The Macroeconomic Effects of Fiscal Policy in a Small Open Economy under a Flexible Exchange Rate Regime

This licentiate's thesis analyzes the macroeconomic effects of fiscal policy in a small open economy under a flexible exchange rate regime, assuming that the government spends exclusively on domestically produced goods. The motivation for this research comes from the observation that the literature on the new open economy macroeconomics (NOEM) has focused almost exclusively on two-country global models and the analyses of the effects of fiscal policy on small economies are almost completely ignored. This thesis aims at filling in the gap in the NOEM literature and illustrates how the macroeconomic effects of fiscal policy in a small open economy depend on the specification of preferences. The research method is to present two theoretical model that are extensions to the model contained in the Appendix to Obstfeld and Rogoff (1995). The first model analyzes the macroeconomic effects of fiscal policy, making use of a model that exploits the idea of modelling private and government consumption as substitutes in private utility. The model offers intuitive predictions on how the effects of fiscal policy depend on the marginal rate of substitution between private and government consumption. The findings illustrate that the higher the substitutability between private and government consumption, (i) the bigger is the crowding out effect on private consumption (ii) and the smaller is the positive effect on output. The welfare analysis shows that the less fiscal policy decreases welfare the higher is the marginal rate of substitution between private and government consumption. The second model of this thesis studies how the macroeconomic effects of fiscal policy depend on the elasticity of substitution between traded and nontraded goods. This model reveals that this elasticity a key variable to explain the exchange rate, current account and output response to a permanent rise in government spending. Finally, the model demonstrates that temporary changes in government spending are an effective stabilization tool when used wisely and timely in response to undesired fluctuations in output. Undesired fluctuations in output can be perfectly offset by an opposite change in government spending without causing any side-effects.

Membrane Insertion of C-tail Anchored Proteins

The correct localization of proteins is essential for cell viability. In order to achieve correct protein localization to cellular membranes, conserved membrane targeting and translocation mechanisms have evolved. The focus of this work was membrane targeting and translocation of a group of proteins that circumvent the known targeting and translocation mechanisms, the C-tail anchored protein family. Members of this protein family carry out a wide range of functions, from protein translocation and recognition events preceding membrane fusion, to the regulation of programmed cell death. In this work, the mechanisms of membrane insertion and targeting of two C-tail anchored proteins were studied utilizing in vivo and in vitro methods, in yeast and mammalian cell systems. The proteins studied were cytochrome b(5), a well characterized C-tail anchored model protein, and N-Bak, a novel member of the Bcl-2 family of regulators of programmed cell death. Membrane insertion of cytochrome b(5) into the endoplasmic reticulum membrane was found to occur independently of the known protein conducting channels, through which signal peptide-containing polypeptides are translocated. In fact, the membrane insertion process was independent of any protein components and did not require energy. Instead membrane insertion was observed to be dependent on the lipid composition of the membrane. The targeting of N-Bak was found to depend on the cellular context. Either the mitochondrial or endoplasmic reticulum membranes were targeted, which resulted in morphological changes of the target membranes. These findings indicate the existence of a novel membrane insertion mechanism for C-tail anchored proteins, in which membrane integration of the transmembrane domain, and the translocation of C-terminal fragments, appears to be spontaneous. This mode of membrane insertion is regulated by the target membrane fluidity, which depends on the lipid composition of the bilayer, and the hydrophobicity of the transmembrane domain of the C-tail anchored protein, as well as by the availability of the C-tail for membrane integration. Together these mechanisms enable the cell to achieve spatial and temporal regulation of sub-cellular localization of C-tail anchored proteins.

Missing-In-Metastasis (MIM) regulates cell morphology by promoting plasma membrane and actin cytoskeleton dynamics

