Municipal Bond Demand Premiums and Bond Price Volatility: A Note

The behavior of different components of municipal bond yields may have a significant impact upon bond price behavior. Specifically, demand premiums created by banks may stabilize bond yields in some maturity ranges but not in others; for example, short-term municipals may be stabilized but not long-term. This research implies that bank demand behavior may create demand premiums that stabilize prices of short-term municipal bonds relative to those of Treasury bonds of like maturity. While this implication is inconsistent with the residual theory of bank demand, it is consistent with the tax-shield theory attributed to Hendershott and Koch [3, 4].     

Anti‐microbial hand washes for domestic use – their effectiveness in vitro and in normal use

The killing or removal of microbes from the hands is a critical factor in food safety as many studies have shown the hands to be both an important source of microbes and powerful agents of cross‐contamination in hospital and domestic situations. In response to this concern, a number of novel hand‐washing products have appeared on the market. These products contain anti‐microbial agents and claim to be more effective at removing bacteria than soap bars and conventional liquid soaps. This study attempts to test these claims by comparing the effectiveness of a conventional soap bar, a conventional liquid soap and an anti‐microbial liquid soap containing triclosan. In vitro tests demonstrate that the anti‐microbial liquid soap is more effective than conventional liquid soaps in reducing the viability of six bacterial species and that this effect is both time and dose dependent. However, when the three soaps were compared for their ability to reduce microbial counts on the hands no differences were observed between the three products. For all three soaps, counts after washing sometimes went up and sometimes down when compared with pre‐wash counts. This was the case both when the soaps were used ‘normally’– that is, with great variation in the time taken, water and soap volumes used and method of washing and after a standardized, rigorous wash recommended in clinical situations. Furthermore, reduction in microbial counts from hands contaminated by handling raw meat was no greater for the anti‐microbial than for the conventional liquid soap.     

Slack and Cyclically Sensitive Inflation

We investigate the flattening Phillips relation by making two departures from standard specifications. First, we measure slack using real activity variables that are bandpass filtered or year-over-year changes in activity (these are similar), instead of gaps. Second, we study the components of inflation instead of the standard aggregates. We find that some inflation components have strong and stable correlations with the cyclical component of real activity; these components tend to be relatively well-measured and domestically determined. Other components, typically prices that are poorly measured or internationally determined, have weak and/or unstable correlations with cyclical activity. We construct a new inflation index, cyclically sensitive inflation, that weights the components by their joint cyclical covariation with real activity. The index has strong and stable correlations with cyclical activity and provides a real-time measure of cyclical movements in inflation.     

Why Has U.S. Inflation Become Harder to Forecast?

We examine whether the U.S. rate of price inflation has become harder to forecast and, to the extent that it has, what changes in the inflation process have made it so. The main finding is that the univariate inflation process is well described by an unobserved component trend-cycle model with stochastic volatility or, equivalently, an integrated moving average process with time-varying parameters. This model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well.