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.

Where and how family members spend time at home? A quantitative analysis of the observational tracking on the everyday lives of Italian families

This paper examines a dataset that derives from an observational tracking, in order to analyze where and how middle-class working families spend time at home. We use an ethnographic approach to study the everyday lives of Italian dual-income middle-class families, with the aim to analyze quantitatively the use of home spaces and the types of activities of family members on weekday afternoons and evenings. The different analyses (multiple correspondence analysis, agglomerative hierarchical cluster, discriminant analysis) show how particular spaces and activities in these spaces are dominated by certain family members. We suggest a combination of qualitative and quantitative methodologies as useful tools to explore in detail the everyday lives of families, and to understand how family members use the domestic spaces. In particular, we consider relevant the use of quantitative analyses to examine ethnographic data, especially in connection with the methodological reflexivity among researchers

Tax simulation in the SHP

This paper describes a simulation package designed to estimate the annual income taxes paid by respondents of the Swiss Household Panel (SHP). In Switzerland, the 26 cantons have their own tax system. Additionally, tax levels vary between the over 2000 municipalities and over time. The simulation package takes account of this complexity by building on existing tables on tax levels which are provided by the Swiss Federal Tax Administration Office. Because these are limited to a few types of households and only 812 municipalities, they have to be extended to cover all households and municipalities. A further drawback of these tables is that they neglect several deductions. The tax simulation package fills this gap by taking additionally account of deductions for children, double-earner couples, third pillar and support for dependent persons according to cantonal legislation. The resulting variable on direct taxes not only serves to calculate household income net of taxes, but can also be a variable for analysis by its own account.

Creation of an Age-Adjusted, Dual-Energy X-ray Absorptiometry-Derived Trabecular Bone Score Curve for the Lumbar Spine in Non-Hispanic US White Women.

The trabecular bone score (TBS, Med-Imaps, Pessac, France) is an index of bone microarchitecture texture extracted from anteroposterior dual-energy X-ray absorptiometry images of the spine. Previous studies have documented the ability of TBS of the spine to differentiate between women with and without fractures among age- and areal bone mineral density (aBMD)-matched controls, as well as to predict future fractures. In this cross-sectional analysis of data collected from 3 geographically dispersed facilities in the United States, we investigated age-related changes in the microarchitecture of lumbar vertebrae as assessed by TBS in a cohort of non-Hispanic US white American women. All subjects were 30 yr of age and older and had an L1-L4aBMDZ-score within ±2 SD of the population mean. Individuals were excluded if they had fractures, were on any osteoporosis treatment, or had any illness that would be expected to impact bone metabolism. All data were extracted from Prodigy dual-energy X-ray absorptiometry devices (GE-Lunar, Madison, WI). Cross-calibrations between the 3 participating centers were performed for TBS and aBMD. aBMD and TBS were evaluated for spine L1-L4 but also for all other possible vertebral combinations. To validate the cohort, a comparison between the aBMD normative data of our cohort and US non-Hispanic white Lunar data provided by the manufacturer was performed. A database of 619 non-Hispanic US white women, ages 30-90 yr, was created. aBMD normative data obtained from this cohort were not statistically different from the non-Hispanic US white Lunar normative data provided by the manufacturer (p = 0.30). This outcome thereby indirectly validates our cohort. TBS values at L1-L4 were weakly inversely correlated with body mass index (r = -0.17) and weight (r = -0.16) and not correlated with height. TBS values for all lumbar vertebral combinations decreased significantly with age. There was a linear decrease of 16.0% (-2.47 T-score) in TBS at L1-L4 between 45 and 90 yr of age (vs. -2.34 for aBMD). Microarchitectural loss rate increased after age 65 by 50% (-0.004 to -0.006). Similar results were obtained for other combinations of lumbar vertebra. TBS, an index of bone microarchitectural texture, decreases with advancing age in non-Hispanic US white women. Little change in TBS is observed between ages 30 and 45. Thereafter, a progressive decrease is observed with advancing age. The changes we observed in these American women are similar to that previously reported for a French population of white women (r(2) > 0.99). This reference database will facilitate the use of TBS to assess bone microarchitectural deterioration in clinical practice.

