Band-Aids to Major Surgery: Making Healthcare Work in the U.S.


Editor’s Note: The following post comes from Sergio Gutiérrez. Sergio is a Chicago-based designer and strategist working at the intersection of people, business, and technology. He graduated from BGSE’s MSc Economics of Science and Innovation in 2011.


So, as it seems, healthcare in the U.S. seems to be in of trouble and, all the voices say, design can do a lot to solve the problem. For this reason, many design and innovation consulting firms are making healthcare a strong focus area. For any designer —or any person trained to solve problems for that matter— this type of problem, because of its complexity, potential impact, and evident “higher purpose” is also very attractive.

However, regardless all the hype around this topic, thinking of design as the main driver for structural change may prove a bit unrealistic — as much as I would like to think that design can save the world. In reality, given the magnitude of the problem in the U.S., this needs to be attacked from different angles, with various strategies and tools and, probably, the most critical ones will have to come from outside the design field.

The system that is supposed to take care of us is very sick.

To help you gauge the magnitude of the U.S. healthcare problem, let me start with some background info — it won’t hurt, I promise: This is what we pay for our healthcare in the U.S…

  • The U.S. 2010 healthcare expenditure was 18% of the GDP, up to $2.6 trillion. That is roughly double the OECD average and this figure is projected to grow up to 26% of GDP by 2037 (scary).
  • The U.S. has the highest healthcare administration costs in the World at triple the OECD average.
  • Cost of healthcare per capita is above $8,200. That is more than double the OECD average of $3,200. Second, but not even close, is Switzerland with $5,200.

This is what we get…

  • There are fewer physicians and hospital beds per person than in most other OECD countries.
  • Life expectancy has increased over the last few decades but less than compared to other economies. Between 1960 and 2010, 9 years compared in the U.S. to 11 years on average on OECD countries.
  • 33% Americans were obese as of 2009 compared to an average 16% in the OECD countries.
  • The cost of certain procedures is much higher in the U.S. and the industry seems to favor more expensive diagnosis procedures.
  • In 2012, 46% of the U.S. population were underinsured or uninsured at some point, if not all year.
  • The system is terribly complex, especially for users: a new study to be released in September shows how only 14% of all insured Americans “can explain all four key health insurance concepts: deductible, co-pay, co-insurance, out-of-pocket maximum”. Can you?
  • And finally, healthcare bills is the number one reason for family bankruptcy in the U.S.

 A vicious circle

Continue reading “Band-Aids to Major Surgery: Making Healthcare Work in the U.S.”

Interest rates after the credit crunch crisis: single versus multiple curve approach

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2014. The project is a required component of every master program.

Interest rates after the credit crunch crisis: single versus multiple curve approach


Oleksandr Dmytriiev, Yining Geng, and Cem Sinan Ozturk

Master Program:


Paper Abstract:

For interest rate derivative pricing, 2007 crisis was a turning point. Prior to the crisis, market interest rates showed consistencies that allowed the use of a single curve for both forwarding and discounting. After the crisis, the inconsistencies in the market interest rates led to development of a new method of the pricing interest rate derivatives, which is called Multi-Curve Framework. We studied the influence of the multi-curve approach on the interest rate derivative pricing. We calculated and compared the price of a simple swap in both multi-curve and single curve approaches. We suggested the generalization of the lattice approach, which is usually used to approximate the short interest rate models, for milti-curve framework. This is a novel result, which have not been developed in the scientific literature. As an example, we showed how to use the Black-Derman-Toy interest rate model on binomial lattice in multi-curve framework and calculated the price of the 2-8 period swaption in a single (LIBOR) curve and two-curve (OIS+LIBOR) approaches. This technique can be used for pricing any interest rate instrument.

Read the full paper or view slides below:

Hate is in the air: The effect of Czech and German radio on elections in pre-war Czechoslovakia

Editor’s note: This post is part of a series showcasing Barcelona GSE master projects by students in the Class of 2014. The project is a required component of every master program.

Hate is in the air: The effect of Czech and German radio on elections in pre-war Czechoslovakia


Bruno Baránek, Kryštof Krotil, and Samuel Škoda

Master Program:


Paper Abstract:

In this paper we assess the role of radio broadcasting in parliamentary elections of 1935 in Czechoslovakia. In our main specification, we regress the vote shares of multiple parties on the signal strengths of Czech and German radio while controlling for demographic and socio-economic characteristics. In particular, we focus on SdP – the ethnic German party with separatist tendencies, which was supported by Hitler’s NSDAP. We find that propaganda contained in the German broadcasts had a polarizing effect on the Czechoslovak political spectrum as it increased the number of votes for SdP and also for Czech communists and nationalists. This increase was compensated by the fall in votes for centrist democratic parties. On the other hand, the Czech radio, which was politically neutral, tended to neutralize the effect of the German radio.

Read the full paper or view slides below:

ECB Outright Monetary Transactions – Master Projects 2014

Editor’s note: This is the first post in a series that will showcase Barcelona GSE master projects by students in the Class of 2014. The master project is a required component of every master program.

