Progress Towards to Equity Market Integration in Eastern Europe

The advent of the European Union has decreased the diversification benefits available from country based equity market indices in the region. This paper measures the increase in stock integration between the three largest new EU members (Hungary, the Czech Republic and Poland who joined in May 2004) and the Euro-zone. A potentially gradual transition in correlations is accommodated in a single VAR model by embedding smooth transition conditional correlation models with fat tails, spillovers, volatility clustering, and asymmetric volatility effects. At the country market index level all three Eastern European markets show a considerable increase in correlations in 2006. At the industry level the dates and transition periods for the correlations differ, and the correlations are lower although also increasing. The results show that sectoral indices in Eastern European markets may provide larger diversification opportunities than the aggregate market. JEL classifications: C32; C51; F36; G15 Keywords: Multivariate GARCH; Smooth Transition Conditional Correlation; Stock Return Comovement; Sectoral correlations; New EU Members

Individual Aspirations and Satisfaction:Quantifying the Importance of Homeownership

Residential satisfaction is often used as a barometer to assess the performance of public policy and programmes designed to raise individuals' well-being. However, the fact that responses elicited from residents might be biased by subjective, non-observable factors casts doubt on whether these responses can be taken as trustable indicators of the individuals' housing situation. Emotional factors such as aspirations or expectations might affect individuals' cognitions of their true residential situation. To disentangle this puzzle, we investigated whether identical residential attributes can be perceived differently depending on tenure status. Our results indicate that tenure status is crucial not only in determining the level of housing satisfaction, but also regarding how dwellers perceive their housing characteristics. Keywords: Housing satisfaction, subjective well-being, homeownership. JEL classification: D1, R2.

Transplantation tolerance induced by regulatory T cells: in vivo mechanisms and sites of action.

The mechanisms by which CD4(+)CD25(+)Foxp3(+) T (Treg) cells regulate effector T cells in a transplantation setting and their in vivo homeostasis still remain to be clarified. Using a mouse adoptive transfer model, we analyzed the in vivo expansion, trafficking, and effector function of alloreactive T cells and donor-specific Treg cells, in response to a full-thickness skin allograft. Fluorescent-labeled CD4(+)CD25(-) and antigen-specific Treg cells were transferred alone or co-injected into syngeneic BALB/c-Nude recipients transplanted with skins from (C57BL/6 x BALB/c) F1 donors. Treg cells divided in vivo, migrated and accumulated in the allograft draining lymph nodes as well as within the graft. The co-transfer of Treg cells did not modify the early activation and homing of CD4(+)CD25(-) T cells in secondary lymphoid organs. However, in the presence of Treg cells, alloreactive CD4(+)CD25(-) T cells produced significantly less IFN-gamma and were present in reduced numbers in the secondary lymphoid organs. Furthermore, time-course studies showed that Treg cells were recruited into the allograft at a very early stage after transplantation and effectively prevented the infiltration of effector T cells. In conclusion, suppression of rejection requires the early recruitment to the site of antigenic challenge of donor-specific Treg cells, which then mainly regulate the effector arm of T cell alloresponses.

HIV-1 drug resistance transmission networks in southwest Switzerland.

To determine viral subtypes and resistance mutations to antiretroviral treatment (ART) in untreated HIV-1 acutely infected subjects from Southwest Switzerland. Clinical samples were obtained from the HIV primary infection cohort from Lausanne. Briefly, pol gene was amplified by nested PCR and sequenced to generate a 1?kb sequence spanning protease and reverse transcriptase key protein regions. Nucleotide sequences were used to assess viral genotype and ART resistance mutations. Blood specimens and medical information were obtained from 30 patients. Main viral subtypes corresponded to clade B, CRF02_AG, and F1. Resistant mutations to PIs consisted of L10V and accessory mutations 16E and 60E present in all F1 clades. The NNRTI major resistant mutation 103N was detected in all F1 viruses and in other 2 clades. Additionally, we identified F1 sequences from other 6 HIV infected and untreated individuals from Southwest Switzerland, harboring nucleotide motifs and resistance mutations to ART as observed in the F1 strains from the cohort. These data reveal a high transmission rate (16.6%) for NNRTI resistant mutation 103N in a cohort of HIV acute infection. Three of the 5 resistant strains were F1 clades closely related to other F1 isolates from HIV-1 infection untreated patients also coming from Southwest Switzerland. Overall, we provide strong evidence towards an HIV-1 resistant transmission network in Southwest Switzerland. These findings have relevant implications for the local molecular mapping of HIV-1 and future ART surveillance studies in the region.

