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.

Public sector rationing and private sector selection [paper accepted and forthcoming in Journal of Public Economic Theory]

We study the interaction between nonprice public rationing and prices in the private market. Under a limited budget, the public supplier uses a rationing policy. A private firm may supply the good to those consumers who are rationed by the public system. Consumers have different amounts of wealth, and costs of providing the good to them vary. We consider two regimes. First, the public supplier observes consumers' wealth information; second, the public supplier observes both wealth and cost information. The public supplier chooses a rationing policy, and, simultaneously, the private firm, observing only cost but not wealth information, chooses a pricing policy. In the first regime, there is a continuum of equilibria. The Pareto dominant equilibrium is a means-test equilibrium: poor consumers are supplied while rich consumers are rationed. Prices in the private market increase with the budget. In the second regime, there is a unique equilibrium. This exhibits a cost-effectiveness rationing rule; consumers are supplied if and only if their costbenefit ratios are low. Prices in the private market do not change with the budget. Equilibrium consumer utility is higher in the cost-effectiveness equilibrium than the means-test equilibrium [Authors]

A multi-perspective approach to performance anxiety in music students

AbstractPerforming publicly has become increasingly important in a variety of professions. This condition is associated with performance anxiety in almost all performers. Whereas some performers successfully cope with this anxiety, for others it represents a major problem and even threatens their career. Musicians and especially music students were shown to be particularly affected by performance anxiety.Therefore, the goal of this PhD thesis was to gain a better understanding of performance anxiety in university music students. More precisely, the first part of this thesis aimed at increasing knowledge on the occurrence, the experience, and the management of performance anxiety (Article 1). The second part aimed at investigating the hypothesis that there is an underlying hyperventilation problem in musicians with a high level of anxiety before a performance. This hypothesis was addressed in two ways: firstly, by investigating the association between the negative affective dimension of music performance anxiety (MPA) and self-perceived physiological symptoms that are known to co-occur with hyperventilation (Article 2) and secondly, by analyzing this association on the physiological level before a private (audience-free) and a public performance (Article 3). Article 4 places some key variables of Article 3 in a larger context by jointly analyzing the phases before, during, and after performing.The main results of the self-report data show (a) that stage fright is experienced as a problem by one-third of the surveyed students, (b) that the students express a considerable need for more help to better cope with it, and (c) that there is a positive association between negative feelings of MPA and the self-reported hyperventilation complaints before performing. This latter finding was confirmed on the physiological level in a tendency of particularly high performance-anxious musicians to hyperventilate. Furthermore, the psycho-physiological activation increased from a private to a public performance, and was higher during the performances than before or after them. The physiological activation was mainly independent of the MPA score. Finally, there was a low response coherence between the actual physiological activation and the self-reports on the instantaneous anxiety, tension, and perceived physiological activation.Given the high proportion of music students who consider stage fright as a problem and given the need for more help to better cope with it, a better understanding of this phenomenon and its inclusion in the educational process is fundamental to prevent future occupational problems. On the physiological level, breathing exercises might be a good means to decrease - but also to increase - the arousal associated with a public performance in order to meet an optimal level of arousal needed for a good performance.

Biochemical analysis of female mice urine with reference to endocrine function: a key tool for estrus detection.

Species-specific chemical signals released through urine, sweat, saliva and feces are involved in communication between animals. Urinary biochemical constituents along with pheromones may contribute to variation across reproductive cycles and facilitate to estrus detection. Hence, the present study was designed to analyze such biochemical profiles, such as proteins, carbohydrates, lipids, fatty acids, in response with steroid hormones such as estradiol and progesterone. The experimental groups were normal, prepubertal, ovariectomized, and ovariectomized with estrogentreated female mice. In normal mice, the protein and lipid concentrations in urine were significantly higher in proestrus and estrus phases and the quantity of fatty acids was also comparatively higher in estrus. Furthermore, certain fatty acids, namely tridecanoic, palmitic and oleic acids, were present during proestrus and estrus phases, but were exclusively absent in ovariectomized mice. However, the carbohydrate level was equally maintained throughout the four phases of estrous cycle. For successful communication, higher concentrations of protein and specific fatty acids in estrus are directly involved. The significant increase in estradiol at estrus and progesterone at metestrus seems to be of greater importance in the expression pattern of biochemical constituents and may play a notable role in estrous cycle regulation. Thus, we conclude that the variations observed in the concentration of the biochemical constituents depend on the phase of the reproductive cycle as well as hormonal status of animals. The appearance of protein and specific fatty acids during estrus phase raises the possibility to use these as a urinary indicators for estrus detection.

