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Academics have proposed hybrid products with equity features for the financing of housing. In spite of their risk-sharing benefits these products have not become mainstream. This paper studies an important exception, a UK government scheme which in the five years since its inception has provided almost £10 billion of equity financing. The analysis of the origination and prepayment behavior of households who have used the scheme highlights housing affordability constraints. A difference-in-difference analysis of an increase in the maximum government equity limit shows that households took advantage of the increase to buy more expensive properties, and not to reduce their mortgage debt and house price risk exposure. A counterfactual study of homebuyers who, instead of using the equity available, relied on high loan-to-value mortgages shows that their financing choices can be rationalized by an expected rate of house price appreciation of 7.7% per year. We draw general implications for how households approach their house purchase and financing decisions, taking advantage of the fact that the shared equity mortgages that we study allow the separation of the consumption and investment dimensions of housing.

We study the role of housing wealth in financing retirement consumption. In our model retirees: 1. derive utility benefits from remaining in their home (aging in place); and 2. choose in each period whether to maintain their house. The evidence that we present shows that these features are important in explaining the saving decisions of the elderly. The costs and the maintenance requirement of reverse mortgages (RMs) reduce (or eliminate) the benefits of the loans for retirees who wish to do less maintenance. We evaluate the impact of different loan features on retirees’ utility, cash-flows to lenders, and to the government agency that provides mortgage insurance. We show that combining RMs with insurance against a forced home sale (e.g. due to a move to a nursing home) is Pareto improving and can lead to increased demand for the loans due to product complementarities.

We study mortgage design features aimed at stabilizing the macroeconomy. We model overlapping generations of mortgage borrowers and an infinitely lived risk-averse representative mortgage lender. Mortgages are priced using an equilibrium pricing kernel derived from the lender's endogenous consumption. We consider an adjustable-rate mortgage (ARM) with an option that during recessions allows borrowers to pay only interest on their loan and extend its maturity. We find that this maturity extension option stabilizes consumption growth over the business cycle, shifts defaults to expansions, and is welfare enhancing. The cyclical properties of the maturity extension ARM are attractive to a risk-averse lender so the mortgage can be provided at a relatively low cost.

Academics have proposed hybrid products with equity features for the financing of housing. In spite of their risk-sharing benefits these products have not become mainstream. This paper studies an important exception, a UK government scheme which in the five years since its inception has provided almost £10 billion of equity financing. The analysis of the origination and prepayment behavior of households who have used the scheme highlights housing affordability constraints. A difference-in-difference analysis of an increase in the maximum government equity limit shows that households took advantage of the increase to buy more expensive properties, and not to reduce their mortgage debt and house price risk exposure. A counterfactual study of homebuyers who, instead of using the equity available, relied on high loan-to-value mortgages shows that their financing choices can be rationalized by an expected rate of house price appreciation of 7.7% per year. We draw general implications for how households approach their house purchase and financing decisions, taking advantage of the fact that the shared equity mortgages that we study allow the separation of the consumption and investment dimensions of housing.

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Aim of the study is to assess the development of a structured sentinel system for oral health data collection at national level. Furthermore, this pilot study aims to investigate the prevalence data on dentinal sensitivity pain collected through a nationwide network of epidemiological sentinels (dental hygienists). Each sentinel was given a specific number of examinees and periodicity of data collection. Overall, 116 adults were recruited from 19 Regions, 42,24% male and 57,76% female, with a mean age of 26. DH result was consistent with literature data, being 45%. All sentinel completed the standard forms and assured a good compliance. The overall good customer satisfaction assures adhesion of the sentinels to the procedure, and the regular data collection. The pilot study proved the effectiveness of a structured nationwide network of epidemiological sentinels (dental hygienists) for oral health data collection at national level. This methodology can be an essential starting point for periodic comparative studies.

