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.

Correlation between plasma and urine phenylalanine concentrations.

In this pilot study, we show that plasma phenylalanine concentration can be predicted from urine concentration if the age of the patient is taken into consideration. This observation could open the way to a new monitoring of phenylketonuric patients in which painful frequent blood sampling, mandatory to adapt the low phenylalanine diet, could be mostly replaced by urinalysis. Compliance to treatment would be improved and hence also the ultimate mental development. Since this study was based on a small number of patients, validation of the model in a large multicentric survey is needed before it can be recommended.

Xanthine oxidase inhibition by febuxostat attenuates experimental atherosclerosis in mice.

Atherosclerosis is a chronic inflammatory disease due to lipid deposition in the arterial wall. Multiple mechanisms participate in the inflammatory process, including oxidative stress. Xanthine oxidase (XO) is a major source of reactive oxygen species (ROS) and has been linked to the pathogenesis of atherosclerosis, but the underlying mechanisms remain unclear. Here, we show enhanced XO expression in macrophages in the atherosclerotic plaque and in aortic endothelial cells in ApoE(-/-) mice, and that febuxostat, a highly potent XO inhibitor, suppressed plaque formation, reduced arterial ROS levels and improved endothelial dysfunction in ApoE(-/-) mice without affecting plasma cholesterol levels. In vitro, febuxostat inhibited cholesterol crystal-induced ROS formation and inflammatory cytokine release in murine macrophages. These results demonstrate that in the atherosclerotic plaque, XO-mediated ROS formation is pro-inflammatory and XO-inhibition by febuxostat is a potential therapy for atherosclerosis.

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.

Plasma pituitary hormone levels in severe trauma with or without head injury.

In order to evaluate the effect of head injury in severely traumatized patients on the response of ACTH, GH, PRL, and TSH plasma levels, 36 patients were prospectively studied over 5 consecutive days following injury. They were divided into three groups: Group I, severe isolated head injury (n = 14); Group II, multiple injury combined with severe head injury (n = 12); Group III, multiple injury without head injury (n = 10). No significant trend was observed during the 5 consecutive days. The following changes in plasma levels were observed, compared to normal reference value (median values): ACTH was normal in the three groups; PRL was elevated in Group II and normal in the other groups; GH was elevated in all groups; TSH was elevated in Group III and reduced in Groups I and II. Intergroup comparisons showed significantly lower plasma levels for PRL (p less than 0.05) and TSH (p less than 0.01) in Groups I and II, i.e., head-injured patients, compared to Group III, i.e., traumatized patients without head injury. A relationship was observed between the severity of head injury, as expressed by Glasgow Coma Score, intracranial pressure levels, outcome, and TSH and PRL levels.