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on Insurance Economics |
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Issue of 2014‒11‒07
fifteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Helene Barroy; Zeynep Or; Ankit Kumar; David Bernstein |
| Abstract: | While universal health coverage (UHC) offers a powerful goal for a nation, all countries-irrespective of income are struggling with achieving or sustaining UHC. France is a high-income country where HC is in effect universal. Health-related costs are covered by a mix of mandatory social health insurance (SHI) and private complementary schemes, while benefit packages are comprehensive, uniform, and of good quality. France provides some of the highest financial protection among countries in the Organization for Economic Co-operation and Development (OECD). Still, under pressure to sustain UHC without compromising equity of access, the system has been fine-tuned continually since inception. Much can be learned from France's experience in its reforms toward better fiscal sustainability, equity, and efficiency. The main purpose of the study is to assess major challenges that France has faced for sustaining UHC, and to share its experiences and lessons in addressing system bottlenecks to benefit less developed countries as they embark on the path to UHC. |
| Keywords: | ability to pay, access to health care, access to health services, accessibility of care, acute care, alcohol consumption, alcoholism, allocative efficiency, ambulatory ... See More + care, ambulatory sector, basic health services, breast cancer, burden of disease, Cancer patients, capital income, cardiovascular diseases, care techniques, catastrophic health spending, cervical cancer, choice of provider, chronic diseases, chronically ill patients, clinical guidelines, clinical quality, clinician, clinicians, clinics, competencies, cost control, cost of health care, cost of services, cost sharing, cost-effectiveness, cost-efficiency, deaths, decision making, delivery system, dental care, Dental health, Dental health care, diabetes, diagnosis, Diagnostic services, direct costs, doctors, drug consumption, drugs, emergency care, enrollees, entitlement, expenditure control, Fee for Service, fee-for-service, financial consequences, financial impact, financial incentives, financial protection, financial resources, financing health care, Flat Rate, free choice, gambling, general practice, general practitioners, global budgets, growth of health expenditure, HEALTH CARE, health care costs, Health care delivery, health care facilities, Health Care Financing, health care needs, health care networks, health care policies, health care policy, health care professionals, health care providers, health care provision, health care resources, health care services, Health Care Spending, health care system, health care utilization, health centers, HEALTH COVERAGE, Health Economics, health expenditure, Health Expenditure by Source, health expenditure growth, HEALTH EXPENDITURES, Health Financing, HEALTH INEQUALITIES, Health Insurance, health insurance coverage, health insurance funds, health insurance markets, health insurance system, health management, health needs, Health Organization, health outcomes, health policy, health professionals, health promotion, health sector, health service, health service providers, health services, Health Specialist, HEALTH SPENDING, health status, HEALTH SYSTEM, healthcare, high blood pressure, hospital beds, Hospital care, hospital expenditure, hospital management, hospital section, HOSPITAL SECTOR, hospitalisation, hospitalization, Hospitals, Household Income, Human Development, immigrants, income, income countries, Income Distribution, income groups, Indexes, induced demand, information system, insurance contracts, insurance coverage, insurance premiums, insurers, life expectancies, life expectancy, low income, medical activities, medical care, medical devices, medical fees, medical information, medical personnel, medical staff, medication, mental illness, Ministries of Health, monitoring mechanisms, morbidity, mortality, National Health, National Health Insurance, National Health Insurance Fund, nurses, nursing, nursing homes, Nutrition, Outpatient care, patient, patient outcomes, patients, pharmaceutical companies, pharmaceutical industry, physician, physicians, physiotherapists, physiotherapy, pocket payments, poliomyelitis, pregnant women, prescription drug, prescriptions, preventive care, prices of health care, PRIMARY CARE, private clinics, private hospitals, private insurance, private sector, private sectors, Probability, psychiatrists, Public Health, public hospital, public hospital staff, public hospitals, public insurance, Public Policy, public sector, public spending, quality of care, Refugees, rehabilitation, reimbursement rates, screening, SERVICE DELIVERY, sickness funds, smoking, Social Health Insurance, social insurance, social insurance system, social security, Social Security Financing, surgery, treatments, tuberculosis, unemployment, use of health services, vaccination, visits, Workers, working conditions |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hnpdps:91323&r=ias |
| By: | Helene Barroy; Eva Jarawan; Sarah Bales |
