Three Essays on the Formation and Impact of Economic Policy

Introduction In my thesis I argue that economic policy is all about economics and politics. Consequently, analysing and understanding economic policy ideally has at least two parts. The economics part, which is centered around the expected impact of a specific policy on the real economy both in terms of efficiency and equity. The insights of this part point into which direction the fine-tuning of economic policies should go. However, fine-tuning of economic policies will be most likely subject to political constraints. That is why, in the politics part, a much better understanding can be gained by taking into account how the incentives of politicians and special interest groups as well as the role played by different institutional features affect the formation of economic policies. The first part and chapter of my thesis concentrates on the efficiency-related impact of economic policies: how does corporate income taxation in general, and corporate income tax progressivity in specific, affect the creation of new firms? Reduced progressivity and flat-rate taxes are in vogue. By 2009, 22 countries are operating flat-rate income tax systems, as do 7 US states and 14 Swiss cantons (for corporate income only). Tax reform proposals in the spirit of the "flat tax" model typically aim to reduce three parameters: the average tax burden, the progressivity of the tax schedule, and the complexity of the tax code. In joint work, Marius Brülhart and I explore the implications of changes in these three parameters on entrepreneurial activity, measured by counts of firm births in a panel of Swiss municipalities. Our results show that lower average tax rates and reduced complexity of the tax code promote firm births. Controlling for these effects, reduced progressivity inhibits firm births. Our reading of these results is that tax progressivity has an insurance effect that facilitates entrepreneurial risk taking. The positive effects of lower tax levels and reduced complexity are estimated to be significantly stronger than the negative effect of reduced progressivity. To the extent that firm births reflect desirable entrepreneurial dynamism, it is not the flattening of tax schedules that is key to successful tax reforms, but the lowering of average tax burdens and the simplification of tax codes. Flatness per se is of secondary importance and even appears to be detrimental to firm births. The second part of my thesis, which corresponds to the second and third chapter, concentrates on how economic policies are formed. By the nature of the analysis, these two chapters draw on a broader literature than the first chapter. Both economists and political scientists have done extensive research on how economic policies are formed. Thereby, researchers in both disciplines have recognised the importance of special interest groups trying to influence policy-making through various channels. In general, economists base their analysis on a formal and microeconomically founded approach, while abstracting from institutional details. In contrast, political scientists' frameworks are generally richer in terms of institutional features but lack the theoretical rigour of economists' approaches. I start from the economist's point of view. However, I try to borrow as much as possible from the findings of political science to gain a better understanding of how economic policies are formed in reality. In the second chapter, I take a theoretical approach and focus on the institutional policy framework to explore how interactions between different political institutions affect the outcome of trade policy in presence of special interest groups' lobbying. Standard political economy theory treats the government as a single institutional actor which sets tariffs by trading off social welfare against contributions from special interest groups seeking industry-specific protection from imports. However, these models lack important (institutional) features of reality. That is why, in my model, I split up the government into a legislative and executive branch which can both be lobbied by special interest groups. Furthermore, the legislative has the option to delegate its trade policy authority to the executive. I allow the executive to compensate the legislative in exchange for delegation. Despite ample anecdotal evidence, bargaining over delegation of trade policy authority has not yet been formally modelled in the literature. I show that delegation has an impact on policy formation in that it leads to lower equilibrium tariffs compared to a standard model without delegation. I also show that delegation will only take place if the lobby is not strong enough to prevent it. Furthermore, the option to delegate increases the bargaining power of the legislative at the expense of the lobbies. Therefore, the findings of this model can shed a light on why the U.S. Congress often practices delegation to the executive. In the final chapter of my thesis, my coauthor, Antonio Fidalgo, and I take a narrower approach and focus on the individual politician level of policy-making to explore how connections to private firms and networks within parliament affect individual politicians' decision-making. Theories in the spirit of the model of the second chapter show how campaign contributions from lobbies to politicians can influence economic policies. There exists an abundant empirical literature that analyses ties between firms and politicians based on campaign contributions. However, the evidence on the impact of campaign contributions is mixed, at best. In our paper, we analyse an alternative channel of influence in the shape of personal connections between politicians and firms through board membership. We identify a direct effect of board membership on individual politicians' voting behaviour and an indirect leverage effect when politicians with board connections influence non-connected peers. We assess the importance of these two effects using a vote in the Swiss parliament on a government bailout of the national airline, Swissair, in 2001, which serves as a natural experiment. We find that both the direct effect of connections to firms and the indirect leverage effect had a strong and positive impact on the probability that a politician supported the government bailout.

