Financing Constraints, Irreversibility, and Investment Dynamics

We develop a model of an industry with many heterogeneous firms that face both financing constraints and irreversibility constraints. The financing constraint implies that firms cannot borrow unless the debt is secured by collateral; the irreversibility constraint that they can only sell their fixed capital by selling their business. We use this model to examine the cyclical behavior of aggregate fixed investment, variable capital investment, and output in the presence of persistent idiosyncratic and aggregate shocks. Our model yields three main results. First, the effect of the irreversibility constraint on fixed capital investment is reinforced by the financing constraint. Second, the effect of the financing constraint on variable capital investment is reinforced by the irreversibility constraint. Finally, the interaction between the two constraints is key for explaining why input inventories and material deliveries of US manufacturing firms are so volatile and procyclical, and also why they are highly asymmetrical over the business cycle.

Financial Markets and Real Ecinomy: Four Essays in International Trade

Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.

Credit Constraints, Firms' Precautionary Investment, and the Business Cycle

This paper studies the macroeconomic implications of firms' precautionary investment behavior in response to the anticipation of future financing constraints. Firms increase their demand for liquid and safe investments in order to alleviate future borrowing constraints and decrease the probability of having to forego future profitable investment opportunities. This results in an increase in the share of short-term projects that produces a temporary increase in output, at the expense of lower long-run investment and future output. I show in a calibrated model that this behavior is at the source of a novel and powerful channel of shock transmission of productivity shocks that produces short-run dampening and long-run propagation. Furthermore, it can account for the observed business cycle patterns of the aggregate and firm-level composition of investment.

A importância do sector microcrédito e o perfil do microempresário: Ilha de Santo Antão Cabo Verde

As microempresas desempenham um papel fundamental na promoção do emprego, na inovação, na criação de rendimentos e no desenvolvimento económico e social. Para os países em vias de desenvolvimento, crê-se que a dinamização das microempresas pode ser um instrumento privilegiado de promoção e combate à pobreza, na medida em que esta poderá ser a via para incentivar as camadas mais pobres das populações rurais e urbanas a criarem os seus próprios negócios e a providenciarem os seus próprios rendimentos. A criação e o crescimento das microempresas estão, todavia, condicionados por vários constrangimentos. A inexistência de capital inicial (Start-Up Capital) é apontada na literatura financeira como uma das mais relevantes. O recurso ao capital externo, como fonte de financiamento, dependerá, por sua vez, de vários factores. O presente estudo foi realizado em Santo Antão, a ilha mais a norte e a mais montanhosa do Arquipélago de Cabo Verde. O sector micro crédito chama atenção pelo facto de ser um instrumento de importância primordial para Cabo Verde e, particularmente, para a ilha de Santo Antão que possui uma estrutura económica e social muito vulnerável o que nos leva a compreender melhor, o funcionamento das microempresas, instaladas nos três municípios da Ilha (Paul, Ribeira Grande e Porto Novo). Ao longo do estudo definimos o perfil sócio económico do micro empresário Santantonense, com o objectivo de compreender e quantificar o contributo do sector para o desenvolvimento empresarial da ilha, sem esquecer os constrangimentos e dificuldades que se colocam aos micros empresários na procura de financiamento. O processo de recolha de informação foi efectuado com recurso a pesquisas de campo, a partir da elaboração e aplicação de entrevistas de uma forma semi-estruturada, no sentido de identificar as principais características/perfil do empresário. Os dados recolhidos pelas entrevistas têm por base uma apreciação crítica da gestão para melhor compreender e comparar as fragilidades existentes e analisar a capacidade de sucesso dos micros empresários. A configuração da actividade económica foi feita com base na análise quantitativa e qualitativa, dos dados obtidos na aplicação dos questionários. De igual modo, analisamos e comparamos os casos de sucesso e insucesso nas microempresas em estudo, casos de sucesso no que diz respeito aos benefícios de micro créditos para a redução da pobreza e do desemprego, de criação do auto-emprego, e da formação/informação aos micros empresários santantonenses. Nos casos de insucesso analisamos as causas que estiveram na sua origem assim como as consequências daí advenientes. Uma das constatações do estudo, como se verá pela análise dos dados, é que o micro empresário Santantonense, possui um baixo nível de escolaridade e que na sua maioria são mulheres. Um outro resultado evidenciado pelo estudo, é que há uma necessidade da política pública de desenvolvimento no sentido de definição de incentivos à criação e à promoção de micro negócios, atendendo às características demográficas e às necessidades específicas dos beneficiários. Micro enterprises perform a fundamental component in promoting employment, innovation, and earnings-generation and in socio-economic development. For countries en route to development, the belief is that the dynamic engine of the micro enterprises could be a privileged instrument to promote in the battle against poverty, in the hope that this could be the venue to incentivize the poorest of the rural and urban populations to create their own businesses and forecast their own earnings. The creation and the growth of micro enterprises is, however, conditional upon various constraints. The inexistence of initial capital is cited in financial literature as one of the more important. To resort to external capital as a financing source, is itself dependent on various factors. The current study was conducted in Santo Antão, the most northern and mountainous island in the Archipelago of Cape Verde. The micro credit´s sector calls attention to the fact that it is an essential instrument in Cape Verde, particularly in the island of Santo Antão which has an economic and social structure extremely vulnerable, leading us to a better understanding of how micro enterprises operate in the three municipalities of the Island (Paul, Ribeira Grande and Porto Novo). During the course of the study we defined the socio-economic character of the micro entrepreneur Santantonense, with the goal of understanding and quantifying the sector´s contribution to the Island´s entrepreneurial development, keeping in mind the contraints and difficulties that confront the entrepreneurs when seeking financing. The process for gathering the information was performed through field research, beginning with elaboration and application of interviews, designed to identify the entrepreneur´s major characteristics and the importance of micro credit for the island of Santo Antão. The data gathered through the interviews have un underlying basic and critic appreciation of management for a better understanding and comparing the existing fragilities and for analyzing the micro entrepreneurs´ capacity to succeed. The configuration of economic activities was designed based on quantitative and qualitative analysis from data obtained from the questionnaires. Likewise, we analyzed and compared the success and non-success cases of the micro enterprises in the study, success cases with respect to the benefits of micro credit in reducing poverty and unemployment, creation of self-employment, and the education/information for the micro entrepreneurs of Santo Antão. In the non-success cases we analyzed the original causes as well as the impending consequences. One of the study´s contentions, as the data analysis shows, is that micro entrepreneur of Santo Antão has a low level of education with the majority of them being women. In addition the study shows that there is a need for a public discourse in terms of defining and developing incentives for creating and promoting micro businesses given the demographic characteristics and the specific necessities of the beneficiaries.