This article reviews the rich and vast literature on defined-benefit (DB) corporate pension plans. The analysis of how firms react to the taxation and regulation of pension plans and to the guarantees provided by the government has allowed researchers to test alternative corporate finance theories, including risk-shifting and risk management. The difficulty in measuring the value of pension liabilities has motivated the study of whether such liabilities are reflected in the cost of capital and in the value of sponsoring firms. The study of the sponsoring firms’ reaction to mandatory pension contribution has provided evidence on financing constraints and on the free-cash-flow hypothesis. Pension plan terminations and freezes have shed light on the nature of the employment contract between the firm and workers.

We use UK data to show that firms that sponsor a defined-benefit pension plan are less likely to be targeted in an acquisition and, conditional on an attempted takeover, they are less likely to be acquired. Our explanation is that the uncertainty in the value of pension liabilities is a source of risk for acquirers of the firm's shares, which works as a takeover deterrent. In support of this explanation we find that these same firms are more likely to use cash when acquiring other firms, and that the announcement of a cash acquisition is associated with positive announcement effects.

Alternative mortgage products have been identified by many as culprits in the financial crisis. However, because of their lower initial mortgage payments relative to loan amount, they may be a valuable tool for households that expect higher and more certain future labor income, and that wish to smooth consumption over the life‐cycle. Using U.K. household‐level panel data, this paper provides evidence in support of this hypothesis and highlights other important benefits of alternative mortgages, including portfolio diversification, tax benefits, and a reduction in the transaction costs incurred in housing transactions.

Background The independent prognostic impact of diabetes mellitus ( DM ) and prediabetes mellitus (pre‐ DM ) on survival outcomes in patients with chronic heart failure has been investigated in observational registries and randomized, clinical trials, but the results have been often inconclusive or conflicting. We examined the independent prognostic impact of DM and pre‐ DM on survival outcomes in the GISSI ‐HF (Gruppo Italiano per lo Studio della Sopravvivenza nella Insufficienza Cardiaca‐Heart Failure) trial. Methods and Results We assessed the risk of all‐cause death and the composite of all‐cause death or cardiovascular hospitalization over a median follow‐up period of 3.9 years among the 6935 chronic heart failure participants of the GISSI ‐ HF trial, who were stratified by presence of DM (n=2852), pre‐ DM (n=2013), and non‐ DM (n=2070) at baseline. Compared with non‐ DM patients, those with DM had remarkably higher incidence rates of all‐cause death (34.5% versus 24.6%) and the composite end point (63.6% versus 54.7%). Conversely, both event rates were similar between non‐ DM patients and those with pre‐ DM . Cox regression analysis showed that DM , but not pre‐ DM , was associated with an increased risk of all‐cause death (adjusted hazard ratio, 1.43; 95% CI , 1.28–1.60) and of the composite end point (adjusted hazard ratio, 1.23; 95% CI , 1.13–1.32), independently of established risk factors. In the DM subgroup, higher hemoglobin A1c was also independently associated with increased risk of both study outcomes (all‐cause death: adjusted hazard ratio, 1.21; 95% CI , 1.02–1.43; and composite end point: adjusted hazard ratio, 1.14; 95% CI , 1.01–1.29, respectively). Conclusions Presence of DM was independently associated with poor long‐term survival outcomes in patients with chronic heart failure. Clinical Trial Registration URL : http://www.clinicaltrials.gov . Unique identifier: NCT 00336336.

To clarify the role of gene polymorphisms on the effect of losartan and losartan plus hydrochlorothiazide on blood pressure (primary end point) and on cardiac, vascular and metabolic phenotypes (secondary end point) after 4, 8, 12, 16 and 48 weeks treatment, an Italian collaborative study – The Study of the Pharmacogenomics in Italian hypertensive patients treated with the Angiotensin receptor blocker losartan (SOPHIA) – on never-treated essential hypertensives (n = 800) was planned. After an 8 week run-in, losartan 50 mg once daily will be given and doubled to 100 mg at week +4 if blood pressure is more than 140/90 mmHg. Hydroclorothiazide 25 mg once daily at week +8 and amlodipine 5 mg at week +16 will be added if blood pressure is more than 140/90 mmHg. Cardiac mass (echocardiography), carotid intima-media thickness, 24 h ambulatory blood pressure, homeostatic model assessment (HOMA) index, microalbuminuria, plasma renin activity and aldosterone, endogenous lithium clearance, brain natriuretic peptide and losartan metabolites will be evaluated. Genes of the renin–angiotensin–aldosterone system, salt sensitivity, the β-adrenergic system and losartan metabolism will be studied (Illumina custom arrays). A whole-genome scan will also be performed in half of the study cohort (1M array, Illumina 500 GX beadstation).

