scholarly journals A Balanced Portfolio Can Have a Higher Geometric Return than the Risky Asset

2021 ◽  
Vol 14 (9) ◽  
pp. 409
Author(s):  
Miriam Arden ◽  
Tiemen Woutersen
Keyword(s):  
Risk Premium ◽  
Large Fraction ◽  
Developed Countries ◽  
Policy Implications ◽  
Government Bonds ◽  
Stock Portfolios ◽  
Bond Portfolio ◽  
Target Date ◽  
Stock Portfolio ◽  
The U.S

In the U.S., the geometric return on stocks has been higher than the geometric return on bonds over long periods. We study whether balanced portfolios have a larger geometric return (and expected log return) than stock portfolios when the risk premium is low. We use a theoretical model and historical data and find that this is the case. This low-risk premium is often observed in other developed countries. Further, in the past two decades, a balanced portfolio with 70% or 90% invested in the U.S. stock market (with the remainder invested in U.S. government bonds) performed better than a 100% stock or bond portfolio. The reason for this is that a pure stock portfolio loses a large fraction of its value in a downturn. We show that this result is not driven by outliers, and that it occurs even when the returns are log normally distributed. This result has broad policy implications for the construction of pension systems and target-date mutual funds.

scholarly journals Term Premium Dynamics and its Determinants: The Mexican Case

2020 ◽  
Author(s):  
Ana Aguilar-Argaez ◽  
María Diego-Fernández ◽  
Rocío Elizondo ◽  
Jessica Roldán-Peña
Keyword(s):  
Interest Rate ◽  
Risk Premium ◽  
Global Financial Crisis ◽  
Government Bonds ◽  
Term Premium ◽  
Mexican Government ◽  
Low Levels ◽  
Main Determinants ◽  
The Global Financial Crisis ◽  
The U.S

We estimate the term premium implicit in 10-year Mexican government bonds from 2004 to 2019, and analyze the main determinants explaining its dynamics. To do so, we decompose the longterm interest rate into its two components: the expected short-term interest rate and the term premium. The results show that the Mexican term premium increased significantly during three episodes: i) the global financial crisis; ii) the "Taper Tantrum"; and iii) the U.S. presidential election of 2016. In contrast, the term premium decreased, to historically low levels, during the U.S. "Quantitative Easing" and the "Operation Twist" programs. Additionally, we find that the main determinants that explain the dynamics of the premium are the compensation for FX risk (as a proxy of inflationary risk premium), the real compensation, and the U.S. term premium

Maltreatment Variation and Trends in Six Developed Countries Using Multiple Indicators: Methods and Policy Implications

2012 ◽  
Author(s):  
Ruth Gilbert ◽  
John D. Fluke ◽  
Melissa O'Donnell ◽  
Arturo Gonzalez-Izquierdo ◽  
Marni Brownell ◽  
...  
Keyword(s):  
Developed Countries ◽  
Policy Implications ◽  
Multiple Indicators

The nineteenth-century US whaling industry: Where is the risk premium? New materials facilitate updated view

2021 ◽  
Vol 33 (2) ◽  
pp. 344-363
Author(s):  
Barbara L. Coffey
Keyword(s):  
Nineteenth Century ◽  
Risk Premium ◽  
Financial Returns ◽  
New Materials ◽  
Government Bonds ◽  
Us Government ◽  
Whaling Industry ◽  
The Mean ◽  
Printed Materials

Materials that were born digital, and printed materials that have been digitized, have aided an updated examination of nineteenth-century US whaling voyages’ financial returns. Items included the American Offshore Whaling Voyages dataset from whalinghistory.org , The Whalemen’s Shipping List and Merchant’s Transcript, a congressman’s speech and a state’s census reports. These works and others, with analysis, showed that for the 11,257 analysable voyages ending in the 1800s, the mean return was 4.7% and 4.6% for whaling and US government bonds, respectively. Ideally, this work will place the nineteenth-century US whaling industry returns in context of other investments.