| Abstract: | Universal Health Coverage is a powerful framework for a nation aiming to protect their population against health risks. However, countries face multiple challenges in implementing, achieving and sustaining UHC strategies. Sharing and learning from diverse country experiences may enable to foster global and country progress toward that goal. The study seeks to contribute to the global effort of sharing potentially useful lessons to address policy concerns on the design and implementation of UHC strategies in LMICs. Vietnam is one of the LMICs that have taken relatively quick and effective actions to expand health coverage and improve financial protection in the last two decades. The country study, first, takes stock of UHC progress in Vietnam, examining both the breadth and the depth of health coverage and assessing financial protection and equity outputs (chapter one). Chapter two includes an in-depth analysis of some of the major success strategies and policy actions that the country took to expand health coverage and financial protection for all, including for the poor. Chapter three focuses on some of the UHC-related challenges that the country faces in pursuing expansion and sustaining UHC. Vietnam?s experience suggests that, moving toward greater UHC outputs, the system must be constantly adjusted, and that UHC strategies must be adaptive, those used in the past to cover the formal sector and the poor may turn out inadequate to reach the uninsured in the informal sector. |
| Keywords: | ability to pay, access to health care, access to health services, access to services, Administrative costs, aging, antenatal care, artificial limbs, basic health care ... See More + blood pressure, blood tests, Budget Law, cancer, capitation, capitation payment, capitation system, Catastrophic Health Expenditure, catastrophic health spending, central budget, child health, child health services, citizens, clean water, Clinical laboratory, Clinical practice, communicable diseases, contribution rate, contribution rates, cost control, cost sharing, cost-effectiveness, costs of care, curative health care, debt, delivery system, demand for services, Dental care, developing countries, development plans, diabetes, Dialysis, disabilities, disadvantaged groups, disease control, drug list, drugs, early detection, economic growth, Emergency services, employment, entitlement, epidemics, expenditures, families, Family Planning, Fee for Service, fee schedule, financial incentives, financial protection, financial resources, Financial Risk, food safety, global effort, health care, health care costs, health care coverage, Health Care Financing, Health Care Provider, health care services, health care system, Health Care Systems, health centers, HEALTH COVERAGE, health expenditure, Health Expenditures, health facilities, health financing, health financing system, Health Insurance, health insurance funds, Health Insurance Program, health insurance scheme, Health Organization, health outcomes, Health Policy, health professionals, health promotion, Health Purchaser, health reforms, health risks, Health sector, health service, health service delivery, health services, Health Specialist, health spending share, Health Strategy, health system, health system performance, health system reform, Health Systems, health workers, health workforce, Healthcare, Healthcare System, hearing aids, hepatitis B, HIV/AIDS, hospital autonomy, hospital services, hospitals, household expenditure, human resources, hypertension, Immunization, incidence analysis, income, income countries, income elasticity, income groups, induced demand, infant, infant mortality, infectious disease control, infectious diseases, Informal Payments, informal sector, injuries, inpatient admission, inpatient hospital, inpatient hospital services, insurance package, insurance premiums, insurance schemes, Integration, laws, leprosy, live births, living standards, long-term care, medical care, medical care costs, medical costs, medical doctors, medical education, medical equipment, medical examination, Medical Goods, medical services, medical technologies, medical training, medicines, mental illness, Ministry of Health, morbidity, mortality, national development, national Health, national Health Insurance, national policies, nurses, nursing, Nutrition, Outpatient services, patient, patient demand, patients, pediatrics, pharmacists, physician, physicians, Policy Process, Policy Research, population groups, preventive care, preventive health care, primary care, private sector, private services, Private Spending, progress, Prostitution, Provider Payment, Public Expenditure, Public Health, public health programs, Public Health Spending, Public Hospital, public hospitals, Public Policy, public sector, public spending, purchaser-provider split, quality of care, quality of health, quality of health care, Referrals, rehabilitation, reproductive health, Resource Allocation, risk adjustment, screening, smoking, Social Affairs, Social Health Insurance, social insurance, social mobilization, Social Security, social security benefits, social welfare, Sustainable Development, tuberculosis, under-five mortality, universal health insurance coverage, use of health services, vaccination, visits, workers, World Health Organization |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hnpdps:91327&r=ias |
