Self-reported health: potential life underwriting tool?

Any approach that adds speed and efficiency to the underwriting process provides a competitive edge in today's fast changing financial services industry. The acquisition of data for medical underwriting has always been a challenge; with the traditional attending physician statement process adding time, real costs, and opportunity costs to manufacturing life products. Is there any potential for the use of self-reported medical and health history data in medical underwriting assessment? This article reviews published research on the uses and the validity of self-reported health data as it has been applied in current medical and public health practices. Whether self-reported medical history is valid data that can be applied in the underwriting context remains an open question.     

The (ir)relevance of real wage rigidity in the New Keynesian model with search frictions

We develop a New Keynesian model with search and matching frictions in the labor market. We show that the model generates counterfactual labor market dynamics. In particular, it fails to generate the negative correlation between vacancies and unemployment in the data, i.e., the Beveridge curve. Introducing real wage rigidity leads to a negative correlation, and increases the magnitude of labor market flows to more realistic values. However, inflation dynamics are only weakly affected by real wage rigidity. The reason is that labor market frictions give rise to long-run employment relationships. The measure of real marginal costs that is relevant for inflation in the Phillips curve contains a present value component that varies independently of the real wage.     

The post-war transformation of West Germany’s economy: A model for the GDR?

The unification of the two German states within a relatively short period of time now appears inevitable. Yet there is no historical precedent for a successful transformation from a socialist to a market economy. Doubts have been voiced by some as to whether such a transformation is possible. The following article compares the situation facing the GDR today with that facing the Federal Republic in 1948 and examines the conclusions to be drawn from this comparison.     

Terms of trade, catch-up, and home-market effect: The example of Japan

This paper explores theoretically and empirically the medium- and long-run relation of the terms of trade (ratio of traded goods prices) and economic growth of a pair of countries—one of which experiences a major catch-up process towards the other. Two theoretical interdependencies between the terms of trade and economic growth are offered: the home-market effect and the productivity-shock effect. These two effects are tested against each other in a cointegration analysis on data for Japan and the US from 1971 until 1997. Income is cointegrated with the terms of trade. The relevant empirical channel is the home-market effect. However, financial-market effects appear also to be relevant. J. Japanese Int. Economies 21 (4) (2007) 470–488.     

A Theoretical Perspective on Multilateral Agreements on Investment*

Why do we observe some developing countries objecting to the prospect of a Multilateral Agreement on Investment (MAI), even though they have been keen to liberalize investment in preferential agreements in recent years? In this paper, we analyze the issue of MAI implementation and assess the welfare consequences of such kind of agreements. In our model, participation to MAI involves a tradeoff between less rent extraction from multinational firms (MNEs) and more abundant FDI inflows. At equilibrium, either all countries enter MAI, or all countries stay out, or only some of them enter. Coordination problems may induce multiple equilibria: the three types of equilibria may coexist. So, the implementation of MAI may depend not only on structural factors but also on the general “political climate.” When all countries join MAI, world welfare is maximized because this minimizes the hold‐up problem faced by MNEs and stimulates investment. However, in an asymmetric world, welfare gains are not guaranteed for all countries.     

Special economic zones in the People’s Republic of China

By setting up a number of special economic zones, i.e. clearly demarcated regions regulated by special commercial legislation, the Chinese leadership intended, after a period of economic isolation, to integrate China more closely into the international division of labour and to stimulate production by using foreign capital and technology. Have the special economic zones so far been able to live up to expectations? What are the prospects for the future?