Housing is a major component of wealth. Since house prices fluctuate considerably over time, it is important to understand how these fluctuations affect households’ consumption decisions. Rising house prices may stimulate consumption by increasing households’ perceived wealth, or by relaxing borrowing constraints. This paper investigates the response of household consumption to house prices using UK micro data. We estimate the largest effect of house prices on consumption for older homeowners, and the smallest effect, insignificantly different from zero, for younger renters. This finding is consistent with heterogeneity in the wealth effect across these groups. In addition, we find that regional house prices affect regional consumption growth. Predictable changes in house prices are correlated with predictable changes in consumption, particularly for households that are more likely to be borrowing constrained, but this effect is driven by national rather than regional house prices and is important for renters as well as homeowners, suggesting that UK house prices are correlated with aggregate financial market conditions.

For this study of the governance of defined-benefit pension plans in the United Kingdom, the governance measure was equal to the proportion of trustees of the pension plan in 2002 who were also executive directors of the sponsoring company. The findings indicate that pension plans of indebted companies with a higher proportion of insider than independent trustees invest a higher proportion of pension plan assets in equities and that the sponsors contribute less to the plan and have a larger dividend payout ratio. This evidence supports the agency view that insider trustees act in the interests of shareholders of the sponsor, not necessarily in the interests of pension plan members.

This article solves a realistically calibrated life cycle model of consumption and portfolio choice with non-tradable labor income and borrowing constraints. Since labor income substitutes for riskless asset holdings, the optimal share invested in equities is roughly decreasing over life. We compute a measure of the importance of human capital for investment behavior. We find that ignoring labor income generates large utility costs, while the cost of ignoring only its risk is an order of magnitude smaller, except when we allow for a disastrous labor income shock. Moreover, we study the implications of introducing endogenous borrowing constraints in this incomplete-markets setting. Copyright 2005, Oxford University Press.

I show that investment in housing plays a crucial role in explaining the patterns of cross-sectional variation in the composition of wealth and the level of stockholdings observed in portfolio composition data. Due to investment in housing, younger and poorer investors have limited financial wealth to invest in stocks, which reduces the benefits of equity market participation. House price risk crowds out stockholdings, and this crowding out effect is larger for low financial net-worth. In the model as in the data leverage is positively correlated with stockholdings. Copyright 2005, Oxford University Press.

A typical household has a home mortgage as its most significant financial contract. The form of this contract is correspondingly important. This paper studies the choice between a fixed-rate (FRM) and an adjustable-rate (ARM) mortgage. In an environment with uncertain inflation, a nominal FRM has risky real capital value whereas an ARM has a stable real capital value. However an ARM can increase the short-term variability of required real interest payments. This is a disadvantage of the ARM for a household that faces borrowing constraints and has only a small buffer stock of financial assets. The paper uses numerical methods to solve a life-cycle model with risky labor income and borrowing constraints, under alternative assumptions about available mortgage contracts. While an ARM is generally an attractive form of mortgage, a household with a large mortgage, risky labor income, high risk aversion, a high cost of default, and a low probability of moving is less likely to prefer an ARM. The paper also considers an inflation-indexed FRM, which removes the wealth risk of the nominal FRM without incurring the income risk of the ARM, and is therefore a superior vehicle for household risk management. The welfare gain from mortgage indexation can be very large.

