Asymmetric Taxation under Incremental and Sequential Investment

This paper discusses the effects of an asymmetric tax scheme on incremental and sequential investment strategies. The tax base is equal to the firm's return, net of an imputation rate. When the firm's return is less than this rate, however, no tax refunds are allowed. This scheme is neutral under both income and capital uncertainty.     

The Eurosystem, the U.S. Federal Reserve, and the Bank of Japan: Similarities and Differences

The paper provides a systematic comparison of the Eurosystem, the U.S. Federal Reserve, and the Bank of Japan. These monetary authorities exhibit somewhat different status and tasks, which reflect different historical conditions and national characteristics. However, widespread changes in central banking practices in the direction of greater independence and increased transparency, as well as changes in the economic and financial environment over the past 15–20 years, have contributed to reduce the differences among these three world's principal monetary authorities. A comparison based on simple "over-the-counter" policy reaction functions shows no striking differences in terms of monetary policy implementation.     

Cultural Determinants of Household Saving Behavior

Relying on the epidemiological approach, we show that culture is a significant driver of household saving behavior. Second-generation immigrants from countries that put strong emphasis on thrift or wealth accumulation tend to save more in Germany. We confirm these results in data from the United Kingdom. By linking parents to their children, we show that these two cultural components affect the saving behavior of both first-generation immigrants and their children.     

Investment in Health Technologies in a Competitive Model with Real Options

This paper adopts a real options approach to study the optimal timing of investment in new technologies by health care providers competing for patients and the role of alternative payment systems in the adoption decision. The innovative technology provides a better health outcome, thus attracting a larger number of patients. On the other hand, at the early stages of innovation it is assumed to involve a larger degree of uncertainty and higher costs. The role of the payment system turns out not always to be intuitive. In particular, it is shown that a more generous scheme does not always induce earlier investment. By comparing the competitive solution with the social optimal timing, some policy implications are finally discussed.     

The intra-day performance of market timing strategies and trading systems based on Japanese candlesticks

Abstract

We develop market timing strategies and trading systems to test the intra-day predictive power of Japanese candlesticks at the 5-minute interval on the 30 constituents of the DJIA index. Around a third of the candlestick rules outperform the buy-and-hold strategy at the conservative Bonferroni level. After adjusting for trading costs, however, just a few rules remain profitable. When we correct for data snooping by applying the SSPA test on double-or-out market timing strategies, no single candlestick rule beats the buy-and-hold strategy after transaction costs. We also design fully automated trading systems by combining the best-performing candlestick rules. No evidence of out-performance is found after transaction costs. Although Japanese candlesticks can somewhat predict intra-day returns on large US caps, we show that such predictive power is too limited for active portfolio management to outperform the buy-and-hold strategy when luck, risk, and trading costs are correctly measured.     

The Dynamics of Pharmaceutical Regulation and R&D Investments

The paper uses a real option approach to investigate the properties of two widely used schemes of regulating the reimbursement of new pharmaceutical products: standard cost‐effectiveness thresholds and performance‐based risk‐sharing agreements. The use of the latter has been quickly spreading and often criticized in recent times. The results show that the exact definition of the risk‐sharing agreement is key in determining its economic effects. In particular, despite the concerns expressed by some authors, the incentive for a firm to invest in R&D may be the same or even greater than under cost‐effectiveness thresholds. The greater flexibility on the timing of commercialization allowed by risk‐sharing schemes plays a key role, by increasing the value of the option to invest in R&D under uncertainty. Under this scheme, a higher value for the firm is associated with earlier access to innovations for patients. The price for this is less value for money for the insurer at the time of adoption of the innovation.