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Working Papers

An Axiomatization of the Pairwise Netting Proportional Rule in Financial Networks



We consider financial networks where agents are linked to each other via mutual liabilities. In case of bankruptcy, there are potentially many bankruptcy rules, ways to distribute the assets of a bankrupt agent over the other agents. One common approach is to first apply pairwise netting of agents that have mutual liabilities and next use the proportional rule to determine the payments on the basis of the net liabilities. We refer to this as the pairwise netting proportional rule. The pairwise netting proportional rule satisfies the basic requirements of claims boundedness, limited liability, priority of creditors, and continuity. It also satisfies the desirable properties of net impartiality, an agent that has two creditors with the same net claims pays the same amount to both creditors on top of pairwise netting, and invariance to mitosis, an agent that splits into a number of identical agents is not affecting the payments of the other agents. We demonstrate that if net impartiality and invariance to mitosis, together with the basic requirements, are regarded as imperative properties, then payments should be determined by the pairwise netting proportional rule.


Disparities in premature and old age mortality in Europe in the first decade of the 2000s

Mária Lackó


This study presents disparities in mortality rates of 38-41 European countires and attempts at giving explanations for these. Explanatory factors of premature (0-64 ages) and old age (above 65 years old) mortality rates are compared accordig to cause-specific diseases and genders for 2009. In addition, mortality disparities due to avoidable (preventable and treatable) diseases are analyzed on a narrower sample of countries for 2015.

The model applied in the investigations takes into account the living conditions and life-styles of the population in the given countries i.e. GDP per capita, geographical location, air-pollution, educational level, tobacco and spirit consumption habits, and health care expenditures.

The most astonishing result is connected with the effect of air pollution: this factor has a similarly big weight in increasing premature male mortality as the well-known factor, tobacco consumption. Moreover, in the case of old age male mortality air pollution even dominate the effect of smoking.


Indexing public pensions in progress to wages or prices

András Simonovits


Initial public pensions are indexed to the economy-wide average wages, but pensions in progress are indexed to prices, average wages or their combinations––varying across countries and periods. We create a simple overlapping cohorts framework to study the properties of indexing pensions in progress––emphasizing a neglected issue: close wage paths should imply close benefit paths even at real wage shocks. This robustness criterion of an equitable pension system is only satisfied by wage indexing, which in turn requires the adjustment of the accrual rate. To minimize the redistribution from low-earning short-lived citizens to high-earning long-lived ones, progression should be introduced.


Does trust associate with political regime?

Sára Khayouti – Hubert János Kiss – Dániel Horn


Since trust correlates with economic development and in turn economic development associates with political regime, we conjecture that there may be a relationship between trust and political regime. We investigate if trust aggregated on the country level correlates with the political regime. We do not find any significant association, with or without taking into account other factors (e.g. regional location, economic development, geographic conditions, culture) as well.


Patient democracies?

Sára Khayouti – Hubert János Kiss – Dániel Horn


We test if the political regime of a country associates with the patience of the citizens. Recent findings indicate that i) more democratic countries tend to have higher growth, and ii) patience correlates positively with economic development, suggesting a potential link between the political regime and patience. We document a positive association between the level of democracy and patience for most of the political regime indices that we use, even after controlling for region, economic development, geographical conditions, and culture. We report some evidence that political participation is behind our findings.