| By: | Kristoffer Markwardt; Alessandro Martinello; László Sándor |
| Abstract: | Facing risk, people take precautions by insuring themselves through both formal and informal insurance channels. But are private savings merely an inferior, dominated alterna- tive to formal insurance schemes, or are the two options mutual substitutes? To answer this question, we exploit that a sudden introduction of home equity loans in Denmark exogenously provided some homeowners with unexpected liquidity. Using a ten-year, high-quality panel dataset drawn from Danish administrative registries, we find that those who were suddenly provided with extra liquidity were less likely to sign up for unemployment insurance afterwards compared to other homeowners, thereby showing that private informal insurance can substitute formal public insurance. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:197781&r=ias |
| By: | Meltem Aran; Claudia Rokx |
| Abstract: | Beginning in 2003, Turkey initiated a series of reforms under the Health Transformation Program (HTP) that over the past decade have led to the achievement of universal health coverage (UHC). The progress of Turkey?s health system has few, if any, parallels in scope and speed. Before the reforms, Turkey?s aggregate health indicators lagged behind those of OECD member states and other middle-income countries. The health financing system was fragmented, with four separate insurance schemes and a ?Green Card? program for the poor, each with distinct benefits packages and access rules. Both the Ministry of Labor and Social Security and Ministry of Health (MoH) were providers and financiers of the health system, and four different ministries were directly involved in public health care delivery. Turkey?s reform efforts have impacted virtually all aspects of the country?s health system and have resulted in the rapid expansion of the proportion of the population covered and of the services to which they are entitled. At the same time, financial protection has improved. For example, (i) insurance coverage increased from 64 to 98 percent between 2002 and 2012; (ii) the share of pregnant women having four antenatal care visits increased from 54 to 82 percent between 2003 and 2010; and (iii) citizen satisfaction with health services increased from 39.5 to 75.9 percent between 2003 and 2011. Despite dramatic improvements there is still space for Turkey to continue to improve its citizens? health outcomes, and challenges lie ahead for improving services beyond primary care. The main criticism to reform has so far come from health sector workers; the future sustainability of reform will rely not only on continued fiscal support to the health sector but also the maintenance of service provider satisfaction. |
| Keywords: | access to health care, access to health care services, access to health services, administrative control, allocative efficiency, antenatal care, Capita Health Expenditure ... See More + child mortality, Childbirth, citizen, citizens, communicable diseases, deaths, Debt, delivery system, demand for health, demand for health services, doctors, Economic growth, economic resources, emergency vehicles, Employment, expenditures, financial protection, financing of health care, focus group discussions, fragmented financing system, General practitioners, Health Affairs, health care, Health Care Costs, health care delivery, health care expenditures, health care facilities, health care providers, health care sector, health care services, health care system, health centers, HEALTH COVERAGE, Health Data, health delivery, health delivery system, Health Expenditure, Health expenditure growth, Health Expenditure per capita, health expenditures, Health facilities, health finance, health financing, health financing system, health indicators, health infrastructure, health insurance, health insurance scheme, Health Insurance System, Health Organization, health outcomes, Health Planning, Health Policy, health posts, health professionals, Health Project, health reform, health reforms, health risks, health sector, health sector reform, health sector workers, health services, health spending, Health status, health status indicators, health supply, health system, Health System Efficiency, Health Systems, Health Systems in Transition, health workers, health workforce, Health-Care, Health-Care System, Health-Financing, Healthcare Spending, hospital autonomy, hospital beds, Hospital management, Hospital Sector, hospitals, HR, human development, human resources, illness, Immunization, income, income countries, income households, individual health, induced demand, infant, infant mortality, infant mortality rate, inservice training, insurance, insurance coverage, insurance schemes, integration, labor market, level of health spending, life =expectancy, life expectancy, life expectancy at birth, live births, local authorities, maternal health, maternal health services, medical centers, Medical Policy, medical school, medical specialties, medicines, Midwives, Ministry of Health, morbidity, mortality, National Health, National Health Insurance, National Health Policy, Newborn Health, nurses, Nutrition, old system, outpatient services, paradigm shift, paramedics, parliamentary seats, party