Services standardization in the United-States and in Europe: an institutional analysis of private authority

This contribution explores the role of international standards in the rules governing the internationalisation of the service economy. It analyses on a cross-institutional basis patterns of authority in the institutional setting of service standards in the European and Amercian context. The entry into force of the World Trade Organisation (WTO) in 1995 gave international standards a major role in harmonising the technical specifications of goods and services traded on the global market Despite the careful wording of the WTO, a whole range of international bodies still have the capacity to define generic as well as detailed technical specifications affecting how swelling offshore services are expected to be traded on worldwide basis. The analysis relies on global political economy approaches to identify constitutive patterns of authority mediating between the political and the economic spheres on a transnational space. It extends to the area of service standards the assumption that the process of globalisation is not opposing states and markets, but a joint expression of both of them including new patterns and agents of structural change through formal and informal power and regulatory practices. The paper argues that service standards reflect the significant development of a form of transnational hybrid authority, that blurs the distinction between private and public actors, whose scope spread all along from physical measures to societal values, and which reinforces the deterritorialisation of regulatory practices in contemporary capitalism. It provides evidence of this argument by analysing the current European strategy regarding service standardization in response to several programming mandate of the European Commission and the American views on the future development of service standards.

Treatment with tumor necrosis factor inhibitors in axial spondyloarthritis: comparison between private rheumatology practices and academic centers in a large observational cohort.

OBJECTIVE: To evaluate the initiation of and response to tumor necrosis factor (TNF) inhibitors for axial spondyloarthritis (axSpA) in private rheumatology practices versus academic centers. METHODS: We compared newly initiated TNF inhibition for axSpA in 363 patients enrolled in private practices with 100 patients recruited in 6 university hospitals within the Swiss Clinical Quality Management (SCQM) cohort. RESULTS: All patients had been treated with ≥ 1 nonsteroidal antiinflammatory drug and > 70% of patients had a baseline Bath Ankylosing Spondylitis Disease Activity Index (BASDAI) ≥ 4 before anti-TNF agent initiation. The proportion of patients with nonradiographic axSpA (nr-axSpA) treated with TNF inhibitors was higher in hospitals versus private practices (30.4% vs 18.7%, p = 0.02). The burden of disease as assessed by patient-reported outcomes at baseline was slightly higher in the hospital setting. Mean levels (± SD) of the Ankylosing Spondylitis Disease Activity Score were, however, virtually identical in private practices and academic centers (3.4 ± 1.0 vs 3.4 ± 0.9, p = 0.68). An Assessment of SpondyloArthritis international Society (ASAS40) response at 1 year was reached for ankylosing spondylitis in 51.7% in private practices and 52.9% in university hospitals (p = 1.0) and for nr-axSpA in 27.5% versus 25.0%, respectively (p = 1.0). CONCLUSION: With the exception of a lower proportion of patients with nr-axSpA newly treated with anti-TNF agents in private practices in comparison to academic centers, adherence to ASAS treatment recommendations for TNF inhibition was equally high, and similar response rates to TNF blockers were achieved in both clinical settings.