The cells of multicellular organisms have differentiated to carry out specific functions that are often accompanied by distinct cell morphology. The actin cytoskeleton is one of the key regulators of cell shape subsequently controlling multiple cellular events including cell migration, cell division, endo- and exocytosis. A large set of actin regulating proteins has evolved to achieve and tightly coordinate this wide range of functions. Some actin regulator proteins have so-called house keeping roles and are essential for all eukaryotic cells, but some have evolved to meet the requirements of more specialized cell-types found in higher organisms enabling complex functions of differentiated organs, such as liver, kidney and brain. Often processes mediated by the actin cytoskeleton, like formation of cellular protrusions during cell migration, are intimately linked to plasma membrane remodeling. Thus, a close cooperation between these two cellular compartments is necessary, yet not much is known about the underlying molecular mechanisms. This study focused on a vertebrate-specific protein called missing-in-metastasis (MIM), which was originally characterized as a metastasis suppressor of bladder cancer. We demonstrated that MIM regulates the dynamics of actin cytoskeleton via its WH2 domain, and is expressed in a cell-type specific manner. Interestingly, further examination showed that the IM-domain of MIM displays a novel membrane tubulation activity, which induces formation of filopodia in cells. Following studies demonstrated that this membrane deformation activity is crucial for cell protrusions driven by MIM. In mammals, there are five members of IM-domain protein family. Functions and expression patterns of these family members have remained poorly characterized. To understand the physiological functions of MIM, we generated MIM knockout mice. MIM-deficient mice display no apparent developmental defects, but instead suffer from progressive renal disease and increased susceptibility to tumors. This indicates that MIM plays a role in the maintenance of specific physiological functions associated with distinct cell morphologies. Taken together, these studies implicate MIM both in the regulation of the actin cytoskeleton and the plasma membrane. Our results thus suggest that members of MIM/IRSp53 protein family coordinate the actin cytoskeleton:plasma membrane interface to control cell and tissue morphogenesis in multicellular organisms.

Folding and Selective Exit of Reporter Proteins from the Yeast Endoplasmic Reticulum

The present study analyses the traffic of Hsp150 fusion proteins through the endoplasmic reticulum (ER) of yeast cells, from their post-translational translocation and folding to their exit from the ER via a selective COPI-independent pathway. The reporter proteins used in the present work are: Hsp150p, an O-glycosylated natural secretory protein of Saccharomyces cerevisiae, as well as fusion proteins consisting of a fragment of Hsp150 that facilitates in the yeast ER proper folding of heterologous proteins fused to it. It is thought that newly synthesized polypeptides are kept in an unfolded form by cytosolic chaperones to facilitate the post-translational translocation across the ER membrane. However, beta-lactamase, fused to the Hsp150 fragment, folds in the cytosol into bioactive conformation. Irreversible binding of benzylpenicillin locked beta-lactamase into a globular conformation, and prevented the translocation of the fusion protein. This indicates that under normal conditions the beta-lactamase portion unfolds for translocation. Cytosolic machinery must be responsible for the unfolding. The unfolding is a prerequisite for translocation through the Sec61 channel into the lumen of the ER, where the polypeptide is again folded into a bioactive and secretion-competent conformation. Lhs1p is a member of the Hsp70 family, which functions in the conformational repair of misfolded proteins in the yeast ER. It contains Hsp70 motifs, thus it has been thought to be an ATPase, like other Hsp70 members. In order to understand its activity, authentic Lhs1p and its recombinant forms expressed in E. coli, were purified. However, no ATPase activity of Lhs1p could be detected. Nor could physical interaction between Lhs1p and activators of the ER Hsp70 chaperone Kar2p, such as the J-domain proteins Sec63p, Scj1p, and Jem1p and the nucleotide exchange factor Sil1p, be demonstrated. The domain structure of Lhs1p was modelled, and found to consist of an ATPase-like domain, a domain resembling the peptide-binding domain (PBD) of Hsp70 proteins, and a C-terminal extension. Crosslinking experiments showed that Lhs1p and Kar2p interact. The interacting domains were the C-terminal extension of Lhs1p and the ATPase domain of Kar2p, and this interaction was independent of ATPase activity of Kar2p. A model is presented where the C-terminal part of Lhs1p forms a Bag-like 3 helices bundle that might serve in the nucleotide exchange function for Kar2p in translocation and folding of secretory proteins in the ER. Exit of secretory proteins in COPII-coated vesicles is believed to be dependent of retrograde transport from the Golgi to the ER in COPI-coated vesicles. It is thought that receptors escaping to the Golgi must be recycled back to the ER exit sites to recruit cargo proteins. We found that Hsp150 leaves the ER even in the absence of functional COPI-traffic from the Golgi to the ER. Thus, an alternative, COPI-independent ER exit pathway must exists, and Hsp150 is recruited to this route. The region containing the signature guiding Hsp150 to this alternative pathway was mapped.

