Asset pricing models are most commonly built to address opuzzlespin either equity or bond markets. A question that seems worth asking is whether this habitual separation does not make one loose sight of much of the commonality in the behavior of asset pricing anomalies across markets. A commonality which by itself would not seem surprising, if one accepts a relation between macroeconomic aggregates and risk premia in asset markets to exist.
In the empirical asset pricing literature, the integration of bond and equity markets has long been an extensively studied topic. Keim and Stambaugh (1986), for example, construct bond and stock market variables which they find capable of jointly predicting risk premia of common stocks, as well as, corporate and government bonds. Cochrane and Piazzesi (2005) find a single return forecasting factor for one to five year maturity bonds, which turns out to be counter cyclical and to also forecast stock returns. Fama and French (1989) find a term premium with a clear business cycle pattern, showing that the returns on stocks and bonds move together. Moreover, they find that dividend yields, as well as, default spreads forecast returns on both stocks and bonds to be high, when business conditions are weak and low, when they are strong.
Regulators and governments around the world are rewriting the rules for the governance of corporations. Most of these initiatives focus on increasing board vigilance and minority shareholder protection. In the United States, these efforts have culminated in the passage of the Sarbanes-Oxley act, while in the European Union this has led to the talk of a possible European code of conduct on corporate governance.
While some academic research supports the hypothesis that shareholder rights and board vigilance stimulate the growth of financial markets and economics (for instance, see La Porta, Lopez-de Silanes, Shleifer, and Vishny (1998)), the hypothesis remains to be conclusively established. First, the ability of shareholder rights to explain financial market development in the time series is weak. In the United Kingdom around the turn of the last century a legal precedent, Foss vs Harbottle (1843) stripped minority shareholders of virtually all legal protection.
Chronic diseases – long-lasting illnesses, such as asthma, cancer, diabetes, heart disease and depression – are the leading causes of death and disability in the United States. Chronic diseases affect the quality of life of 90 million Americans and are responsible for seven out of every ten deaths in the U.S. killing more than 1.7 million Americans every year.
Chronic illnesses place an enormous burden on patients and their families, both emotionally and economically. But the impact of chronic diseases does not stop there; it reaches the wider community and economy in many ways, primarily the health care and employment systems. Chronic diseases are one of the main drivers behind the use of health care services in the U.S. As the Centers for Disease Control (CDC) has warned, “The United States cannot effectively address escalating health care costs without addressing the problem of chronic diseases.” Of every dollar the nation spends on health care, more than 75 cents is spent on medical care for people with chronic illness. Chronic diseases are also the number one cause of lost productivity in the workplace and missed workdays. In the U.S., the costs of chronic disease are estimated to total more than $800 billion each year.
