/n?u=RePEc:imf:imfwpa:06/254&r=ias

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