 An Evaluation of the ECB’s Outright Monetary Transactions


Madalen Castells, Alexandros Georgakopoulos, Edgar Giménez Trill, Jesse Lastunen, and Karolos Lymperakis-Pitas

Master Program:

International Trade, Finance and Development

Project Summary:

Since early 2009, the euro crisis has influenced most countries of the European Monetary Union (EMU), contributing to persistent low economic growth, high unemployment, steeply rising public financial costs and several problems with the region’s banks. As a result, a wide variety of policy measures have been adopted to address these problems. The central actors have included not only individual member states but also the European Central Bank (ECB), European Commission (EC) and International Monetary Fund (IMF).

While the success of many of the policies in recent years have been contested by different parties, the ECB’s Outright Monetary Transactions (OMT) program initiated in the summer of 2012 has been widely welcomed. Our paper attempts to understand and investigate OMT’s claimed success, motivated especially by the recent efforts to discontinue the policy. The implications with regard to the continuation of the program are potentially enormous, both economically and in terms of the social welfare of European citizens. Altogether, our motivation stems from the catastrophic consequences of the crisis, mixed success of most mid-crisis policy responses, and the uncertain destiny of OMT – perhaps one of the most crucial policy initiatives adopted in Europe after 2008.

Our research questions build on the uncertain contribution of OMT to the declining bond spreads in the peripheral euro nations. We ask whether OMT was responsible for the decline in their spreads after mid-2012, why this might be the case, and whether the policy can be successful in the future. The underlying policy question is simply whether European legislators should resume OMT. Our study is based on two steps: we first examine the ”theory and practice” of the program, also conducting a compact literature survey on other research studying its effectiveness, and then turn to quantitative methods. Our quantitative analysis consists of a regression study and the application of the synthetic control method to examine OMT’s effect on declining bond spreads in the periphery. In the process, we also analyze the nature and dynamics of the post-Lehman hikes in peripheral bond spreads.

Our results suggest, firstly, that the post-Lehman takeoff in sovereign bond spreads in the periphery was largely induced by fears of sovereign default that were separated from ”normal” associations between spreads and economic fundamentals. In particular, the synthetic control countries we construct based on spread determinants in the peripheral countries do not experience any such increases in their spreads. Our regression analysis also indicates that the mid-crisis evolution of peripheral spreads differs strikingly from the values predicted based on the stable period between 2000 and 2008. Furthermore, countries outside the periphery do not suffer from the pronounced association between spreads and fundamentals.

Secondly we find that OMT was very likely to be responsible for the rapid decline in peripheral spreads after mid-2012. The synthetic control countries we construct are not significantly affected by OMT, and some actually experience slight upward trends in their spreads after the policy is announced. The method lends strong support to OMT’s role in the declines in peripheral spreads. Similarly, the regression analysis suggests that post-OMT trends in spreads approach the stable values predicted based on the pre-crisis period. In most peripheral countries, OMT also breaks up the upward trend predicted based on the period before OMT.

Our results broadly validate earlier studies by Krishnamurthy et. al (2013) and Altavilla et al. (2014) regarding OMT’s effect, and Arghyrou and Kontonikas (2011), De Grauwe and Yi (2012) and Di Cesare et al. (2012) regarding the panic-driven nature of the increased peripheral bond spreads during the crisis. Although we consider that further research regarding the suggested long-term costs of OMT is needed, we strongly believe that the benefits of the policy outweigh the hypothetical concerns, and OMT should therefore be resumed by European policymakers. In particular, OMT had the intended effect of reducing bond spreads and stabilizing monetary policy in the European Monetary Union, and there is no indication that actually implementing bond purchases through the program will be necessary.

Read the full project report or view slides below:

Firms in conflict: adapt or perish

Being an entrepreneur is a difficult activity, and being an entrepreneur in a developing country is even more difficult. But being an entrepreneur in a developing country affected by a violent conflict situation seems almost impossible. In fact, it is not.

Francesco Amodio (Economics ’10) is a PhD student in the GPEFM doctoral program organized by Universitat Pompeu Fabra with the Barcelona GSE. He and co-author Michele Di Maio (University of Naples Parthenope) have published the following post on the blog of the Stockholm International Peace Research Institute (SIPRI):

Firms in conflict: adapt or perish

Being an entrepreneur is a difficult activity, and being an entrepreneur in a developing country is even more difficult. But being an entrepreneur in a developing country affected by a violent conflict situation seems almost impossible. In fact, it is not.

Read the full post on the SIPRI blog.

This week, Francesco is co-organizing the first Barcelona GSE Phd Jamboree. The Jamboree is a two-day workshop for GPEFM and IDEA students to share ideas and get feedback on their work in progress.

Note to all Barcelona GSE students and alumni:

If you have been published on the web or in a print publication and would like The Voice to link to your work, please send us a link and a short excerpt.