A Most Active Customer

2014 ◽  
Vol 44 (5) ◽  
pp. 470-502 ◽  
Author(s):  
Simone Turchetti
Keyword(s):  
World War Ii ◽  
Nuclear Power ◽  
Atomic Energy Commission ◽  
Developed Countries ◽  
Atomic Energy ◽  
Peace Treaty ◽  
Research Committee ◽  
Energy Field ◽  
Set Up ◽  
The U.S

After World War II had ended, Italy, not unlike other developed countries, held the ambition to establish an atomic energy program. The Peace Treaty of 1947 forbade its administration from seeking to acquire atomic weaponry, but in 1952 a national research committee was set up to explore the peaceful uses of atomic energy, in particular with regard to building nuclear reactors. One of the committee’s goals was to use nuclear power to make the country less reliant on foreign energy provisions. Yet, this paper reveals that the atomic energy project resulted in actually increasing Italy’s dependence on overseas assistance. I explain the reasons for this outcome by looking at the unfolding of U.S.–Italy relations and the offers of collaboration in the atomic energy field put forth by the U.S. State Department and the U.S. Atomic Energy Commission. I argue that these offers undermined plans to shape the nuclear program as its Italian architects had envisioned, caused them to reconsider the goal of self-sufficiency in energy provisioning, and reconfigured the project to be amenable to the security and economic priorities of the U.S. administration. In this way, I conclude, the path for the Italian project to “de-develop” was set.

Wealth and governance in unstable states : South Africa as a context for Mancur Olson's theory of collective action

2016 ◽  
Author(s):  
◽  
Pamela E. Kelrick
Keyword(s):  
South Africa ◽  
Developing Countries ◽  
Collective Action ◽  
Temporal Dynamics ◽  
Generalized Additive Models ◽  
Political Stability ◽  
Developed Countries ◽  
Additive Models ◽  
Policy Implications ◽  
Empirical Analyses

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] Mancur Olson's theory of collective action has primarily been construed and applied to developed countries with formal economies and (generally) socio-political stability. Yet, he asserted that his theory of collective action would apply in developing countries, even those which are far less stable. This study examined Olson's assertion that collective action applies in developing countries, using South Africa as a case study. The empirical analyses included canonical correlation analysis and generalized additive models, using attribute, spatial, and temporal data to understand the spatial and temporal dynamics between wealth and governance in South Africa. Geographic clustering by race and economic class remains persistent despite democratic reforms and improved governance engagement. In addition, findings of the empirical analyses were used to evaluate Olson's theory of collective action and frame the policy implications. Collective action is consistent with findings, but, in the context of developing countries, ought to include more prominent considerations of path dependency, increasing returns, and historical institutionalism.

scholarly journals Export Diversification and Ecological Footprint: A Comparative Study on EKC Theory among Korea, Japan, and China

2018 ◽  
Vol 10 (10) ◽  
pp. 3657 ◽  
Author(s):  
Hongbo Liu ◽  
Hanho Kim ◽  
Shuanglu Liang ◽  
Oh-Sang Kwon
Keyword(s):  
Economic Development ◽  
Environmental Kuznets Curve ◽  
Ecological Footprint ◽  
Developed Countries ◽  
Product Diversification ◽  
Policy Implications ◽  
Export Market ◽  
Kuznets Curve ◽  
Export Product ◽  
Export Product Diversification