FOXC2 controls formation and maturation of lymphatic collecting vessels through cooperation with NFATc1.

The mechanisms of blood vessel maturation into distinct parts of the blood vasculature such as arteries, veins, and capillaries have been the subject of intense investigation over recent years. In contrast, our knowledge of lymphatic vessel maturation is still fragmentary. In this study, we provide a molecular and morphological characterization of the major steps in the maturation of the primary lymphatic capillary plexus into collecting lymphatic vessels during development and show that forkhead transcription factor Foxc2 controls this process. We further identify transcription factor NFATc1 as a novel regulator of lymphatic development and describe a previously unsuspected link between NFATc1 and Foxc2 in the regulation of lymphatic maturation. We also provide a genome-wide map of FOXC2-binding sites in lymphatic endothelial cells, identify a novel consensus FOXC2 sequence, and show that NFATc1 physically interacts with FOXC2-binding enhancers. As damage to collecting vessels is a major cause of lymphatic dysfunction in humans, our results suggest that FOXC2 and NFATc1 are potential targets for therapeutic intervention.

Partir de soi, rencontrer l'autre--quelques réflexions sur la formation de psychiatre [The self and the other: a few comments on psychiatric education].

This manuscript has served for an oral presentation in honour of Professor Pierre Bovet who retired from his position as head physician at the Department of Psychiatry of the Lausanne University Hospital, Switzerland. Pierre Bovet has focused his clinical and scientific interest and his teaching activities on the schizophrenic spectrum disorders. The author tries to describe the essential elements of a clinical attitude which allows to really encounter the patient.

A role for the src family kinase Fyn in NK cell activation and the formation of the repertoire of Ly49 receptors.

NK cell function is regulated by a dual receptor system, which integrates signals from triggering receptors and MHC class I-specific inhibitory receptors. We show here that the src family kinase Fyn is required for efficient, NK cell-mediated lysis of target cells, which lack both self-MHC class I molecules and ligands for NKG2D, an activating NK cell receptor. In contrast, NK cell inhibition by the MHC class I-specific receptor Ly49A was independent of Fyn, suggesting that Fyn is specifically required for NK cell activation via non-MHC receptor(s). Compared to wild type, significantly fewer Fyn-deficient NK cells expressed the inhibitory Ly49A receptor. The presence of a transgenic Ly49A receptor together with its H-2(d) ligand strongly reduced the usage of endogenous Ly49 receptors in Fyn-deficient mice. These data suggest a model in which the repertoire of inhibitory Ly49 receptors is formed under the influenced of Fyn-dependent NK cell activation as well as the respective MHC class I environment. NK cells may acquire Ly49 receptors until they generate sufficient inhibitory signals to balance their activation levels. Such a process would ensure the induction of NK cell self-tolerance.

Positive Torsional Strain Causes the Formation of a Four-Way Junction at Replication Forks.

Research by L. Postow, C. Ullsperger, R.W. Keller, C. Bustamante, A.V. Vologodskii, and N.R. Cozzarelli, J. Biol. Chem. 2001, 276, 2790 Condensation and commentary by Alexander Bucka and Andrzej Stasiak, Universite ´ de Lausanne, Switzerland Purpose of the Study To demonstrate that positive torsional strain generated during DNA replication can lead to reversals of replication forks and, consequently can result in the formation of four-way DNA junctions

Paclitaxel-eluting biodegradable synthetic vascular prostheses: a step towards reduction of neointima formation?

BACKGROUND: Clinical small-caliber vascular prostheses are unsatisfactory. Reasons for failure are early thrombosis and late intimal hyperplasia. We thus prepared biodegradable small-caliber vascular prostheses using electrospun polycaprolactone (PCL) with slow-releasing paclitaxel (PTX), an antiproliferative drug. METHODS AND RESULTS: PCL solutions containing PTX were used to prepare nonwoven nanofibre-based 2-mm ID prostheses. Mechanical morphological properties and drug loading, distribution, and release were studied in vitro. Infrarenal abdominal aortic replacement was carried out with nondrug-loaded and drug-loaded prostheses in 18 rats and followed for 6 months. Patency, stenosis, tissue reaction, and drug effect on endothelialization, vascular remodeling, and neointima formation were studied in vivo. In vitro prostheses showed controlled morphology mimicking extracellular matrix with mechanical properties similar to those of native vessels. PTX-loaded grafts with suitable mechanical properties and controlled drug-release were obtained by factorial design. In vivo, both groups showed 100% patency, no stenosis, and no aneurysmal dilatation. Endothelial coverage and cell ingrowth were significantly reduced at 3 weeks and delayed at 12 and 24 weeks in PTX grafts, but as envisioned, neointima formation was significantly reduced in these grafts at 12 weeks and delayed at 6 months. CONCLUSIONS: Biodegradable, electrospun, nanofibre, polycaprolactone prostheses are promising because in vitro they maintain their mechanical properties (regardless of PTX loading), and in vivo show good patency, reendothelialize, and remodel with autologous cells. PTX loading delays endothelialization and cellular ingrowth. Conversely, it reduces neointima formation until the end point of our study and thus may be an interesting option for small caliber vascular grafts.

