Characterizing Gaussian Models of the Term Structure of Interest Rates

Models of the term structure of interest rates are considered for which, under the martingale measure, instantaneous forward rates are Gaussian. The possible forms of the covariance structure are characterized under appropriate formulations of the Markov property. It is demonstrated that imposing Markovian assumptions limits severely the covariances that may be obtained and that the strongest such formulation together with stationarity implies that the whole forward rate surface is necessarily a Gaussian random field described by just three parameters.     

PRICE STABILIZATION THROUGH DEFICIENCY PAYMENTS*

Given a goal of farm price stabilization, the likely effect of a deficiency payment scheme on U.S. hog prices and production is examined for the period 1957 through 1971. A graphic model of supply and demand adjustment is first presented, and empirical results arc then reported. The model output refers to average price to packer and farmer, price variance, changes in farm income, and income variance. The analysis suggests that a deficiency payment scheme would have been modestly successful in achieving likely policy goals. Ay ant pour but la stabilisation des prix agricales, eel article étudie, pour la période de 1957 a 1971, ? effet probable ? un système de versements ? appoint sar le prix et la production des pores attx Etats-Unis. On y présente un graphique sur ? ajustement de ? offre et de la demande suive ? 'un rapport des résultats empiriques. Le graphique indique le prix moyen x ? abatteur et à? agricultettr, la variationdes prix, les changements dans les revenus agricoles et la variation des revenus. ? analyse indique qu'uti système de versements ? appoint aurait oblenu un certain succès en atteignant les bins proposés.     

Lessons learned from the PMI case study: the community perspective

This summary report presents the lessons learned during the two-part qualitative case study on the efficacy of the Prevention Marketing Initiative (PMI) in its implementation of an HIV prevention program. About 179 community participants were included in the PMI program, which discussed topics ranging from organizing initial planning committees to financially sustaining federal demonstration programs. One of the successes observed was the development of rapport with schools and churches; however, during the course of its implementation, the program realized the necessity of 1) approaching the program as an ongoing process; 2) going beyond studying the target population through formative research; 3) changing the role of a community coalition as the project matures; 4) reexamining the composition of coalition in the light of the target audience; 5) advocating the project as a community resource that promotes collaboration; 6) attending the needs of coalition members; and 7) using the media in the campaign. Likewise, several lessons were also learned in the areas of youth involvement, intervention development, program implementation, and maintenance of PMI activities.     

State enforcement of federal standards: Implications for interstate pollution

This paper explores the relationship between interstate air pollution and the division of power between federal and state agencies in setting and enforcing standards. In the context of the US Clean Air Act we argue that the EPA is able to monitor the adoption of technology-based standards more closely than it can monitor state-level enforcement, and that this causes an effective division of control between federal and state agencies. Our analysis offers three main insights into the interstate pollution problem in this setting. First, states have an incentive to enforce standards less stringently on firms located close to downwind borders, and this leads to excessive interstate pollution in equilibrium. Second, there can arise an inherent substitutability in the regulatory problem between strict standards and compliance effort, and this creates a strategic linkage between the federal policy on standards and state policies on enforcement. In particular, a tighter federal standard can induce less selective enforcement but can also lead to less enforcement overall. Third, states will attempt to neutralize the impact of location-based federal standards (that specifically target interstate pollution) in a way that actually exacerbates the underlying enforcement problem.     

Sterling's farewell symphony: The end of the Sterling Area revisited

When and why did Sterling Area countries stop holding sterling as the majority of their foreign exchange reserves? This paper takes a comparative approach to examine the relative importance of various determinants of adherence to sterling in its declining years as an international currency. Using an original cross-national panel dataset covering the period 1965–79, we conduct survival analysis which systematically evaluates a comprehensive set of economic and political factors, at the country level as well as in international relations, about when and why countries chose to diversify their reserves away from sterling. Our results highlight the significance of international transactional factors in influencing adherence to sterling, while the effects of British geopolitical retrenchment, Commonwealth cultural ties, and distributional issues were more ambiguous and sensitive to local conditions. We also find that domestic political and historical factors, such as democracy and imperial legacy, played a role in sterling's international unravelling. Finally, we use our results to examine the experience of individual sterling countries and their decisions to diversify.