The recording of a transition liability associated with the adoption of SFAS No. 106, Accounting for Postretirement Benefits Other than Pensions, will result in an equity-to-debt shift on GAAP-based financial statements. If SFAS No. 1 06 is adopted for statutory accounting purposes, this shift could impact underwriting capacity.

We empirically study individual pension choice between two di.erent defined benefit (DB) plans and a defined contribution (DC) plan. The DB plans differ in their contribution rates and in the way retirement benefits are calculated, as a proportion of final salary or as a proportion of lifetime earnings. We relate labor income characteristics to the choice of pension plan. Among other determinants of pension choice, we find that: (i) individuals who face higher income growth are more likely to choose DB final salary plans, and less likely to choose the DC plan; (ii) individuals who face higher earnings volatility are less likely to choose DB final salary plans; (iii) individuals with higher earnings are more likely to choose either the DC or the DB final salary plan. These results constitute evidence of self selection of individuals into different pension plans, an important issue for pension fund providers and for those involved in pension reform.

We empirically study individual pension choice between two different defined benefit (DB) plans and a defined contribution (DC) plan. The DB plans differ in their contribution rates and in the way retirement benefits are calculated, as a proportion of final salary or as a proportion of lifetime earnings. We relate labor income characteristics to the choice of pension plan. Among other determinants of pension choice, we find that: (i) individuals who face higher income growth are more likely to choose DB final salary plans, and less likely to choose the DC plan; (ii) individuals who face higher earnings volatility are less likely to choose DB final salary plans; (iii) individuals with higher earnings are more likely to choose either the DC or the DB final salary plan. These results constitute evidence of self selection of individuals into different pension plans, an important issue for pension fund providers and for those involved in pension reform.

Housing is a major component of wealth. Since house prices fluctuate considerably over time, it is important to understand how these fluctuations affect households’ consumption decisions. Rising house prices may stimulate consumption by increasing households’ perceived wealth, or by relaxing borrowing constraints. This paper investigates the response of household consumption to house prices using UK micro data. We estimate the largest effect of house prices on consumption for older homeowners, and the smallest effect, insignificantly different from zero, for younger renters. This finding is consistent with heterogeneity in the wealth effect across these groups. It suggests that as the population ages and becomes more concentrated in the old homeowners group, aggregate consumption may become more responsive to house prices. In addition, we find that regional house prices affect regional consumption growth. Predictable changes in house prices are correlated with predictable changes in consumption, particularly for households that are more likely to be borrowing constrained, but this effect is driven by national rather than regional house prices and is important for renters as well as homeowners, suggesting that UK house prices are correlated with aggregate financial market conditions.

This paper solves numerically the intertemporal consumption and portfolio choice problem of an infinitely-lived investor who faces a time-varying equity premium. The solutions we obtain are very similar to the approximate analytical solutions of Campbell and Viceira (1999), except at the upper extreme of the state space where both the numerical consumption and portfolio rules flatten out. We also consider a constrained version of the problem in which the investor faces borrowing and short-sales restrictions. These constraints bind when the equity premium moves away from its mean in either direction, and are particularly severe for risk-tolerant investors. The constraints have substantial effects on optimal consumption, but much more modest effects on optimal portfolio choice in the region of the state space where they are not binding. JEL classification: G12.

If household portfolios are constrained by borrowing and short-sales restrictions asset markets, then alternative retirement savings systems may affect household welfare by relaxing these constraints. This paper uses a calibrated partial-equilibrium model of optimal life-cycle portfolio choice to explore the empirical relevance of these issues. In a benchmark case, we find ex-ante welfare gains equivalent to a 3.7% increase in consumption from the investment of half of retirement wealth in the equity market. The main channel through which these gains are realized is that the higher average return on equities permits a lower Social Security tax rate on younger households, which helps households smooth their consumption over the life cycle. There is a smaller welfare gain of 0.5% of consumption when Social Security tax rates are held constant. We also find that realistic heterogeneity of risk aversion and labor income risk can strongly affect optimal portfolio choice over the life cycle, which provides one argument for a privatized Social Security system with an element of personal portfolio choice.

