The transmission of partner mental health to individual life satisfaction: Estimates from a longitudinal household survey

This paper investigates the relationship between partner's mental health and individual life satisfaction, using panel data and calculating the monetary valuation of mental illness. Accounting for measurement error and endogeneity of income, partners' mental health has a significant association with individual well-being. The additional income needed to compensate someone living with a partner with a mental condition is substantial (ranges between USD 33,000 and USD 50,000). Further, individuals do not show adaptation to partners' mental illness. The results have implications for policy-makers wishing to value the effects of policies that aim to impact on mental health and levels of well-being.     

The Impact of Monetary Surprises on Australian Financial Futures Markets: An Insight into Cash Rate Target Announcements

This paper investigates the impact of unanticipated Australian monetary policy changes on AUD/USD exchange rate futures, and 3‐year and 10‐year Australian Treasury bond futures, during the period from January 1997 to April 2010. Our study contributes to the literature by using both the 30‐day and the 90‐day bank accepted bill (BAB) rates to disentangle the unexpected surprise component of monetary policy changes from overall cash rate target changes in the Australian money market, and by concurrently modelling the effects of monetary surprises and other key macroeconomic announcements in Australia. The empirical results suggest that the 30‐day BAB rate is the best proxy for the expected monetary policy actions. We find that the effect of monetary surprises on the volatility of the 3‐ and 10‐year bond future instruments is significant and persistent. We have also documented a strong monetary policy effect on the mean returns of the exchange rate futures, indicating that unexpected monetary policy adjustments have a significant impact on the level of the exchange rate movements rather than on the volatility of the FX futures market.     

Impact of hirsutism on women's quality of life and their valuation of an effective treatment

SUMMARY

The aims of the study were to assess the impact on health-related quality of life in women with excess facial hair; to assess patients' valuation of treatment for excess facial hair using willingness-to-pay (WTP) and to assess the cost per quality adjusted life year (QALY) gained from using an effective treatment for hirsutism. Questionnaires were sent to hirsute women, their partners and a sample of non-hirsute women to establish the basic characteristics and perceptions of each of the groups. Significant differences in health-related quality of life existed between hirsute and non-hirsute women. However, no significant differences between the groups' WTP for effective treatment were evident. Assuming an annual cost of £156 for a woman with facial hirsutism, the cost per QALY gained from the use of eflornithine cream for the treatment of hirsutism was considered to represent value for money even when a low estimate of effectiveness is used.     

Economic Valuation of Health for Environmental Policy: Comparing Alternative Approaches. Introduction and Overview

Protecting human health is a primary goal of environmental policy and economic evaluation of health can help policy-makers judge the relative worth of alternative actions. Economists use two distinct approaches in normatively evaluating health. Whereas environmental economists use benefit-cost analysis supported by monetary valuation in terms of willingness-to-pay, health economists evaluate interventions based on cost-effectiveness or cost-utility analysis (CEA), using quality-adjusted life-years (QALY) or similar indexes. This paper provides background on the controversy about the relative merits of these approaches and introduces the remaining papers in the special issue. These papers (with one exception) were presented at a conference sponsored by the Department of Economics at the University of Central Florida with support from the US Environmental Protection Agency. Although CEA might not lead to substantially different implications for environmental policy than benefit-cost analysis, and QALY may provide a benefit transfer tool to fill gaps in the morbidity valuation literature, the papers in this issue raise serious concerns about the suitability of QALY-based CEA for environmental regulatory analysis. QALY does not in general appropriately represent individual preferences for health and CEA is neither independent of income distribution nor adequate to assess efficiency.     

The impact of increasing neurological disability of multiple sclerosis on health utilities: a systematic review of the literature

Abstract

Background: Multiple sclerosis (MS) is a debilitating disease, accompanied by neurological symptoms of varying severity. Utilities are a key summary index measure used in assessing health-related quality of life in individuals with MS.