Transitioning from the BGSE to a PhD

(Originally posted at Econ Point of View)

Determining whether to apply for a Ph.D. program or not, going through each application, and then finally making a decision is exhausting. It forces, rightfully so, the young economist to look on his experiences and his goals. I asked myself over and over about where I had been, where I am, and where I want to go. Here are some of my reflections.

How the heck did I end up here?

Some people find their vocation early in life and take the exact right steps. Other people find their vocation while reading Exchange and Production after a long workday. I took this indirect route. Until I discovered economics, academics were the means and not the ends for me. During my undergraduate, I did well in difficult physics and political science programs and on the football field. This ultimately led to an enjoyable well-paying job. That was my goal for college and I surpassed it.

However, when I started studying economics, my goals drastically changed. Economics turned my life anew. Suddenly, the good job was inadequate. I could not stop researching economics. My free time turned into economics time. Through blogs, ¨pop¨economics, and academic work, I had found my passion. It just kept building. I woke up to read Hayek on information before work and fell asleep to Kirzner on competition and price theory. Throughout my day, I listened to lectures, followed blogs, and economics audiobooks. Economics became my life and it spread from how I made decisions to how I spoke. Continue reading “Transitioning from the BGSE to a PhD”

Spotlight on Faculty Research: Profs. Alessandra Bonfiglioli and Gino Gancia

Gino Gancia

Alessandra Bonfiglioli


Alessandra Bonfiglioli (PhD, Stockholm) and Gino Gancia (PhD, Stockhold) are both Barcelona GSE Affiliated Professors. Last year, they jointly published an article titled “Uncertainty, Electoral Incentives and Political Myopia” in the Economic Journal.


In this recent article, Alessandra Bonfiglioli (UPF) and Gino Gancia (CREI) argue that periods of high economic uncertainty like the current one are particularly favorable for the adoption of long-term policies, such as fiscal stabilizations and other structural reforms. The reason is that high uncertainty implies that economic performance and electoral outcomes depend more on luck and less on policy choices. This makes politicians less reluctant to adopt policies with current costs but future benefits. Continue reading “Spotlight on Faculty Research: Profs. Alessandra Bonfiglioli and Gino Gancia”

Cash Transfers and Labor Supply in Peru


(Editor’s Note: The following post was written by BGSE alumnus Fernando Fernandez (Economics ’13). Fernando is currently a Research Fellow at the Inter-American Development Bank in Washington, D.C.)

The paper:

What do you do when you receive your monthly payment? Do you leave the office a bit earlier and have some drinks with your friends? Now, imagine you are a self-employed, non-paid, agricultural worker who works to support your family in the Andeans regions of Peru. Moreover, suppose you are credit constrained and with limited access to markets. What would you do if you start receiving monthly cash transfers from your generous government? Would not you take a break? After all, you work very hard and need some rest, right?

Such a program does exist and is named JUNTOS (“together” in Spanish). It gives around US $40 per month to mothers of poor children if they send their kids to school and to health centers on a regular basis. The objective of the program is to reduce current and future poverty through cash transfers and investments in children’s human capital.

Labor economists would say that JUNTOS generates an income effect: if your income is higher you would consume more leisure and work less (assuming that leisure is a normal good). However, most of the empirical literature on cash transfers and labor supply find no effects on participation in the labor market, hours of work, and earnings. This literature relies on comparisons between households who receive the transfer to households who do not. Does this mean that labor supply does not respond to cash transfers? Continue reading “Cash Transfers and Labor Supply in Peru”

A Balkan Spring?

Bosnia and Herzegovina
A joke often retold in Bosnia and Herzegovina says: “Why is there no sex in any state firms or government buildings? Because everyone is related to each other”.

A joke often retold in Bosnia and Herzegovina says: “Why is there no sex in any state firms or government buildings? Because everyone is related to each other”. Thanks to prevailing nepotism in the public sector, that is. This joke perfectly portrays the self-ironic attitude of the Balkan mentality that develops as one quickly learns that succeeding in life evolves more around building “a network” than spending time in the library. Yet, in February of 2014, “that joke isn’t funny anymore”[1]. Continue reading “A Balkan Spring?”

Modeling Independence

Ryan D. Griffiths,  Pablo Guillen, and Ferran Martinez i Coma of the University of Sydney released a working paper (PDF) in September with a model of Catalan independence. The abstract:

We propose a game theoretical model to assess the capacity of Catalonia to become a recognized, independent country with at least a de facto European Union (EU) membership. Support for Catalan independence is increasing for reasons pertaining to identity and economics. Spain can avoid a vote for independence by effectively ‘buying-out’ a proportion of the Catalan electorate with a funding agreement favorable to Catalonia. If, given the current economic circumstances, the buying-out strategy is too expensive, a pro-independence vote is likely to pass. Our model predicts an agreement in which Spain and the European Union accommodate Catalan independence in exchange for Catalonia taking a share of the Spanish debt. If Spain and the EU do not accommodate, Spain becomes insolvent, which in turn destabilizes the EU. The current economic woes of Spain and the EU both contribute to the desire for Catalan independence and make it possible.

HT: Tyler Cowen