Free Mobility and Taste-Homogeneity of Jurisdiction Structures

We consider a population of agents distributed on the unit interval. Agents form jurisdictions in order to provide a public facility and share its costs equally. This creates an incentive to form large entities. Individuals also incur a transportation cost depending on their location and that of the facility which makes small jurisdictions advantageous. We consider a fairly general class of distributions of agents and generalize previous versions of this model by allowing for non-linear transportation costs. We show that, in general, jurisdictions are not necessarily homogeneous. However, they are if facilities are always intraterritory and transportation costs are superadditive. Superadditivity can be weakened to strictly increasing and strictly concave when agents are uniformly distributed. Keywords: Consecutiveness, stratification, local public goods, coalition formation, country formation. JEL Classification: C71 (Cooperative Games), D71 (Social Choice; Clubs; Committees; Associations), H73 (Interjurisdictional Differentials and Their Effects).

Leading indicator properties of US high-yield credit spreads

In this paper we examine the out-of-sample forecast performance of high-yield credit spreads regarding real-time and revised data on employment and industrial production in the US. We evaluate models using both a point forecast and a probability forecast exercise. Our main findings suggest the use of few factors obtained by pooling information from a number of sector-specific high-yield credit spreads. This can be justified by observing that, especially for employment, there is a gain from using a principal components model fitted to high-yield credit spreads compared to the prediction produced by benchmarks, such as an AR, and ARDL models that use either the term spread or the aggregate high-yield spread as exogenous regressor. Moreover, forecasts based on real-time data are generally comparable to forecasts based on revised data. JEL Classification: C22; C53; E32 Keywords: Credit spreads; Principal components; Forecasting; Real-time data.

Congested hubs

Hub congestion is a major problem and a relevant policy issue because it causes delays and many organizational problems at airports that end up implying unpleasant consequences both for air travelers and airlines. In a competitive framework in which carriers choose aircraft size, this paper suggests that airlines schedule too many flights using overly small aircraft, which constitutes a major contributor to congestion. Two- part congestion tolls, accounting for the congestion imposed on other carriers and the congestion imposed on all passengers, are needed to recover e�� ciency. Finally, we analyze the validity of the results by studying the effects of network size, airport capacity, competition in layover time, and the formation of airline alliances. Keywords: congestion; hub-and-spoke networks; overprovision of frequency; con- gestion internalization; congestion tolls JEL Classiffication Numbers: L13; L2; L93

Scheduled Service Versus Personal Transportation: The Role of Distance

This paper presents a theoretical and empirical analysis of the relationship be- tween frequency of scheduled transportation services and their substitutability with personal transportation (using distance as a proxy). We study the interaction between a monopoly firm providing a high-speed scheduled service and private transportation (i.e., car). Interestingly, the carrier chooses to increase the frequency of service on longer routes when competing with personal transportation because by providing higher frequency (at extra cost) it can also charge higher fares which can boost its profits. However, in line with the results of earlier studies, frequency decreases for longer flights when driving is not a viable option. An empirical application of our analysis to the European airline industry confirms the predictions of our theoretical model. Keywords: short-haul routes; long-haul routes; flight frequency; distance JEL Classification Numbers: L13; L2; L93

Environmental Kuznets Curves for Carbon Emissions: A Critical Survey

The empirical finding of an inverse U-shaped relationship between per capita income and pollution, the so-called Environmental Kuznets Curve (EKC), suggests that as countries experience economic growth, environmental deterioration decelerates and thus becomes less of an issue. Focusing on the prime example of carbon emissions, the present article provides a critical review of the new econometric techniques that have questioned the baseline polynomial specification in the EKC literature. We discuss issues related to the functional form, heterogeneity, ���spurious��� regressions and spatial dependence to address whether and to what extent the EKC can be observed. Despite these new approaches, there is still no clear-cut evidence supporting the existence of the EKC for carbon emissions. JEL classifications: C20; Q32; Q50; O13 Keywords: Environmental Kuznets Curve; Carbon emissions; Functional form; Heterogeneity; ���Spurious��� regressions; Spatial dependence.Residential satisfaction is often used as a barometer to assess the performance of public policy and programmes designed to raise individuals' well-being. However, the fact that responses elicited from residents might be biased by subjective, non-observable factors casts doubt on whether these responses can be taken as trustable indicators of the individuals' housing situation. Emotional factors such as aspirations or expectations might affect individuals' cognitions of their true residential situation. To disentangle this puzzle, we investigated whether identical residential attributes can be perceived differently depending on tenure status. Our results indicate that tenure status is crucial not only in determining the level of housing satisfaction, but also regarding how dwellers perceive their housing characteristics. Keywords: Housing satisfaction, subjective well-being, homeownership. JEL classification: D1, R2.