Objectives: To provide a systematic review of the literature on utilities of relapsing-remitting MS (RRMS) and secondary progressive MS (SPMS) patients and to review changes in utilities associated with the increasing neurological disability of different stages of MS, as measured by the Expanded Disability Status Scale (EDSS).

Methods: Employing pre-defined search terms and inclusion/exclusion criteria, systematic searches of the literature were conducted in EMBASE, MEDLINE, PsycINFO, the Health Economic Evaluation Database (HEED), and the NHS Economic Evaluations Database (NHS/EED). Proceedings for the International Society for Pharmacoeconomics and Outcomes Research (ISPOR), the European Society for Treatment and Research in MS (ECTRIMS), the American Society for Treatment and Research in MS (ACTRIMS), and the Latin American Society for Treatment and Research in MS (LACTRIMS) were reviewed in addition to the UK National Institute for Health and Clinical Excellence website and the table of contents of PharmacoEconomics and Value in Health.

Results: This review identified 18 studies reporting utilities associated with health states of MS. Utilities ranged from 0.80 to 0.92 for patients with an EDSS score of 1, from 0.49 to 0.71 for patients with an EDSS score of 3, from 0.39 to 0.54 for patients with an EDSS score of 6.5, and from –0.19 to 0.1 for patients with an EDSS score of 9.

Limitations: Several of the studies reviewed relied on data from patient organizations, which may not be fully representative of the general patient populations. Additionally, the majority of the studies relied on retrospective data collection.

Conclusions: Utilities decrease substantially with increasing neurological disability. Cross-country differences are minimal with utility scores following a similar pattern across countries for patients at similar disease severity levels. This consistency in findings is noteworthy, as there is a reliable evidence base for selecting utility values for economic evaluation analyses. However, more research is needed to explore potential differences in utilities between RRMS and SPMS patients.     

Asymmetric monetary policy rules in Australia

In this study, the hypothesis that the Reserve Bank of Australia (RBA) implements an asymmetric monetary policy rule is tested. We estimate both linear and asymmetric monetary policy reaction functions for the period before inflation targeting was adopted, for the period when inflation targeting was explicitly adopted and for the full sample period. The results of the linear monetary policy rules are consistent with the estimates reported from other studies that estimate linear monetary policy rules for Australia. On the other hand, the results of estimating the asymmetric monetary policy rules for the pre-inflation targeting period shows that the RBA had reacted symmetrically, suggesting that it had acted with the same aggressiveness towards both inflation and output gaps of the same magnitude, over both phases of the business cycle. However, for the inflation targeting period, the results show that the RBA had reacted asymmetrically in its policy response to the inflation gap, output gap or both. A similar result is found for the full sample period. This asymmetric response supports the view that a non-linear monetary policy rule emanated from asymmetric preferences, rather than from the existence of a non-linear Phillips curve.     

Using the budget constraint to monetarise impact assessment results

Recent developments in Life Cycle Impact Assessment (LCIA) provide a basis for reducing the uncertainty in monetarisation of environmental impacts. The LCIA method “Ecoindicator99” provides impact pathways ending in a physical score for each of the three safeguard subjects humans, ecosystems, and resources. We redefine these damage categories so that they can be measured in terms of Quality Adjusted Life Years (QALYs) for impacts on human well-being, Biodiversity Adjusted Hectare Years (BAHYs) for impacts on ecosystems, and monetary units for impacts on resource productivity.The monetary value of a QALY can be derived from the budget constraint, i.e. the fact that the average annual income is the maximum that an average person can pay for an additional life year. Since a QALY by definition is a life-year lived at full well-being, the budget constraint can be determined as the potential annual economic production per capita at full well-being. We determine this to be 74,000 EUR with an uncertainty estimate of 62,000 to 84,000 EUR. This corresponds well to the 74,627 EUR willingness-to-pay estimate of the ExternE project. Differences to other estimates can be explained by inherent biases in the valuation approaches used to derive these estimates.The value of ecosystems can be expressed in monetary terms or in terms of QALYs, as the share of our well-being that we are willing to sacrifice to protect the ecosystems. While this trade-off should preferably be done by choice modelling, only one such study was found at the level of abstraction that allows us to relate BAHYs to QALYs or monetary units. Stressing the necessity for such studies, we resort to suggest a temporary proxy value of 1400 EUR/BAHY (or 52 BAHY/QALY), with an uncertainty range of 350 to 3500 EUR/BAHY.The practical consequences of the above-described monetarisation values has been investigated by combining them with the midpoint impact categories of two recent LCIA methods, thus providing a new LCIA method with the option of expressing results in both midpoints and an optional choice between QALY and monetary units as endpoint. From our application of the new method to different case studies, it is noteworthy that resource impacts obtain less emphasis than in previous LCIA methods, while impacts on ecosystems obtain more importance. This shows the significance of being able to express impacts on resources and ecosystems in the same units as impacts on human well-being.     