platform, patient, patient care, Patient Cost, patient satisfaction, patients, pharmaceutical expenditures, pharmacists, pharmacy, physician, physicians, pocket payments, policy change, policy decisions, policy goals, policy makers, Policy Research, political power, political turmoil, popular support, Pregnancy, pregnant women, prescription drugs, preventive health services, primary care, primary health care, primary health care facilities, private insurance, private pharmacies, private sector, private sectors, professional associations, progress, provision of health care, Public Expenditure, public health, public health care, public health expenditures, public health system, Public Hospital, Public Hospitals, public providers, public sector, public service, public support, purchaser-provider split, purchasing power, purchasing power parity, quality assurance, quality of care, quality of services, rural areas, scientific evidence, series of meetings, service delivery, service provider, service provision, service quality, service utilization, Social Insurance, Social Policy, Social Security, social security schemes, socioeconomic development, socioeconomic status, State Planning, supply of health care, Sustainable Development, Trade Unions, Under-five mortality, urban centers, workers |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hnpdps:91326&r=ias |
| By: | Michael R. CARTER (Université du Wisconsin); Alain de JANVRY (Université de Californie à Berkeley); Elisabeth SADOULET (Université de Californie à Berkeley); Alexandros SARRIS (Université d'Athènes) |
| Abstract: | Index-based weather insurance is a major institutional innovation that could revolutionize access to formal insurance for millions of smallholder farmers and related individuals. It has been introduced in pilot or experimental form in many countries at the individual or institutional level. Significant efforts have been made in research to assess its impacts on shock coping and risk management, and to contribute to improvements in design and implementation. While impacts have typically been positive where uptake has occurred, uptake has generally been low and in most cases under conditions that were not sustainable. This paper addresses the reasons for this current discrepancy between promise and reality. We conclude on perspectives for improvements in product design, complementary interventions to boost uptake, and strategies for sustainable scaling up of uptake. Specific recommendations include: (1) The first-order importance of reducing basis risk, pursuing for this multiple technological, contractual, and institutional innovations. (2) The need to use risk layering, combining the use of insurance, credit, savings, and risk-reducing investments to optimally address different categories of risk. For this, these various financial products should be offered in a coordinated fashion. (3) Calling on a role for state intervention on two fronts. One is the implementation of public certification standards for maximum basis risk of insurance contracts; the other is “smart” subsidies for learning, data accumulation, initial re-insurance, and catastrophic risks. (4) Using twin-track institutional-level index insurance contracts combined with intra-institution distribution of payouts to reduce basis risk and improve the quality of insurance. For this, credible intra-institutional rules for idiosyncratic transfers must be carefully designed. Finally (5), the need for further research on the determinants of behavior toward risk and insurance, the design of index-based insurance products combined with others risk handling financial instruments, and rigorous impact analyses of on-going programs and experiments. |
| JEL: | O16 Q12 Q14 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:1799&r=ias |
| By: | Biais, Bruno; Heider, Florian; Hoerova, Marie |
| Abstract: | Derivatives activity, motivated by risk-sharing, can breed risk taking. Bad news about the risk of the asset underlying the derivative increases the expected liability of a protection seller and undermines her risk prevention incentives. This limits risk-sharing, and may create endogenous counterparty risk and contagion from news about the hedged risk to the balance sheet of protection sellers. Margin calls after bad news can improve protection sellers incentives and enhance the ability to share risk. Central clearing can provide insurance against counterparty risk but must be designed to preserve risk-prevention incentives. |
| Keywords: | Hedging; Insurance; Derivatives; Moral hazard; Risk management;Counterparty risk; Contagion; Central clearing; Margin requirements |
| JEL: | D82 G21 G22 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:25522&r=ias |
| By: | Endang L. Achadi; Anhari Achadi; Eko Pambudi; Puti Marzoeki |