Wnt secretion and gradient formation.

Concentration gradients formed by the lipid-modified morphogens of the Wnt family are known for their pivotal roles during embryogenesis and adult tissue homeostasis. Wnt morphogens are also implicated in a variety of human diseases, especially cancer. Therefore, the signaling cascades triggered by Wnts have received considerable attention during recent decades. However, how Wnts are secreted and how concentration gradients are formed remains poorly understood. The use of model organisms such as Drosophila melanogaster has provided important advances in this area. For instance, we have previously shown that the lipid raft-associated reggie/flotillin proteins influence Wnt secretion and spreading in Drosophila. Our work supports the notion that producing cells secrete Wnt molecules in at least two pools: a poorly diffusible one and a reggie/flotillin-dependent highly diffusible pool which allows morphogen spreading over long distances away from its source of production. Here we revise the current views of Wnt secretion and spreading, and propose two models for the role of the reggie/flotillin proteins in these processes: (i) reggies/flotillins regulate the basolateral endocytosis of the poorly diffusible, membrane-bound Wnt pool, which is then sorted and secreted to apical compartments for long-range diffusion, and (ii) lipid rafts organized by reggies/flotillins serve as "dating points" where extracellular Wnt transiently interacts with lipoprotein receptors to allow its capture and further spreading via lipoprotein particles. We further discuss these processes in the context of human breast cancer. A better understanding of these phenomena may be relevant for identification of novel drug targets and therapeutic strategies.

Hydrocarbon biomarkers in the Topla-Mezica zinc-lead deposits, northern Karavanke/Drau Range, Slovenia: Paleoenvironment at the site of ore formation

The Mississippi Valley-type zinc and lead deposits at Topla (250,150 metric tons (t) of ore grading 1.0 wt % Zn and 3.3 wt % Pb) and Mezica (19 million metric tons (Mt) of ore grading 5.3 wt % Pb and 2.7 wt % Zn) occur within the Middle to Upper Triassic platform carbonate rocks of the northern Karavanke/Drau Range geotectonic units of the Eastern Alps, Slovenia. The ore and host rocks of these deposits have been investigated by a combination of inorganic and organic geochemical methods to determine major, trace, and rare earth element (REE) concentrations, hydrocarbon distribution, and stable isotope ratios of carbonates, kerogen, extractable organic matter, and individual hydrocarbons. These data combined with sedimentological evidence provide insight into the paleoenvironmental conditions at the site of ore formation. The carbonate isotope composition, the REE patterns, and the distribution of hydrocarbon biomarkers (normal alkanes and steranes) suggest a marine depositional environment. At Topla, a relatively high concentration of redox sensitive trace elements (V, Mo, U) in the host dolostones and REE patterns parallel to that of the North American shale composite suggest that sediments were deposited in a reducing environment. Anoxic conditions enhanced the preservation of organic matter and resulted in relatively higher total organic carbon contents (up to 0.4 wt %). The isotopic composition of the kerogen (delta C-13(kerogon) = -29.4 to -25.0 parts per thousand, delta N-15(kerogen) = -.13.6 to 6.8 parts per thousand) suggests that marine algae and/or bacteria were the main source of organic carbon with a very minor contribution from detrital continental plants and a varying degree of alteration. Extractable organic matter from Topla ore is generally depleted in C-13 compared to the associated kerogen, which is consistent with an indigenous source of the bitumens. The mineralization correlates with delta N-15(kerogen) values around 0 per mil, C-13 depleted kerogen, C-13 enriched n-heptadecane, and relatively high concentrations of bacteria] hydrocarbon biomarkers, indicating a high cyanobacterial biomass at the site of ore formation. Abundant dissimilatory sulfate-reducing bacteria, feeding on the cyanobacterial remains, led to accumulation of biogenic H2S in the pore water of the sediments. This biogenic H2S was mainly incorporated into sedimentary organic matter and diagenetic pyrite. Higher bacterial activity at the ore site also is indicated by specific concentration ratios of hydrocarbons, which are roughly correlated with total Pb plus Zn contents. This correlation is consistent with mixing of hydrothermal metal-rich, fluids and local bacteriogenic sulfide sulfur. The new geochemical data provide supporting evidence that Topla is a low-temperature Mississippi Valley-type deposit formed in an anoxic supratidal saline to hypersaline environment. A laminated cyanobacterial mat, with abundant sulfate-reducing bacteria was the main site of sulfate reduction.