Nutrition transition in a middle-income country: 22-year trends in the Seychelles.

BACKGROUND/OBJECTIVES: There is little objective information regarding nutrition transition in African countries. We assessed trends in nutrition patterns in the Seychelles between 1989 and 2011. SUBJECTS/METHODS: Population-based samples were obtained in 1989, 1994 and 2011 and participants aged 25-44 are considered in this study (n=493, 599 and 471, respectively). Similar, although not identical, food frequency questionnaires (FFQs) were used in each survey and the variables were collapsed into homogenous categories for the purpose of this study. RESULTS: Between 1989 and 2011, consumption frequency of fish (5+/week) decreased from 93 to 74%, whereas the following increased: meat (5+/week) 25 to 51%, fruits (1+/week) 48 to 94%, salty snacks (1+/week) 22 to 64% and sweet snacks (1+/week) 38 to 67% (P<0.001 for all). Consumption frequency decreased for home-brewed alcoholic drinks (1+/week) 16 to 1%, but increased for wine (1+/week) 5 to 33% (both P<0.001). Between 2004 and 2011, consumption frequency decreased for rice (2/day) 62 to 57% and tea (1+/day) 72 to 68%, increased for poultry (1+/week) 86 to 96% (all P<0.01), and did not change for vegetables (70.3 to 69.8%, P=0.65). CONCLUSIONS: Seychelles is experiencing nutrition transition characterized by a decreased consumption frequency of traditional staple foods (fish, polished rice), beverages (tea) and of inexpensive home brews, and increased consumption frequency of meat, poultry and snacks. Food patterns also became more varied along with a broader availability of products in the 22-year interval. The health impact of these changes should be further studied.

Activation of HTLV-I transcription in the presence of Tax is independent of the acetylation of CREB-2 (ATF-4).

We have previously demonstrated that the bZIP transcription factor CREB-2, also called ATF-4, trans-activates, in association with the viral protein Tax, the human T-cell leukemia virus type I (HTLV-I) promoter. In this study, we have examined whether CREB-2 acetylation affects transcriptional activation mediated by Tax. We present evidence that CREB-2 is acetylated in vitro and in vivo. CREB-2 is acetylated in two regions: the basic domain of the bZIP (from amino acid residue 270 to 300) and the short basic domain (from 342 to 351) located downstream from the bZIP. We also demonstrate that CREB-2 is acetylated by p300/CBP but not by p/CAF. Moreover, replacement of lysine by arginine in the basic domains decreases the trans-activating capacity of CREB-2. However, in the presence of Tax, the HTLV-I transcription remains fully activated by these CREB-2 mutants. Although we cannot totally exclude that the mutations could also affect CREB-2 structure and activity independent of acetylation, our results suggest that activation of the viral promoter in the presence of Tax is independent of the CREB-2 acetylation.

Ectodysplasin has a dual role in ectodermal organogenesis: inhibition of Bmp activity and induction of Shh expression.

Ectodermal organogenesis is regulated by inductive and reciprocal signalling cascades that involve multiple signal molecules in several conserved families. Ectodysplasin-A (Eda), a tumour necrosis factor-like signalling molecule, and its receptor Edar are required for the development of a number of ectodermal organs in vertebrates. In mice, lack of Eda leads to failure in primary hair placode formation and missing or abnormally shaped teeth, whereas mice overexpressing Eda are characterized by enlarged hair placodes and supernumerary teeth and mammary glands. Here, we report two signalling outcomes of the Eda pathway: suppression of bone morphogenetic protein (Bmp) activity and upregulation of sonic hedgehog (Shh) signalling. Recombinant Eda counteracted Bmp4 activity in developing teeth and, importantly, inhibition of BMP activity by exogenous noggin partially restored primary hair placode formation in Eda-deficient skin in vitro, indicating that suppression of Bmp activity was compromised in the absence of Eda. The downstream effects of the Eda pathway are likely to be mediated by transcription factor nuclear factor-kappaB (NF-kappaB), but the transcriptional targets of Edar have remained unknown. Using a quantitative approach, we show in cultured embryonic skin that Eda induced the expression of two Bmp inhibitors, Ccn2/Ctgf (CCN family protein 2/connective tissue growth factor) and follistatin. Moreover, our data indicate that Shh is a likely transcriptional target of Edar, but, unlike noggin, recombinant Shh was unable to rescue primary hair placode formation in Eda-deficient skin explants.