Bioclimatic constraints to Andean cat distribution: a modelling application for rare species

AimTo identify the bioclimatic niche of the endangered Andean cat (Leopardus jacobita), one of the rarest and least known felids in the world, by developing a species distribution model.LocationSouth America, High Andes and Patagonian steppe. Peru, Bolivia, Chile, Argentina.MethodsWe used 108 Andean cat records to build the models, and 27 to test them, applying the Maxent algorithm to sets of uncorrelated bioclimatic variables from global databases, including elevation. We based our biogeographical interpretations on the examination of the predicted geographic range, the modelled response curves and latitudinal variations in climatic variables associated with the locality data.ResultsSimple bioclimatic models for Andean cats were highly predictive with only 3-4 explanatory variables. The climatic niche of the species was defined by extreme diurnal variations in temperature, cold minimum and moderate maximum temperatures, and aridity, characteristic not only of the Andean highlands but also of the Patagonian steppe. Argentina had the highest representation of suitable climates, and Chile the lowest. The most favourable conditions were centrally located and spanned across international boundaries. Discontinuities in suitable climatic conditions coincided with three biogeographical barriers associated with climatic or topographic transitions.Main conclusionsSimple bioclimatic models can produce useful predictions of suitable climatic conditions for rare species, including major biogeographical constraints. In our study case, these constraints are also known to affect the distribution of other Andean species and the genetic structure of Andean cat populations. We recommend surveys of areas with suitable climates and no Andean cat records, including the corridor connecting two core populations. The inclusion of landscape variables at finer scales, crucially the distribution of Andean cat prey, would contribute to refine our predictions for conservation applications.