This study examines the Environmental Kuznets Curve (EKC) hypothesis by adopting a country’s ecological footprint as an indicator of environmental degradation in three East Asian countries: Japan, Korea, and China. During the development process, countries intend to balance between stabilizing export demand and maintaining sustainable economic improvement in the context of deteriorating global warming and climate change. The Environmental Kuznets Curve (henceforth, EKC) was originally developed to estimate the correlation between environment condition and economic development. In this paper, we started from the EKC model and adopted an Error Correction Methodology (henceforth, ECM) to estimate the EKC relationships in Japan, Korea (two developed countries), and China (a developing country) over the period of 1990 to 2013. Besides this, instead of only using Gross Domestic Product (henceforth, GDP), two subdivisions of trade diversification—export product diversification and export market diversification—are introduced as proxy variables for economic development in rectification of the EKC. The results demonstrate that both Korea and Japan satisfy the EKC theory by demonstrating an inverted U-shaped relationship between economic development and ecological footprint, while analysis based on data from China does not display the same tendency. For both export product diversification and market diversification, the more diversified the country’s export is, the bigger its ecological footprint. The policy implications of this econometric outcome are also discussed.

scholarly journals Testing for Asymmetric Central Bank Preferences

2018 ◽  
Vol 10 (4) ◽  
pp. 25
Author(s):  
Felix S. Nyumuah
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Developed Countries ◽  
Central Banks ◽  
Policy Implications ◽  
Less Developed Countries ◽  
Reaction Function ◽  
Policy Rule ◽  
Asymmetric Preferences ◽  
Policy Reaction Function

The linear specification of the ideal monetary policy reaction function has been questioned in recent times by researchers. They have suggested a nonlinear framework where central banks exhibit asymmetric behaviours. Despite the important policy implications of having asymmetric central bank preferences, studies have been on single-country basis focusing almost entirely on advanced economies. The aim of this study is to check the existence of asymmetric preferences on the part of central banks in the context of a panel of countries and not just a single a country. The study derives and estimates a nonlinear flexible optimal monetary policy rule, which permits zone-like as well as asymmetric behaviours using panel data from a range of countries both developed and less developed. Although the findings indicate the presence of asymmetric preferences on the output gap across less developed countries, generally, the evidence is in favour of a linear policy reaction function and symmetric central bank preferences. These findings mean that monetary policy is characterised by a linear policy rule and symmetric central bank preferences. The results also indicate that interest rate ‘smoothing’ reaction by monetary authorities is more pronounced in less developed countries than in developed ones.

Who are the Asset-Poor in China: A Comprehensive Description and Policy Implications

2019 ◽  
Vol 48 (4) ◽  
pp. 765-787
Author(s):  
YUANYUAN YANG ◽  
JUN-HONG CHEN ◽  
MINCHAO JIN
Keyword(s):  
Critical Role ◽  
Large Body ◽  
Well Being ◽  
Developed Countries ◽  
Urban China ◽  
Policy Implications ◽  
Income Poverty ◽  
Chinese Government ◽  
Household Asset ◽  
Asset Poverty

AbstractThere is a large body of literature asserting that household asset holdings play a critical role in prospects of economic and social well-being. This study examines asset-poverty rates in China using the 2013 survey data from the Chinese Household Income Project (CHIP). The results indicate that asset-poverty rates in urban China were lower than those of developed countries, whereas rural and migrant households experienced more serious asset poverty than their counterparts in urban China. In addition, the asset-poverty rates were at least twice the income-poverty rates in China according to the different poverty lines used in the study. Several demographic characteristics were found associated with asset poverty. To assist the Chinese government in reaching its goal of eradicating absolute poverty by 2020 through targeted poverty alleviation, this study suggests including assets in the description and alleviation of poverty.

scholarly journals International Student Transitions

2021 ◽  
Vol 11 (2) ◽  
Author(s):  
Muhammad Sharif Uddin
Keyword(s):  
Higher Education ◽  
United States ◽  
United Kingdom ◽  
International Students ◽  
International Student ◽  
Higher Education Institutions ◽  
Developed Countries ◽  
The United States ◽  
The United Kingdom ◽  
The U.S

Andrade and James Hartshorn (2019) surrounds the transition that international students encounter when they attend universities in developed countries in pursuit of higher education. Andrade and James Hartshorn (2019) describe how some countries like Australia and the United Kingdom host more international students than the United States (U.S.) and provides some guidelines for the U.S. higher education institutions to follow to host more international students. This book contains seven chapters.

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