Martin Eling, Omid Ghavibazoo and Katja Hanewald
Yu Fu, Michael Sherris and Mengyi Xu
Roshen Fernando and Warwick J. McKibbin
Abstract: This paper updates the analysis of the global macroeconomic consequences of the COVID-19 pandemic in McKibbin and Fernando (2020c) with data as of late October 2020. It also extends the focus to Asian economies and explores four alternative policy interventions coordinated across all economies. The first three policies relate to fiscal policy: an increase in transfers to households of an additional 2% of GDP in 2020; an increase in government spending on goods and services in all economies of 2% of GDP in 2020; an increase in government infrastructure spending in all economies in 2020. The fourth policy is a public health intervention similar to the approach of Australia that successfully manages the virus (flattens the curve) through testing, contact tracing and isolating infected people, coupled with the rapid deployment of an effective vaccine by mid-2021.
The policy that is most supportive of a global economic recovery is the successfully implemented public health policy. Each of the fiscal policies assists in the economic recovery with public sector infrastructure having the most short-term stimulus and longer- term growth benefits.
Keywords: COVID-19, pandemics, infectious diseases, risk, macroeconomics, DSGE, CGE, G- Cubed
Bao Doan, Jonathan J. Reeves and Michael Sherris
Abstract: Insurers and pension funds face the challenges of historically low interest rates and volatility in equity markets, that have been accentuated due to the COVID-19 pandemic. Recent advances in equity portfolio management with a target volatility have been shown to deliver improved on average risk adjusted return, after transaction costs. This paper studies these targeted volatility portfolios in applications to equity, balanced and target-date funds with varying constraints on leverage. Conservative leverage constraints are particularly relevant to pension funds and insurance companies, with more aggressive leverage levels appropriate for alternative investments. We show substantial improvements in fund performance for differing leverage levels and that the return per unit of risk is not significantly impacted by the leverage constraint. Of most interest to insurers and pensions funds, we show that the highest return per unit of risk is in targeted volatility balanced portfolios with equity and bond allocations. Furthermore, we demonstrate the outperformance of targeted volatility portfolios during major stock market crashes, including the crash from the COVID-19 pandemic.
Keywords: COVID-19 pandemic, Equity investment, Portfolio management, Target-date funds, Volatility management JEL classification: C53, G17.
Dandan Yu, Bei Lu, and John Piggott
Abstract: Background: Results of research into the effects of alcohol drinking on population health are inconsistent. Some studies suggest that light to moderate alcohol consump- tion can have a protective effect on morbidity and mortality. But others challenge this view and claim that alcohol use could lead to health loss regardless of the amount. We contribute evidence to this debate by investigating the association between alcohol drinking and all-cause mortality among older adults in China.
Methods: We use nationally representative samples from the Chinese Longitudinal Healthy Longevity Survey and the China Health and Retirement Longitudinal Study. Cox regressions compare ever drinkers who had been exposed to alcohol at some time and lifelong abstainers. We then subdivide ever drinkers into former drinkers who had stopped drinking and current drinkers who were still consuming alcohol. Cox results are supplemented with the interpolated Markov chain approach to calculate total and disability-free life expectancy.
Results: Among older males, ever drinkers seemed to have similar mortality risks to lifelong abstainers. Compared to abstinence, mortality was elevated for former male drinkers, although the effects were generally insignificant. Current male drinkers aged between 65 and 85 had a significantly lower risk of death. With the adjustment for so- cioeconomic status, an average current male drinker at age 65 could expect to live 1.65 years longer in total and 1.84 years longer without disability than lifelong abstainers. However, we can’t reliably estimate alcohol effects on older Chinese females.
Conclusions: Since there is little doubt that heavy drinking is detrimental to health, our results provide evidence supporting an association between light to moderate alcohol consumption and reduced mortality. The recommendation of zero alcohol consump- tion might not be well-justified in the contemporary Chinese context. The importance of alcohol intake in evaluating population health should be taken into account when predicting future health care burdens.
Keywords: Alcohol drinking; All-cause mortality; IMaCh; Life expectancy