Lipid assisted membrane entry in specific phospholipid targeted protein systems

The purpose of this thesis project is to study changes in the physical state of cell membranes during cell entry, including how these changes are connected to the presence of ceramide. The role of enzymatical manipulation of lipids in bacterial internalization is also studied. A novel technique, where a single giant vesicle is chosen under the microscope and an enzyme coupled-particle attached to the micromanipulator pipette towards the vesicle, is used. Thus, the enzymatic reaction on the membrane of the giant vesicle can be followed in real-time. The first aim of this study is to develop a system where the localized sphingomyelinase membrane interaction could be observed on the surface of the giant vesicle and the effects could be monitored with microscopy. Domain formation, which resembles acid sphingomyelinase (ASMase), causes CD95 clustering in the cell membrane due to ceramide production (Grassmé et al., 2001a; Grassmé et al., 2001b) and the formation of small vesicles inside the manipulated giant vesicle is observed. Sphingomyelinase activation has also been found to be an important factor in the bacterial and viral invasion process in nonphagocytic cells (Grassmé et al., 1997; Jan et al., 2000). Accordingly, sphingomyelinase reactions in the cell membrane might also give insight into bacterial or viral cellular entry events. We found sphingomyelinase activity in Chlamydia pneumonia elementarybodies (EBs). Interestingly, the bacterium enters host cells by endocytosis but the internalization mechanism of Chlamydia is unknown. The hypothesis is that sphingomyelin is needed for host cell entry in the infection of C. pneumonia. The second project focuses on this subject. The goal of the third project is to study a role of phosphatidylserine as a target for a membrane binding protein. Phosphatidylserine is chosen because of its importance in fusion processes. This will be another example for the importance of lipids in cell targeting, internalization, and externalization.

Entry of the membrane-containing bacteriophages into their hosts

Viruses are biological entities able to replicate only within their host cells. Accordingly, entry into the host is a crucial step of the virus life-cycle. The focus of this study was the entry of bacterial membrane-containing viruses into their host cells. In order to reach the site of replication, the cytoplasm of the host, bacterial viruses have to traverse the host cell envelope, which consists of several distinct layers. Lipid membrane is a common feature among animal viruses but not so frequently observed in bacteriophages. There are three families of icosahedral bacteriophages that contain lipid membranes. These viruses belong to families Cystoviridae, Tectiviridae, and Corticoviridae. During the course of this study the entry mechanisms of phages representing the three viral families were investigated. We employed a range of microbiological, biochemical, molecular biology and microscopy techniques that allowed us to dissect phage entry into discrete steps: receptor binding, penetration through the outer membrane, crossing the peptidoglycan layer and interaction with the cytoplasmic membrane. We determined that bacteriophages belonging to the Cystoviridae, Tectiviridae, and Corticoviridae viral families use completely different strategies to penetrate into their host cells.

Substrate Selectivity and Molecular Adaptation in the Outer Membrane Proteases of Yersinia pestis and Salmonella enterica

Proteolysis is important in bacterial pathogenesis and colonization of animal and plant hosts. In this work I have investigated the functions of the bacterial outer membrane proteases, omptins, of Yersinia pestis and Salmonella enterica. Y. pestis is a zoonotic pathogen that causes plague and has evolved from gastroenteritis-causing Yersinia pseudotuberculosis about 13 000 years ago. S. enterica causes gastroenteritis and typhoid fever in humans. Omptins are transmembrane β-barrels with ten antiparallel β-strands and five surface-exposed loops. The loops are important in substrate recognition, and variation in the loop sequences leads to different substrate selectivities between omptins, which makes omptins an ideal platform to investigate functional adaptation and to alter their polypeptide substrate preferences. The omptins Pla of Y. pestis and PgtE of S. enterica are 75% identical in their amino acid sequences. Pla is a multifunctional protein with proteolytic and non-proteolytic functions, and it increases bacterial penetration and proliferation in the host. Functions of PgtE increase migration of S. enterica in vivo and bacterial survival in mouse macrophages, thus enhancing bacterial spread within the host. Mammalian plasminogen/fibrinolytic system maintains the balance between coagulation and fibrinolysis and participates in several cellular processes, e.g., cell migration and degradation of extracellular matrix proteins. This system consists of activation cascades, which are strictly controlled by several regulators, such as plasminogen activator inhibitor 1 (PAI-1), α2-antiplasmin (α2AP), and thrombin-activatable fibrinolysis inhibitor (TAFI). This work reveals novel interactions of the omptins of Y. pestis and S. enterica with the regulators of the plasminogen/fibrinolytic system: Pla and PgtE inactivate PAI-1 by cleavage at the reactive site peptide bond, and degrade TAFI, preventing its activation to TAFIa. Structure-function relationship studies with Pla showed that threonine 259 of Pla is crucial in plasminogen activation, as it prevents degradation of the plasmin catalytic domain by the omptin and thus maintains plasmin stability. In this work I constructed chimeric proteins between Pla and Epo of Erwinia pyrifoliae that share 78% sequence identity to find out which amino acids and regions in Pla are important for its functions. Epo is neither a plasminogen activator nor an invasin, but it degrades α2AP and PAI-1. Cumulative substitutions towards Pla sequence turned Epo into a Pla-like protein. In addition to threonine 259, loops 3 and 5 are critical in plasminogen activation by Pla. Turning Epo into an invasin required substitution of 31 residues located at the extracellular side of the Epo protein above the lipid bilayer, and also of the β1-strand in the N-terminal transmembrane region of the protein. These studies give an example of how omptins adapt to novel functions that advantage their host bacteria in different ecological niches.