Stable isotope geochemistry and formation mechanisms of quartz veins; Extreme paleoaltitudes of the Central Alps in the Neogene

Quartz veins ranging in size from less than 50 cm length and 5 cm width to greater than 10 m in length and 5 m in width are found throughout the Central Swiss Alps. In some cases, the veins are completely filled with milky quartz, while in others, sometimes spectacular void-filling quartz crystals are found. The style of vein filling and size is controlled by host rock composition and deformation history. Temperatures of vein formation, estimated using stable isotope thermometry and mineral equilibria, cover a range of 450 degrees C down to 150 degrees C. Vein formation started at 18 to 20 Ma and continued for over 10 My. The oxygen isotope values of quartz veins range from 10 to 20 permil, and in almost all cases are equal to those of the hosting lithology. The strongly rock-buffered veins imply a low fluid/rock ratio and minimal fluid flow. In order to explain massive, nearly morromineralic quartz formation without exceptionally large fluid fluxes, a mechanism of differential pressure and silica diffusion, combined with pressure solution, is proposed for early vein formation. Fluid inclusions and hydrous minerals in late-formed veins have extremely low delta D values, consistent with meteoric water infiltration. The change from rock-buffered, static fluid to infiltration from above can be explained in terms of changes in the large-scale deformation style occurring between 20 and 15 Ma. The rapid cooling of the Central Alps identified in previous studies may be explained in part, by infiltration of cold meteoric waters along fracture systems down to depths of 10 km or more. An average water flux of 0.15 cm 3 cm(-2)yr(-1) entering the rock and reemerging heated by 40 degrees C is sufficient to cool rock at 10 km depth by 100 degrees C in 5 million years. The very negative delta D values of < -130 permil for the late stage fluids are well below the annual average values measured in meteoric water in the region today. The low fossil delta D values indicate that the Central Alps were at a higher elevation in the Neogene. Such a conclusion is supported by an earlier work, where a paleoaltitude of 5000 meters was proposed on the basis of large erratic boulders found at low elevations far from their origin.

Endothelial nitric oxide synthase gene transfer restores endothelium-dependent relaxations and attenuates lesion formation in carotid arteries in apolipoprotein E-deficient mice.

Nitric oxide (NO) and monocyte chemoattractant protein-1 (MCP-1) exert partly opposing effects in vascular biology. NO plays pleiotropic vasoprotective roles including vasodilation and inhibition of platelet aggregation, smooth muscle cell proliferation, and endothelial monocyte adhesion, the last effect being mediated by MCP-1 downregulation. Early stages of arteriosclerosis are associated with reduced NO bioactivity and enhanced MCP-1 expression. We have evaluated adenovirus-mediated gene transfer of human endothelial NO synthase (eNOS) and of a N-terminal deletion (8ND) mutant of the MCP-1 gene that acts as a MCP-1 inhibitor in arteriosclerosis-prone, apolipoprotein E-deficient (ApoE(-/-)) mice. Endothelium-dependent relaxations were impaired in carotid arteries instilled with a noncoding adenoviral vector but were restored by eNOS gene transfer (p < 0.01). A perivascular collar was placed around the common carotid artery to accelerate lesion formation. eNOS gene transfer reduced lesion surface areas, intima/media ratios, and macrophage contents in the media at 5-week follow-up (p < 0.05). In contrast, 8ND-MCP-1 gene transfer did not prevent lesion formation. In conclusion, eNOS gene transfer restores endothelium-dependent vasodilation and inhibits lesion formation in ApoE(-/-) mouse carotids. Further studies are needed to assess whether vasoprotection is maintained at later disease stages and to evaluate the long-term efficacy of eNOS gene therapy for primary arteriosclerosis.