| Abstract: | Indonesia launched Jampersal in 2011, a nationwide program to accelerate the reduction of maternal and newborn deaths. The program was financed by central government revenues and provided free and comprehensive maternal and neonatal care with an emphasis on promoting institutional deliveries. Jampersal providers were public and enlisted private facilities at the primary and secondary levels. In 2013, the World Bank and the Center for Family Welfare, University of Indonesia conducted a qualitative and quantitative study to assess the implementation and impact of the program in Garut District and Depok Municipality in West Java Province. The study found that Jampersal utilization was highest among women who were least educated, poor, and resided in rural areas. Utilization was also high among women with delivery complications. The study showed Jampersal only had an impact where institutional delivery coverage was still low such as in Garut District. In this district, women were 2.4 times more likely to have institutional deliveries after Jampersal. The finding suggests implementation of Jampersal policy may have to be adjusted according to the utilization pattern for efficiency and effectiveness. The government discontinued Jampersal with the launching of the National Health Insurance Program (JKN) on January 1, 2014. The study?s findings indicate the merit in reevaluating the policy to terminate the program, given that Jampersal helped increase institutional deliveries while voluntary participation in JKN remains low. |
| Keywords: | access to health care, access to health services, ambulance, Anesthesia, Antenatal Care, birth attendant, birth attendants, C-section, cancer, Center for Health, Cesarean ... See More + Section, Cesarean sections, child health, child health care, child mortality, child-bearing, childbearing, childbirth, clinics, communities, community activities, competencies, complications during pregnancy, Contraception, contraceptives, delivery care, delivery complications, DESCRIPTION, Development Planning, diseases, districts, doctor, doctors, drugs, educated women, elderly, emergency care, exposure to information, families, family members, Family Planning, family planning services, Family Welfare, financial management, first pregnancy, focus group discussions, general practitioners, government support, gynecology, health care, health care facilities, health centers, Health Facilities, Health Financing, Health Insurance, Health Organization, health professional, health providers, Health Research, health risks, health sector, Health Service, health service delivery, Health Service Provision, Health Services, health system, Home Affairs, home deliveries, home visits, Hospital, hospital beds, hospital management, hospital patients, hospital services, hospitals, Households, housing, Human Development, Human Resources, illiteracy, illiteracy rate, illness, immunization, income, indexes, insurance schemes, Intrauterine device, IUD, labor market, lack of knowledge, life expectancy, live births, local governments, low birth weight, marketing, mass media, maternal care, Maternal deaths, Maternal Health, Maternal Health Services, Maternal Mortality, Maternal Mortality Ratio, Maternity Care, medical staff, medical treatment, medicine, midwife, midwifery, Midwives, Military hospitals, military personnel, Millennium Development Goals, Ministry of Health, morbidity, Mortality, Mother, mothers, Multiple pregnancies, National Development, National Health Insurance, national level, neonatal care, neonatal conditions, neonatal health, newborn, newborn health, newborns, Nurses, Nutrition, obstetric complications, occupancy, occupancy rates, Occupation, patient, patient care, patients, Pharmacists, PHO, physicians, pills, policy decisions, Policy Formulation, political support, Postnatal Care, postpartum care, PPM, pregnancies, pregnancy, pregnancy complications, pregnant women, Primary Care, primary school, Probability, progress, Provider Payment, Public Health, public hospitals, qualitative approach, quality assurance, quality of care, reducing maternal mortality, referral services, referral system, rural area, rural areas, school years, secondary school, secondary schools, service delivery, service delivery points, service provider, service providers, Service Provision, service quality, service utilization, Skilled birth attendance, skilled birth attendants, Social Health Insurance, Socialization, Socioeconomic Status, Specialist, specialists, Spouse, surgery, Sustainable Development, traditional birth attendants, transportation, UNFPA, United Nations Population Fund, urban area, urban areas, vaginal delivery, villages, woman, women of child-bearing age, women of childbearing age, workers |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:hnpdps:91325&r=ias |
| By: | Susan E. Chen (University of Alabama) |
| Abstract: | Recent studies find that many workers do not return to the labor force after their applications for Disability Insurance (DI) are denied. It is, therefore, important to understand how this group funds their consumption. This paper uses the Survey of Income and Program Participation linked to administrative data to examine the social support participation behavior of rejected applicants. By following cohorts of individuals from 10 years before to 10 years after filing for DI, this paper shows that rejected DI applicants are at most 10 percent more likely to depend on social support programs than healthy workers. More general models show that at the time of application rejected applicants are 25 percent more likely to depend on social support programs than healthy workers. These effects decrease across time, but up to 10 years after filing, rejected DI applicants are still up to 12 percent more likely to depend on social support programs. These are the same levels of social support participation exhibited by DI beneficiaries. While rejecting more DI applicants may reduce DI outlays, these results suggest that rejected applicants are more likely to depend on other federally funded assistance programs to fund their (very) early retirement. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp305&r=ias |