A key transcription cofactor on the nascent sex chromosomes of European tree frogs (Hyla arborea)

We show that MED15, a key component of the transcription complex Mediator, lies within the nonrecombining segment of nascent sex chromosomes in the male-heterogametic Hyla arborea. Both X and Y alleles are expressed during embryonic development and differ by three frame-preserving indels (eight amino acids in total) within their glutamine-rich central part. These changes have the potential to affect the conformation of the Mediator complex and to activate genes in a sex-specific way and might thus represent the first steps toward the acquisition of a male-specific function. Alternatively, they might result from an ancestral neutral polymorphism, with different alleles picked by chance on the X and Y chromosomes when MED15 was trapped in the nonrecombining segment.

Characterization of the rice PHO1 gene family reveals a key role for OsPHO1;2 in phosphate homeostasis and the evolution of a distinct clade in dicotyledons.

Phosphate homeostasis was studied in a monocotyledonous model plant through the characterization of the PHO1 gene family in rice (Oryza sativa). Bioinformatics and phylogenetic analysis showed that the rice genome has three PHO1 homologs, which cluster with the Arabidopsis (Arabidopsis thaliana) AtPHO1 and AtPHO1;H1, the only two genes known to be involved in root-to-shoot transfer of phosphate. In contrast to the Arabidopsis PHO1 gene family, all three rice PHO1 genes have a cis-natural antisense transcript located at the 5 ' end of the genes. Strand-specific quantitative reverse transcription-PCR analyses revealed distinct patterns of expression for sense and antisense transcripts for all three genes, both at the level of tissue expression and in response to nutrient stress. The most abundantly expressed gene was OsPHO1;2 in the roots, for both sense and antisense transcripts. However, while the OsPHO1;2 sense transcript was relatively stable under various nutrient deficiencies, the antisense transcript was highly induced by inorganic phosphate (Pi) deficiency. Characterization of Ospho1;1 and Ospho1;2 insertion mutants revealed that only Ospho1;2 mutants had defects in Pi homeostasis, namely strong reduction in Pi transfer from root to shoot, which was accompanied by low-shoot and high-root Pi. Our data identify OsPHO1;2 as playing a key role in the transfer of Pi from roots to shoots in rice, and indicate that this gene could be regulated by its cis-natural antisense transcripts. Furthermore, phylogenetic analysis of PHO1 homologs in monocotyledons and dicotyledons revealed the emergence of a distinct clade of PHO1 genes in dicotyledons, which include members having roles other than long-distance Pi transport.

The transcription factor PHR1 plays a key role in the regulation of sulfate shoot-to-root flux upon phosphate starvation in Arabidopsis.

Background: Sulfate and phosphate are both vital macronutrients required for plant growth and development. Despite evidence for interaction between sulfate and phosphate homeostasis, no transcriptional factor has yet been identified in higher plants that affects, at the gene expression and physiological levels, the response to both elements. This work was aimed at examining whether PHR1, a transcription factor previously shown to participate in the regulation of genes involved in phosphate homeostasis, also contributed to the regulation and activity of genes involved in sulfate inter-organ transport. Results: Among the genes implicated in sulfate transport in Arabidopsis thaliana, SULTR1;3 and SULTR3;4 showed up-regulation of transcripts in plants grown under phosphate-deficient conditions. The promoter of SULTR1;3 contains a motif that is potentially recognizable by PHR1. Using the phr1 mutant, we showed that SULTR1;3 up regulation following phosphate deficiency was dependent on PHR1. Furthermore, transcript up regulation was found in phosphate-deficient shoots of the phr1 mutant for SULTR2;1 and SULTR3;4, indicating that PHR1 played both a positive and negative role on the expression of genes encoding sulfate transporters. Importantly, both phr1 and sultr1;3 mutants displayed a reduction in their sulfate shoot-to-root transfer capacity compared to wild-type plants under phosphate-deficient conditions. Conclusions: This study reveals that PHR1 plays an important role in sulfate inter-organ transport, in particular on the regulation of the SULTR1;3 gene and its impact on shoot-to-root sulfate transport in phosphate-deficient plants. PHR1 thus contributes to the homeostasis of both sulfate and phosphate in plants under phosphate deficiency. Such a function is also conserved in Chlamydomonas reinhardtii via the PHR1 ortholog PSR1.