Junior Must Pay: Pricing the Implicit Put in Privatizing Social Security

Proposals that portion of the Social Security Trust Fund assets be invested in equities entail the possibility that a severe decline in equity prices renders the Fund assets insufficient to provide the currently mandated level of benefits. In this event, existing taxpayers may be compelled to act as insurers of last resort. The cost to taxpayers of such an implicit commitment equals the value of a put option with payoff equal to the benefit's shortfall. We calibrate an OLG model that generates realistic equity premia and value the put. With 20 percent of the Fund assets invested in equities, the highest level currently under serious discussion, we value a put that guarantees the currently mandated level of benefits at one percent of GDP, or a temporary increase in Social Security taxation of at most 25 percent. We value a put that guarantees 90 percent of benefits at merely .03 percent of GDP. In contrast to earlier literature, our results account for the significant changes in the distribution of security returns resulting from Trust Fund purchases. We also explore the inter-generational welfare implications of the guarantee.

Evanescent character of the repulsive thermal Casimir force

The physical origin of the negative thermal correction to the Casimir force between metals is clarified. For this purpose the asymptotic behavior of the thermal Casimir force is analyzed at large and small distances in the real frequency representation. Contributions from propagating and evanescent waves are considered separately. At large distances they cancel each other in substantial degree so that only the attractive Lifshitz limit survives. At smaller separations the repulsive evanescent contribution of s-polarization dominates in the case of two metals or a metal and a high-permittivity dielectric. Common origin and order of magnitude of the repulsion in these two cases demonstrate naturalness of the controversial large thermal correction between metals.Comment: to be published in Phys. Rev.

A study of the application of singular perturbation theory

A hierarchical real time algorithm for optimal three dimensional control of aircraft is described. Systematic methods are developed for real time computation of nonlinear feedback controls by means of singular perturbation theory. The results are applied to a six state, three control variable, point mass model of an F-4 aircraft. Nonlinear feedback laws are presented for computing the optimal control of throttle, bank angle, and angle of attack. Real Time capability is assessed on a TI 9900 microcomputer. The breakdown of the singular perturbation approximation near the terminal point is examined Continuation methods are examined to obtain exact optimal trajectories starting from the singular perturbation solutions

Junior is Rich: Bequests as Consumption

We explore the consequences for asset pricing of admitting a bequest motive into an otherwise standard overlapping generations model where agents trade equity and perpetual debt securities. Prices of securities are seen to be approximately 50% higher in an economy with bequests as compared to an otherwise identical one where bequests are absent. Robust estimates of the equity premium are obtained in several cases where the desire to leave bequests is modest relative to the desire for old age consumption.

Novel High-Molecular Weight Fucosylated Milk Oligosaccharides Identified in Dairy Streams

peer-reviewedOligosaccharides are the third largest component in human milk. This abundance is remarkable because oligosaccharides are not digestible by the newborn, and yet they have been conserved and amplified during evolution. In addition to encouraging the growth of a protective microbiota dominated by bifidobacteria, oligosaccharides have anti-infective activity, preventing pathogens from binding to intestinal cells. Although it would be advantageous adding these valuable molecules to infant milk formula, the technologies to reproduce the variety and complexity of human milk oligosaccharides by enzymatic/organic synthesis are not yet mature. Consequently, there is an enormous interest in alternative sources of these valuable oligosaccharides. Recent research has demonstrated that bovine milk and whey permeate also contain oligosaccharides. Thus, a thorough characterization of oligosaccharides in bovine dairy streams is an important step towards fully assessing their specific functionalities. In this study, bovine milk oligosaccharides (BMOs) were concentrated by membrane filtration from a readily available dairy stream called “mother liquor”, and analyzed by high accuracy MALDI FT-ICR mass spectrometry. The combination of HPLC and accurate mass spectrometry allowed the identification of ideal processing conditions leading to the production of Kg amount of BMO enriched powders. Among the BMOs identified, 18 have high-molecular weight and corresponded in size to the most abundant oligosaccharides present in human milk. Notably 6 oligosaccharides contained fucose, a sugar monomer that is highly abundant in human milk, but is rarely observed in bovine milk. This work shows that dairy streams represent a potential source of complex milk oligosaccharides for commercial development of unique dairy ingredients in functional foods that reproduce the benefits of human milk.This project was supported by the University of California Discovery Program (05GEB01NHB), the National Institute of Environmental Health Sciences (P42ES004699), the National Institutes of Health award R01AT00707, the California Dairy Research Foundation (08 GEB-04 NH) and the CHARGE study (P01 ES11269). The authors acknowledge financial support from the Irish Department of Agriculture, Fisheries and Food through the Food Institutional Research Measure (FIRM–05/R&D/TD/368)

Trapping of a random walk by diffusing traps

We present a systematic analytical approach to the trapping of a random walk by a finite density rho of diffusing traps in arbitrary dimension d. We confirm the phenomenologically predicted e^{-c_d rho t^{d/2}} time decay of the survival probability, and compute the dimension dependent constant c_d to leading order within an eps=2-d expansion.Comment: 16 pages, to appear in J. Phys.

Perfectly Translating Lattices on a Cylinder

We perform molecular dynamics simulations on an interacting electron gas confined to a cylindrical surface and subject to a radial magnetic field and the field of the positive background. In order to study the system at lowest energy states that still carry a current, initial configurations are obtained by a special quenching procedure. We observe the formation of a steady state in which the entire electron-lattice cycles with a common uniform velocity. Certain runs show an intermediate instability leading to lattice rearrangements. A Hall resistance can be defined and depends linearly on the magnetic field with an anomalous coefficient reflecting the manybody contributions peculiar to two dimensions.Comment: 13 pages, 5 figure

Interior Weyl-type Solutions of the Einstein-Maxwell Field Equations

Static solutions of the electro-gravitational field equations exhibiting a functional relationship between the electric and gravitational potentials are studied. General results for these metrics are presented which extend previous work of Majumdar. In particular, it is shown that for any solution of the field equations exhibiting such a Weyl-type relationship, there exists a relationship between the matter density, the electric field density and the charge density. It is also found that the Majumdar condition can hold for a bounded perfect fluid only if the matter pressure vanishes (that is, charged dust). By restricting to spherically symmetric distributions of charged matter, a number of exact solutions are presented in closed form which generalise the Schwarzschild interior solution. Some of these solutions exhibit functional relations between the electric and gravitational potentials different to the quadratic one of Weyl. All the non-dust solutions are well-behaved and, by matching them to the Reissner-Nordstr\"{o}m solution, all of the constants of integration are identified in terms of the total mass, total charge and radius of the source. This is done in detail for a number of specific examples. These are also shown to satisfy the weak and strong energy conditions and many other regularity and energy conditions that may be required of any physically reasonable matter distribution.Comment: 21 pages, RevTex, to appear in General Relativity and Gravitatio