| By: | Andrew Ellul (Indiana University); Chotibhak Jotikasthira (University of North Carolina); Christian T. Lundblad (University of North Carolina); Yihui Wang (Fordham University) |
| Abstract: | We provide new empirical evidence concerning the contentious debate over the use of historical cost (HCA) versus mark-to-market (MTM) accounting in regulating financial institutions. These accounting rules, through their interactions with capital regulations, alter financial institutions’ trading behavior. The insurance industry provides a natural laboratory to explore these interactions since significant differences exist in regulatory accounting rules: (1) life insurers have greater flexibility to hold speculative-grade assets under HCA than property and casualty insurers, which are required to use MTM, and (2) the degree to which life insurers have to recognize market value through impairment differs across U.S. states. In the context of the sizeable downgrades of asset-backed securities (ABS) during the 2007-2009 financial crisis, we show that insurers facing MTM are more likely to sell the downgraded ABS than insurers holding these assets under HCA. To improve their capital positions, insurers facing HCA disproportionately resort to gains trading, selectively selling their corporate and government bond holdings with the highest unrealized gains. This trading behavior transmits shocks across otherwise unrelated markets. |
| Keywords: | Regulation; Mark to market; Historical cost accounting; Gains trading; Fire sales; Asset-backed securities (ABS); Corporate bonds; Insurance companies. |
| JEL: | G11 G12 G14 G18 G22 |
| Date: | 2014–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:375&r=ias |
| By: | Fabian Kindermann (Institute for Macroeconomics and Econometrics, University of Bonn); Dirk Krueger (Department of Economics, University of Pennsylvania) |
| Abstract: | n this paper we argue that very high marginal labor income tax rates are an effective tool for social insurance even when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. To make this point we construct a large scale Overlapping Generations Model with uninsurable labor productivity risk, show that it has a wealth distribution that matches the data well, and then use it to characterize fiscal policies that achieve a desired degree of redistribution in society. We find that marginal tax rates on the top 1% of the earnings distribution of close to 90% are optimal. We document that this result is robust to plausible variation in the labor supply elasticity and holds regardless of whether social welfare is measured at the steady state only or includes transitional generations. |
| Keywords: | Progressive Taxation, Top 1%, Social Insurance, Income Inequality |
| JEL: | E62 H21 H24 |
| Date: | 2024–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:14-036&r=ias |
| By: | Bell Fanon Ouelega (Association of African Young Economists) |
| Abstract: | Worldwide life insurance regulations are converging towards stochastic valuation of liabilities. Some regulatory framework requires the actuary to estimate the market consistent value of the liabilities. Often, a risk neutral ESG is used to project and discount future liabilities cash flows. Life insurer’s liabilities cash flows are impacted by policyholders’ dynamics: lapses, dynamic lapses, and surrenders. Such dynamics are related to economic variables for which applying risk-neutrality is challenging, to say the least. An alternative approach is to use a real world ESG with deflators. The purpose of this paper is to contribute to the financial economics literature on state-price deflators. In this paper, we compare the calculations of the market value of a call option under the risk neutral valuation (the Q-measure) and the real world valuation with the deflators (The P-measure). We also look at the Market Value of Liabilities, and the Expected Present Value of Future Profits (PVFP) under the risk neutral valuation and the real world valuation with the deflators for a profit-sharing Single Premium Deferred Annuity (SPDA)s subject to a participation rate, a spread on the index earning, and a minimum guarantee rate. The models built for this paper point to the following conclusions Firstly, State-Price Deflators and risk neutral valuation result in equivalent valuation for publicly traded securities; and secondly, State-Price Deflators and risk neutral valuation result in equivalent valuation for non-traded cash flows such as deferred annuities allowing for participation rate in an equity index, a cap and a spread. |
| Keywords: | Deflators, ESG, Monte-Carlo, Risk-neutral, Martingale |
| JEL: | G22 C63 G12 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:aay:wpaper:13_011&r=ias |
| By: | Fulford, Scott L. (Boston College) |