The economic effects of lowering HIV incidence in South Africa: A CGE analysis

South Africa has the highest UNAIDS HIV severity rating: “generalised pandemic”. A country with this classification requires public health interventions aimed at the general population. This paper investigates the efficacy of one such policy, examining the national economic effects of an increase in condom use. We use an epidemiological model to estimate the impact of condom use on HIV infections distinguished by age, gender and race. The epidemiological model's outputs are input to an economy-wide dynamic general equilibrium model that distinguishes labour market participants by age, gender, race, labour market status and HIV status. We find that the programme generates gains in real consumption with a present value of approximately USD $30 billion, or USD $2000 per household.     

Monetary policy before and after the euro: evidence from Greece

We model Greek monetary policy in the 1990s and use our findings to address two interrelated questions. First, how was monetary policy conducted in the 1990s so that the hitherto highest-inflation EU country managed to join the euro by 2001? Second, how compatible is the ECB monetary policy with Greek economic conditions? We find that Greek monetary policy in the 1990s was: (i) primarily determined by German/ECB interest rates, though still influenced by domestic fundamentals; (ii) involving non-linear output gap effects; (iii) subject to a deficit of credibility culminating in the 1998 devaluation. On the question of compatibility our findings depend on the value assumed for the equilibrium post-euro real interest rate and overall indicate both a reduction in the pre-euro risk premium and some degree of monetary policy incompatibility. Our analysis has policy implications for the new EU members and motivates further research on fast-growing EMU economies.     

Bi‐currency versus Single‐currency Targeting: Lessons from the Russian Experience

This paper examines how the 2005 shift in Russian exchange rate policy from US dollar (USD) single‐currency to USD–EUR (euro) bi‐currency targeting has impacted domestic interest rates. The finding show that this policy shift has disconnected Russian interest rates from US dollar‐denominated interest rates, while instead linking them to a synthetic interest rate composed of USD and EUR rates at the same proportion as that of these two currencies in the currency basket against which the ruble's exchange rate is set. The Russian experience shows that while the adoption of bi‐currency targeting may help ensure that domestic interest rates are less dependent on the monetary cycle of a single country, these rates are instead likely to reflect financial developments in all countries whose currencies are included in the currency basket. This insight is likely to be relevant for other countries that pursue basket‐targeting policies.     

The impact of different scenarios for intermittent bladder catheterization on health state utilities: results from an internet-based time trade-off survey

Aims: Intermittent catheterization (IC) is the gold standard for bladder management in patients with chronic urinary retention. Despite its medical benefits, IC users experience a negative impact on their quality of life (QoL). For health economics based decision making, this impact is normally measured using generic QoL measures (such as EQ-5D) that estimate a single utility score which can be used to calculate quality-adjusted life years (QALYs). But these generic measures may not be sensitive to all relevant aspects of QoL affected by intermittent catheters. This study used alternative methods to estimate the health state utilities associated with different scenarios: using a multiple-use catheter, one-time-use catheter, pre-lubricated one-time-use catheter and pre-lubricated one-time-use catheter with one less urinary tract infection (UTI) per year.