This paper solves numerically the intertemporal consumption and portfolio choice problem of an infinitely-lived investor who faces a time-varying equity premium. The solutions we obtain are very similar to the approximate analytical solutions of Campbell and Viceira (1999), except at the upper extreme of the state space where both the numerical consumption and portfolio rules flatten out. We also consider a constrained version of the problem in which the investor faces borrowing and short-sales constraints. These constraints bind when the equity premium moves away from its mean in either direction, and are particularly severe for risk-tolerant investors. The optimal constrained portfolio rules are similar but not identical to the optimal unconstrained rules with the constraints imposed. The portfolio constraints also affect the optimal consumption policy.

If household portfolios are constrained by borrowing and short-sales restrictions asset markets, then alternative retirement savings systems may affect household welfare by relaxing these constraints. This paper uses a calibrated partial-equilibrium model of optimal life-cycle portfolio choice to explore the empirical relevance of these issues. In a benchmark case, we find ex-ante welfare gains equivalent to a 3.7% increase in consumption from the investment of half of retirement wealth in the equity market. The main channel through which these gains are realized is that the higher average return on equities permits a lower Social Security tax rate on younger households, which helps households smooth their consumption over the life cycle. There is a smaller welfare gain of 0.5% of consumption when Social Security tax rates are held constant. We also find that realistic heterogeneity of risk aversion and labor income risk can strongly affect optimal portfolio choice over the life cycle, which provides one argument for a privatized Social Security system with an element of personal portfolio choice.

SFAS 125 was fully effective after December 31, 1997. The main issues covered by the standard are transfers and servicing of financial assets and recognition of liabilities. This article focuses on the differential financial statement effects and ratio impact of recording transfers as sales versus as secured borrowings. An example illustrates the income and ratio manipulation possibilities afforded by the standard.

Despite their vasodilating action, calcium antagonists increase renal sodium excretion. To ascertain whether renal kallikrein plays a role in the renal effects of calcium antagonists, nifedipine (N) (10 mg orally) or placebo (P) was given to 17 male patients with mild to moderate essential hypertension during a 6-h infusion of either saline (S) or aprotinin (A) (2 X 10(6) KIU in 200 ml of saline). Blood pressure (BP) and heart rate (HR) were measured every 10 min, and blood samples were taken at -10, 0, 30, 60, 120, 240, 360 min for plasma renin activity (PRA), creatinine, and osmolarity determinations. Urinary kallikrein, aldosterone, creatinine, and electrolytes were measured in 6-h urine collections. The acute administration of N induced a significant systolic BP (SBP) and diastolic (DBP) fall and a transient PRA increase that peaked at 30 min and were not modified by A infusion. Urinary volume (+47%), Na+ (+54%) and Cl- (+58%) excretion were significantly enhanced by N. There were less pronounced and statistically not significant increases in urinary excretion of Ca2+ (+38%) and K+ (+29%). Infusion of A did not interfere with the natriuretic effect of N. Our data do not support the hypothesis that the kallikrein-kinin system plays an important role in mediating the renal effects of nifedipine in humans.

The use of sublingual captopril has been recently suggested in hypertensive crisis on the assumption of a faster absorption and thus a more rapid effect on blood pressure than with the oral route. To verify this hypothesis we have compared the hypotensive effect of oral and sublingual captopril in 40 essential hypertensives who were randomly allocated to either route of administration. Captopril was administered orally dissolved in water or allowed to dissolve under the tongue. After 5, 10, 20, 30, 40, 60 and 90 minutes blood pressure, Plasma Renin Activity (PRA) and Angiotensin Converting Enzyme (ACE) were measured. No significant differences were found between the two groups in the time course of blood pressure decrease, PRA increase and ACE inhibition. The changes of the parameters studied was superimposable irrespective of the route of administration thus not supporting the hypothesis that sublingual captopril might be absorbed more rapidly.