Anticipation, Learning and Welfare: the Case of Distortionary Taxation

We study the impact of anticipated fiscal policy changes in a Ramsey economy where agents form long-horizon expectations using adaptive learning. We extend the existing framework by introducing distortionary taxes as well as elastic labour supply, which makes agents. decisions non-predetermined but more realistic. We detect that the dynamic responses to anticipated tax changes under learning have oscillatory behaviour that can be interpreted as self-fulfilling waves of optimism and pessimism emerging from systematic forecast errors. Moreover, we demonstrate that these waves can have important implications for the welfare consequences of .scal reforms. (JEL: E32, E62, D84)

Stability of isoenzyme and kinetoplast DNA (k-DNA) patterns in successively cloned Trypanosoma cruzi populations

Four Trypanosoma cruzi strains from zymodermes A, B, C and D were successively clonedon BHI-LIT-agar-blood BLAB). Twenty clones from the first generation (F1), 10 from The second (F2) and 4 from the third (F3) from the strains A138, B147 and C23 were isolated. The D150 strain provied 29 F1 and F2 clones. The strains and clones had their isoenzyme and K-DNA patterns determined. The clones from A138, Bl47 and C231 strains presented isoemzyme and K-DNA patterns identical between thewmselves and their respective parental strains. Therefore showing the homogenety and stability of isoenzyme and K-DNA patterns after successive cloning. The Dl50 strain from zymodeme D (ZD) showed heterogeneity. Twenty-eight out of 29 clones of the first generation were of zymodeme A and only one was of zymodeme C, confirming previous reports that ZD strains consisted of ZA and ZC parasite populations. The only D150 strain clone of zymodeme C showed a K-DNA pattern identical to its parental strain. The remining clones although similar among themselves were different from the parental strain. Thus the T. cruzi strains had either homonogeneus or heterogeneous populations. The clones produced by successive cloning provided genetically homonogeous populations. Their experimental use will make future results more reliable and reproducible.

Migration and trade: Theory with an Application to the Eastern- Western European Integration

The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intraindustry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occured between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe. Key Words: Skilled Migration, Gains from Variety, Real Wages, Eastern-Western Europe. JEL Codes: F12, F22, J61.

(Optimal) Spatial Aggregation in the Determinants of Industrial Location

Empirical studies on the determinants of industrial location typically use variables measured at the available administrative level (municipalities, counties, etc.). However, this amounts to assuming that the effects these determinants may have on the location process do not extent beyond the geographical limits of the selected site. We address the validity of this assumption by comparing results from standard count data models with those obtained by calculating the geographical scope of the spatially varying explanatory variables using a wide range of distances and alternative spatial autocorrelation measures. Our results reject the usual practice of using administrative records as covariates without making some kind of spatial correction. Keywords: industrial location, count data models, spatial statistics JEL classification: C25, C52, R11, R30

Evaluation of three serological tests for the detection of human plague in northeast Brazil

The passive haemagglutination (PHA) test, enzyme-linked immunosorbent assay (ELISA) and the dot enzyme-immunosorbent assay (DOT-ELISA) were used to detect the levels of IgG antibodies against the Fraction 1 (F1) antigen of Yersinia pestis in sera of plague-infected patients from Northeast Brazil. Twenty three selected PHA-positive sera of subjects with bacteriological confirmation of plague were also positive in the DOT-ELISA but only 19 were detected by the conventional ELISA technique. Another group of 186 serum samples from subjects diagnosed as plague-infected by clinical and epidemiological parameters, but PHA-negative, were screened with DOT-ELISA and 11 gave positive results. The specificity of the assays on the serological detection of plague was confirmed in inhibition tests using purified F1 antigen. These results suggest that DOT-ELISA can be an useful, simple and more sensitive alternative for the serodiagnosis of plague in Northeast Brazil.

Does Internationalization Alter the R&D-Productivity Relationship?

R&D investment is an important driver of productivity gains. However, firms differ in their ability to appropiate the returns to their R&D efforts. This paper analyses to what extent firm's internationalization influences the endogenous relation between R&D and productivity. In particular, we assess the contribution of R&D to productivity for a panel of UK firms that differ in their degree of internationalization. We find that, on average, multinationals obtain higher gains from their investment in R&D. However, the influence of internationalization on the contribution of R&D to productivity varies along the distribution of the returns to R&D. Keywords: R&D, Multinationals, Productivity. JEL Codes: C14, D24, F23.