Catastrophe insurance market in the Caribbean Region : market failures and recommendations for public sector interventions

The Caribbean region suffers from a high degree of economic volatility. A history of repeated external and domestic shocks has made economic insecurity a major concern across the region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author develops a conceptual framework for risk management and shows that the insurance market for catastrophic risk in the Caribbean region remains a"thin"market characterized by"high"prices and"low"transfer of risk. He analyzes the possible market failures which could explain the lack of development of the catastrophe insurance market. Finally he outlines a set of recommendations for public sector interventions.Payment Systems&Infrastructure,Non Bank Financial Institutions,Insurance&Risk Mitigation,Environmental Economics&Policies,Insurance&Risk Mitigation,Hazard Risk Management,Environmental Economics&Policies,Health Economics&Finance,Non Bank Financial Institutions

An alternative unifying measure of welfare gains from risk-sharing

Following Lucas's (1987) standard approach, welfare gains from international risk-sharing have been measured as the percentage increase in consumption levels that leaves individuals indifferent between, autarky and risk-sharing. The author proposes to measure welfare gains as the increase in consumption growth, instead of consumption levels. When the consumption process is non-stationary, the author's proposed measure has several attractive features: it does not depend on the horizon, and it is robust to alternative specifications of the consumption stochastic processes (from geometric Brownian processes, to Orstein-Ulhenbeck mean-reverting processes), and preferences (from constant relative risk aversion preferences to Kreps-Porteus preferences). The author then uses this measure to estimate potential welfare gains from international risk-sharing for a representative U.S. consumer. The author finds that if international risk-sharing leads only to a complete elimination of aggregate consumption volatility (with no impact on consumption growth), it represents gains to a U.S. consumer of only $12 a year on average. But if international risk-sharing also permits an increase in consumption growth, it may have a sizable impact on welfare. Each 0.5 percentage point increase in consumption growth, represents gains to a U.S. consumer of about$ 160 a year on average.Consumption,Financial Intermediation,Economic Theory&Research,Environmental Economics&Policies,Insurance&Risk Mitigation,Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Inequality,Financial Intermediation

Trade reform in Vietnam : opportunities with emerging challenges

In 1986 Vietnam initiated a transition from a centrally planned economy to a market-oriented economy where the government would keep playing a leading role. These renovation (doi moi) policies were successful at generating economic growth and reducing poverty. In the ten-year socioeconomic strategy endorsed by the Ninth Party Congress in April 2001, the authorities further articulated their development objectives in terms of economic growth and poverty reduction. To reach these objectives, the government indicated that its structural reform priorities were to change Vietnam's trade and financial policies, liberalize the climate for private investment, increase the efficiency of public enterprises, and improve governance. The author argues that the pace of implementation of trade reform-which has been impressive so far-is raising new challenges. On one side, fast liberalization of trade reform may soon conflict with the slow pace of implementation of other reforms, including restructuring of state-owned enterprises and state-owned commercial banks. On the other side, Vietnam would greatly benefit from fast implementation of trade reform and particularly fast accession to the World Trade Organization (WTO), especially after China's recent WTO accession. Auffret concludes that implementation of trade reform will be a testing ground to reveal the extent of Vietnam's commitment to a market-oriented economy.Environmental Economics&Policies,Trade Policy,Rules of Origin,Economic Theory&Research,Payment Systems&Infrastructure,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,World Trade Organization,Economic Theory&Research,Environmental Economics&Policies,Trade and Services

High consumption volatility : the impact of natural disasters?

A history of repeated external and domestic shocks has made economic insecurity a major concern across the Caribbean region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author shows that despite high consumption growth, the Caribbean region suffers from a high volatility of consumption that decreases household welfare. After presenting some empirical evidence that consumption volatility is higher in the Caribbean region than in the rest of the world, he makes some empirically testable inferences that help explain consumption volatility. The authordevelops a conceptual framework for analyzing the effects of catastrophic events on household and aggregate welfare. According to this framework, the volatility of consumption comes from production shocks that are transformed into consumption shocks mostly because of underdeveloped or ineffective risk-management mechanisms. Auffret conducts an empirical analysis of the impact of catastrophic events on 16 countries (6 from the Caribbean region and 10 from Latin America) from 1970-99 and shows that catastrophic events lead to: 1) A substantial decline in the growth of output. 2) A substantial decline in the growth of investment. 3) A more moderate decline in consumption growth (most of the decline is in private consumption, while public consumption declines moderately. 4) A worsening of the current account of the balance of payments.Economic Theory&Research,Financial Intermediation,Public Health Promotion,Environmental Economics&Policies,Consumption,Environmental Economics&Policies,Economic Theory&Research,Inequality,Consumption,Financial Intermediation

Vertebral pain in helicopter pilots

Pathological forms of spinal pain engendered by piloting helicopters were clinically studied. Lumbalgia and pathology of the dorsal and cervical spine are discussed along with their clinical and radiological signs and origins

Inertial terms to magnetization dynamics in ferromagnetic thin films

Inertial magnetization dynamics have been predicted at ultrahigh speeds, or frequencies approaching the energy relaxation scale of electrons, in ferromagnetic metals. Here we identify inertial terms to magnetization dynamics in thin Ni$_{79}$Fe$_{21}$ and Co films near room temperature. Effective magnetic fields measured in high-frequency ferromagnetic resonance (115-345 GHz) show an additional stiffening term which is quadratic in frequency and $\sim$ 80 mT at the high frequency limit of our experiment. Our results extend understanding of magnetization dynamics at sub-picosecond time scales.Comment: 11 pages, 3 figure

Radiological examination of the spine and fitness for work as a helicopter pilot

On the matter of spinal fitness for piloting, standards are proposed that suit the critical spinal segments proper to different jobs. Involved here are primarily pilots of combat airplanes and of helicopters. Fitness for one of these does not necessarily mean fitness for the other