Outer Membrane Protease/Adhesin PgtE of Salmonella enterica: Role in Salmonella-Host Interaction

Salmonella enterica serovar Typhimurium is a common cause of gastroenteritis in humans and, occasionally, also causes systemic infection. During systemic infection an important characteristic of Salmonella is its ability to survive and replicate within macrophages. The outer membrane protease PgtE of S. enterica is a member of the omptin family of outer membrane aspartate proteases, which are beta-barrel proteins with five surface-exposed loops. The main goals of this study were to characterize biological substrates and pathogenesis-associated functions of PgtE and to determine the conditions where PgtE is fully active. In this study we found that PgtE requires rough lipopolysaccharide (LPS) to be functional but is sterically inhibited by the long O-antigen side chain in smooth LPS. Salmonella isolates normally are smooth with a long oligosaccharide O-antigen, and PgtE remains functionally cryptic in wild-type Salmonella cultivated in vitro. Interestingly, our results showed that due to increased expression of PgtE and to reduced length of the LPS O-antigen chains, the wild-type Salmonella expresses highly functional PgtE when isolated from mouse macrophage-like J774A.1 cells. Salmonella is thought to be continuously released from macrophages to infect new ones, and our results suggest that PgtE is functional during these transient extracellular growth phases. Six novel host protein substrates were identified for PgtE in this work. PgtE was previously known to activate human plasminogen (Plg) to plasmin, a broad-spectrum serine protease, and in this study PgtE was shown to interfere with the Plg system by inactivating the main inhibitor of plasmin, alpha2-antiplasmin. PgtE also interferes with another important proteolytic system of mammals by activating pro-matrix metalloproteinase-9 to an active gelatinase. PgtE also directly degrades gelatin, a component of extracellular matrices. PgtE also increases bacterial resistance against complement-mediated killing in human serum and enhances survival of Salmonella within murine macrophages as well as in the liver and spleen of intraperitoneally infected mice. Taken together, the results in this study suggest that PgtE is a virulence factor of Salmonella that has adapted to interfere with host proteolytic systems and to modify extracellular matrix; these features likely assist the migration of Salmonella during systemic salmonellosis.

Plant guard cell anion channel SLAC1 regulates stomatal closure

Plants are rooted to their growth place; therefore it is important that they react adequately to changes in environmental conditions. Stomatal pores, which are formed of a pair of guard cells in leaf epidermis, regulate plant gas-exchange. Importantly, guard cells protect the plant from desiccation in drought conditions by reducing the aperture of the stomatal pore. They serve also as the first barrier against the major air pollutant ozone, but the behaviour of guard cells during ozone exposure has not been sufficiently addressed. Aperture of the stomatal pore is regulated by the influx and efflux of osmotically active ions via ion channels and transporters across the guard cell membrane, however the molecular identity of guard cell plasma membrane anion channel has remained unknown. In the frame of this study, guard cell behaviour during ozone exposure was studied using the newly constructed Arabidopsis whole-rosette gas-exchange system. Ozone induced a Rapid Transient Decrease (RTD) in stomatal conductance within 10 min from the start of exposure, which was followed by a recovery in the conductance within the next 40 min. The decrease in stomatal conductance was dependent on the applied ozone concentration. Three minutes of ozone exposure was sufficient to induce RTD and further ozone application during the closure-recovery process had no effect on RTD, demonstrating that the whole process is programmed within the first three minutes. To address the molecular components responsible for RTD, the ozone response was measured in 59 different Arabidopsis mutants involved in guard cell signalling. Four of the tested mutants slac1 (originally rcd3), ost1, abi1-1 and abi2-1 lacked RTD completely. As the ozone sensitive mutant slac1 lacked RTD, the next aim of this study was to identify and characterize SLAC1. SLAC1 was shown to be a central regulator in response to all major factors regulating guard cell aperture: CO2, light/darkness transitions, ozone, relative air humidity, ABA, NO, H2O2, and extracellular Ca2+. It encodes the first guard cell plasma membrane slow type anion channel to be identified at the molecular level. Interestingly, the rapid type anion conductance was intact in slac1 mutant plants. For activation, SLAC1 needs to be phosphorylated. Protein kinase OST1 was shown to phosphorylate several amino acids in the N-terminal tail of SLAC1, Ser120 was one of its main targets, which led to SLAC1 activation. The lack of RTD in type 2C protein phosphatase mutants abi1-1 and abi2-1, suggests that these proteins have a regulatory role in ozoneinduced activation of the slow type anion channel.