| Abstract: | Credit limit variability is a crucial aspect of the consumption, savings, and debt decisions of households in the United States. Using a large panel, this paper first demonstrates that individuals gain and lose access to credit frequently and often have their credit limits reduced unexpectedly. Credit limit volatility is larger than most estimates of income volatility and varies over the business cycle. While typical models of intertemporal consumption fix the credit limit, I introduce a model with variable credit limits. Variable credit limits create a reason for households to hold both high interest debts and low interest savings at the same time, since the savings act as insurance. Simulating the model using the estimates of credit limit volatility, I show that it explains all of the credit card puzzle: why around a third of households in the United States hold both debt and liquid savings at the same time. The approach also offers an important new channel through which financial system uncertainty affects household decisions. |
| Keywords: | credit card puzzle; intertemporal consumption; precaution; credit limits; household finance |
| JEL: | D14 D91 E21 |
| Date: | 2010–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:14-8&r=ias |
| By: | Hugo Benítez-Silva; J. Ignacio García-Pérez; Sergi Jiménez-Martín |
| Abstract: | The discussion about the need for Social Security reforms has recently resurfaced, and is expected to continue to be part of the political agenda in the near future. Our paper is a step in the direction of providing a framework for policy analysis that accounts for employment uncertainty, something that has been relatively overlooked in terms of its link with retirement decisions. In this context, we explicitly consider the participation decision of older individuals along with their decision to claim Social Security retirement benefits, using a sequential decision structure. We have numerically solved and simulated a benchmark model of the inter-temporal decision problem that individuals face in the United States. Our results show that the model is able to explain with great accuracy the strikingly high proportion of individuals who claim benefits exactly at the Early Retirement Age. The model is also able to replicate the declining labor force participation at older ages. Additionally, we discuss a number of policy experiments that suggest that individuals claiming and labor supply decisions are responsive to measures likely to be on the table for policy makers when considering the reforms of the U.S. Social Security system. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2014-12&r=ias |
| By: | Szabolcs Szikszai (University of Pannonia (Department of Economics)); Tamas Badics (University of Pannonia (Department of Economics)) |
| Abstract: | In this report we discuss the factors driving the growth of the global financial sector that are considered by many authors (e.g. Toporowski,1999 and Orhangazi, 2008) to have precipitated the financial crisis of 2007-2008. Our analysis focuses on the behavior of the different types of financial as well as non-financial companies that financed the global expansion of financial assets. First, we find that investors of hedge funds and private equity funds lacked clear guidance on the expected performance due to the lack of transparency of operation and because conventional risk-return measures have proven to be inapplicable. Furthermore, it is also likely that hedge funds drastically decreased liquidity in certain markets during the crisis as they rushed to cash in on their assets. On the other hand, most of their investors were institutional investors, which prepared for potential losses and the collapse of hedge funds during the crisis did not shake the financial system. We also demonstrate the important role of NFCs in the process of financialisation of the economy. We point out that, as a result of a change in NFCs’ relationship with financial markets following 1980, financial assets held by non- financial corporations increased relative to the value of their real assets. This micro- based process of financialisation was triggered by a shift in corporate governance norms towards maximizing shareholder value as well as NFCs’ drive to compensate for falling rates of return in the real sector. The increased interconnectedness of the financial and the corporate sector also seems to explain why the crisis of thefinancial sector inevitably led to a full-fledged economic crisis. Finally, we show that the active proprietary trading of the leading US investment banks was also an important element in the buildup of risks in the financial system preceding the crisis. |
| Keywords: | financial crisis, regulation, insurance fund, hedge fund, mutual fund, pension fund, private equity fund, wealth fund, investment bank, proprietary trading, financialization, share buyback |
| JEL: | G01 G22 G23 G24 G31 G32 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper43&r=ias |
| By: | World Bank; Indonesia National Institute of Research and Development |
| Keywords: | Health Monitoring and Evaluation Health, Nutrition and Population - Adolescent Health Health Systems Development and Reform Disease Control and Prevention Health, Nutrition and Population - Population Policies |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:20404&r=ias |