Methods: Health state utilities were elicited through an internet-based time trade-off (TTO) survey in adult volunteers representing the general population in Canada and the UK. Health states were developed to represent the catheters based on the following four attributes: steps and time needed for IC process, pain and the frequency of UTIs.

Results: The survey was completed by 956 respondents. One-time-use catheters, pre-lubricated one-time-use catheters and ready-to-use catheters were preferred to multiple-use catheters. The utility gains were associated with the following features: one time use (Canada: +0.013, UK: +0.021), ready to use (all: +0.017) and one less UTI/year (all: +0.011).

Limitations: Internet-based survey responders may have valued health states differently from the rest of the population: this might be a source of bias.

Conclusion: Steps and time needed for the IC process, pain related to IC and the frequency of UTIs have a significant impact on IC related utilities. These values could be incorporated into a cost utility analysis.     

An inventory of simple monetary policy rules in a New Keynesian macroeconomic model

We derive necessary and sufficient conditions for simple monetary policy rules that guarantee equilibrium determinacy in the New Keynesian monetary model. Our modeling framework is derived from a fully specified optimization model that is amenable to analytical characterisation. The monetary rules analyzed are variants of the basic Taylor rules ranging from simple inflation targeting (current, forward, backward) to canonical Taylor rules with and without inertial nominal interest rates. We establish that determinacy obtains for a wide range of policy parameters, especially when the monetary authority targets output and smoothes interest rates. Contrary to other results in the literature, we do not find a case for super-inertial interest rate policy.     

Inequality and the business cycle: evidence from U.S. survey data

ABSTRACT

We study the effects of macroeconomic shocks on measures of economic inequality obtained from U.S. survey data. To identify aggregate supply, aggregate demand, and monetary policy shocks, we estimate vector autoregressions and impose sign and zero restrictions on impulse response functions. We find that the effects of the macroeconomic shocks on inequality depend on the type of shock as well as on the measure of inequality considered. Contractionary monetary policy shocks increase expenditure and consumption inequality, whereas income and earnings inequality are less affected. Adverse aggregate supply and demand shocks increase income and earnings inequality, but reduce expenditure and consumption inequality. Our results suggest that different channels dominate in the transmission of the shocks. The earnings heterogeneity channel is consistent with the inequality dynamics after monetary policy shocks, but it appears to be less crucial when the economy is hit by either aggregate supply or aggregate demand shocks. Using variance decompositions, we find that although the macroeconomic shocks account for large shares of the variation in the macroeconomic variables, their contributions to the dynamics of the inequality measures are limited.     

More and none? Children and parental well-being: A bimodal outcome from an instrumental variable approach

We examine the effect of the marginal child and the total number of children on self-reported well-being as a proxy for happiness. Prior literature has not controlled for endogeneity. We propose an instrumental variable approach which remediates the existing endogeneity problem, and generates a non-linear marginal effect and a bimodal distribution which explains why prior research arrived at competing positive, negative, or inconclusive outcomes. We provide evidence in support of a "parenting happiness gap" where happiness declines after the birth of the first child; however, beyond the first child additional children have a significant, positive and increasing effect on well-being. Confirmed by evidence from sociology and psychology literature, we consider possible channels which explain these results and discuss their policy implications in the context of fertility, labor market and health outcomes.     

An application of the SF-6D to create heath values in Portuguese working age adults

Objectives: This study describes the health-related quality of life (HRQOL) of the Portuguese working age population and investigates sociodemographic differences.

Methods: Subjects randomly selected from the working age population (n=2,459) were assessed using the SF-36v2 and converted into the preference-based SF-6D.