Suicidal expression among school-attending adolescents in a middle-income sub-Saharan country.

We investigated correlates for suicidal expression among adolescents in the Seychelles. Data on 1,432 students (52% females) were derived from the Global School-based Health Survey. Participants were divided into three groups: those with no suicidal behavior (N = 1,199); those with suicide ideation/SI (N = 89); and those reporting SI with a plan to carry out a suicide attempt/SISP (N = 139), each within a 12-month recall period. Using multinomial logistic regression, we examined the strength of associations with social, behavioral and economic indicators while adjusting for covariates. Sixteen percent of school-attending adolescents reported a suicidal expression (10% with a plan/6.2% without). Those reporting SI were younger (relative risk ratio RRR = 0.81; CI = 0.68-0.96), indicated signs of depression (RRR = 1.69; CI = 1.05-2.72) and loneliness (RRR=3.36; CI =1.93-5.84). Tobacco use (RRR = 2.34; CI = 1.32-4.12) and not having close friends (RRR = 3.32; CI = 1.54-7.15) were significantly associated with SI. Those with SISP were more likely to be female (RRR = 0.47; 0.30-0.74), anxious (RRR = 3.04; CI = 1.89-4.88) and lonely (RRR = 1.74; CI = 1.07-2.84). Having no close friends (RRR = 2.98; 1.56-5.69) and using tobacco (RRR = 2.41; 1.48-3.91) were also strongly associated. Having parents who were understanding was protective (RRR = 0.50; CI = 0.31-0.82). Our results suggest that school health promotion programs may benefit from targeting multiple factors associated with suicidal expression. More research, particularly multilevel designs are needed to identify peer and family influences which may modify associations with suicidality.

Simultaneous cell morphometry and refractive index measurement with dual-wavelength digital holographic microscopy and dye-enhanced dispersion of perfusion medium.

Digital holographic microscopy (DHM) allows optical-path-difference (OPD) measurements with nanometric accuracy. OPD induced by transparent cells depends on both the refractive index (RI) of cells and their morphology. This Letter presents a dual-wavelength DHM that allows us to separately measure both the RI and the cellular thickness by exploiting an enhanced dispersion of the perfusion medium achieved by the utilization of an extracellular dye. The two wavelengths are chosen in the vicinity of the absorption peak of the dye, where the absorption is accompanied by a significant variation of the RI as a function of the wavelength.

Inhibition of the renin-angiotensin-aldosterone system: is there room for dual blockade in the cardiorenal continuum?

Antagonism of renin-angiotensin-aldosterone system is exerted through angiotensin-converting enzyme inhibitors, angiotensin receptor antagonists, renin inhibitors and mineralocorticoid receptor antagonists. These drugs have been successfully tested in numerous trials and in different clinical settings. The original indications of renin-angiotensin-aldosterone system blockers have progressively expanded from the advanced stages to the earlier stages of cardiorenal continuum. To optimize the degree of blockade of renin-angiotensin-aldosterone system, dose uptitrations of angiotensin-converting enzyme inhibitors and angiotensin receptor antagonists or the use of a dual blockade, initially identified with the combination of angiotensin-converting enzyme inhibitors and angiotensin receptor antagonists, have been proposed. The data from the Ongoing Telmisartan Alone and in Combination with Ramipril Global Endpoint Trial (ONTARGET) study do not support this specific dual blockade approach. However, the dual blockade of angiotensin-converting enzyme inhibitors/angiotensin receptor antagonists with direct renin inhibitors is currently under investigation while that based on an aldosterone blocker with any of the previous three drugs requires more evidence beyond heart failure. In this review, we revisited potential advantages of dual blockade of renin-angiotensin-aldosterone system in arterial hypertension and diabetes.