Results: The mean SF-6D utility value was 0.70 (range 0.63–0.73). The mean utility value was lower for the lower educational level than for the highest. Women, people living in rural areas and older adults reported lower levels of utility values. Non-parametric tests showed that health utility values were significantly related to employment; unskilled manual workers reported utility values lower than non-manual workers. For different diseases, mean utility values ranged from 0.58 (sexual diseases) to 0.66 (hepatic conditions). Cluster analysis was adopted to classify individuals into three groups according to their answers to the SF-6D dimensions. Multinomial logit regression was used to detect sociodemographic characteristics affecting the probability of following each cluster pattern. This study yielded normative data by age and gender for the SF-6D.

Conclusions: The authors conclude that SF-6D is an effective tool for measuring HRQOL in the community so that different population groups can be compared. The preference-based measure used seems to discriminate adequately across sociodemographic differences. These results allow a better understanding of the impact of sociodemographic variables on the burden of illness perception.

A previous version of this paper was presented at the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) 8th Annual European Congress held at Florence, Italy in November 2005.     

Identifying the Interdependence Between Monetary Policy and Financial Stress: Evidence from China

We estimate the interdependence between Chinese monetary policy and financial stress using structural vector autoregression. To solve the simultaneity problem, we employ a strategy including both short‐run and long‐run restrictions that maintains the qualitative properties of monetary policy shocks derived from the literature. This method is applied to Chinese monthly data, together with a newly constructed index of financial stress in this paper. Our findings suggest there exists strong interdependence between monetary policy and financial stress. The financial stress index increases immediately by 0.4 of its standard deviation after a monetary policy shock that raises the M2 growth rate by 1 percentage point. An increase of financial stress by one standard deviation leads to a decline in the M2 growth rate by 2 percentage points.     

The dependence structure between the Canadian stock market and the USD/CAD exchange rate: a copula approach

Abstract This paper investigates the dependence structure between the real Canadian stock returns and the real USD/CAD exchange rate returns, using the Symmetrized Joe‐Clayton (SJC) copula function. We estimate the SJC copula with monthly data over the period 1995:1 to 2006:12. Our results show significant asymmetric static and dynamic tail dependence between the real stock returns and the real exchange rate returns, such that the two returns are more dependent in the left than in the right tail of their joint distribution. We explain this asymmetric dependence in terms of an asymmetric interest rate policy by Canadian monetary authorities in response to changes in the real exchange rate during sub‐periods of falling and rising commodity prices.     

The Bernanke and Blinder Model in an Open Economy: The Italian Case

Abstract. This paper analyzes the functioning of monetary policy transmission mechanisms in Italy from 1984 to 1998, highlighting the role performed by the credit system. We extend the Bernanke and Blinder model (1988) to the case of an open economy under a quasi‐fixed exchange rate regime, deriving analytically the conditions for the functioning of the three monetary policy channels generally identified in the literature (‘money’, ‘exchange rate’ and ‘credit’). These conditions explain the partial effectiveness of monetary policy in achieving price and income targets, while maintaining external equilibrium. By means of a structural VECM analysis, we evaluate the effectiveness of the transmission of monetary policy through the three channels.     

Do the ECB's introductory statements help predict monetary policy? Evidence from a tone analysis

In this paper, we examine whether a tone shock derived from European Central Bank communication helps predict ECB monetary policy decisions. To this purpose, we first use a bag-of-words approach and several dictionaries on the ECB's Introductory Statements to derive a measure of tone. Next, we orthogonalise the tone measure on the latest data available to market participants to compute the tone shock. Finally, we relate the tone shock to future ECB monetary policy decisions. We find that the tone shock is significantly and positively related to future ECB monetary policy decisions, even when controlling for market expectations of monetary policy and the Governing Council's inter-meeting communication. Further extensions show that the predictive ability of the tone shock is robust to (i) the normalization of the tone measure, (ii) alternative market expectations of monetary policy, and (iii) the horizon of macroeconomic variables used in the Taylor-type monetary policy rule. These findings highlight an additional channel through which ECB communication improves monetary policy predictability, suggesting that the ECB may have private information that it communicates through its Introductory Statements.