Origin of mineralizing fluids of the sediment-hosted Navachab gold mine, Namibia: Constraints from stable (O, H, C, S) isotopes

The Navachab gold mine in the Damara belt of central Namibia is characterized by a polymetallic Au-Bi-As-Cu-Ag ore assemblage, including pyrrhotite, chalcopyrite, sphalerite, arsenopyrite, bismuth, gold, bismuthinite, and bismuth tellurides. Gold is hosted by quartz sulfide veins and semimassive sulfide lenses that are developed in a near-vertical sequence of shelf-type metasedimentary rocks, including marble, calcsilicate rock, and biotite schist. The sequence has been intruded by abundant syntectonic lamprophyre, aplite, and pegmatite dikes, documenting widespread igneous activity coeval with mineralization. The majority of quartz from the veins has delta(18)O values of 14 to 15 per mil (V-SMOW). The total variations in delta(18)O values of the biotite schist and calcsilicate rock are relatively small (12-14 parts per thousand), whereas the marble records steep gradients in delta(18)O values (17-21 parts per thousand), the lowest values being recorded at the vein margins. Despite this, there is no correlation between delta(18)O and delta(13)C values and the carbonate content of the rocks, indicating that fluid-rock interaction alone cannot explain the isotopic gradients. In addition, the marble records increased delta(13)C values at the contact to the veins, possibly related to a change in the physicochemical conditions during fluid-rock interaction. Gold is interpreted to have precipitated in equilibrium with metamorphic find (delta(18)O 12-14 parts per thousand; delta D = -40 to -60 parts per thousand) at peak metamorphic conditions of ca. 550 degrees C and 2 kbars, consistent with isotopic fractionations between coexisting calcite, garnet, and clinopyroxene in the alteration halos. The most likely source of the mineralizing fluid was a midcrustal fluid in equilibrium with the Damaran metapelites that underwent prograde metamorphism at amphibolite- to granulite-facies grades. Although there is no isotopic evidence for the contribution of magmatic fluids, they may have been important in contributing to the overall hydraulic regime and high apparent geothermal gradients (ca. 80 degrees C/km(-1)) in the mine area.

European French-speaking study from the GEMO group on bone metastases management: a special focus on external beam radiotherapy practice survey.

This study seeks to perform a survey of patterns of practice among the different physicians involved in the bone metastases management, with special focus on external beam radiotherapy (EBRT).A questionnaire about bone metastases based on clinical cases and supplemented with general questions, including medical therapies, EBRT and metabolic radiotherapy strategies, surgery, and supportive care approaches, was sent to 4,706 French-speaking physicians in Belgium, France, Luxemburg, and Switzerland.Overall, 644 questionnaires were analyzed. Twenty-eight percent concerned the radiotherapy approach and were judged adequate to respond to the part dedicated to EBRT. Sixty-nine percent of physicians used a total dose irradiation of 30 Gy delivered in ten fractions. A large majority (75%) used two opposed fields prescribed at mid-depth (30%), or with non-equally weighted fields (45%). Seventy percent irradiated also above and below the concerned vertebra. A dosimetry planning treatment was done in 85% and high-energy megavoltage photons were used in 42%. Moreover, 54% physicians used short course radiotherapy in routine.Radiotherapy remains the mainstay of treatment of bone metastases, but there is substantial heterogeneity in clinical practice. Guidelines and treatment protocols are required to improve the treatment quality.

A new approach in the treatment of high flow native AV fistula: the open-pore external scaffolding prosthesis

Objective: The vascular access steal syndrome is a complication occurring in 1-6% after native arterio-venous (AV) fistulas, often due to huge diameter of the vein. This results in very high flow, which could also be responsible for cardiac overload. The aim of this study is to evaluate the efficiency of a new approach in the treatment of this pathology using open-pore external scaffolding prosthesis.Methods: This a retrospective review of all patients presenting symptomatic high flow after native AV fistula between January 2007 and December 2009 in 3 vascular centers. Pre-operative duplex exam confirmed the diagnosis of high flow. The operation consisted in preparation of the whole fistula, measurement of the flow and section on the venous side. The vein was wrapped with this 6 to 8 mm open-pore external scaffolding prosthesis (ProVena, BBraun, Germany) according to its diameter and to the flow and then sutured. Measurement of the flow was repeated. Patients were followed by duplex exam at 1 week and at 1, 3, 6 and 12 months. Procedural success was defined as complete implantation of the prosthesis and reduction of the flow. Primary outcomes were reduction of the flow and recovery of the symptoms and secondary endpoint was patency of the fistula.Results: During the study period, 14 patients, with a mean age of 65・8 years old, have been operated with this technique.There were 2 native forearmfistulas and 12 on the armwith a mean pre-operative flow of 2600 ml/min (1800-3800). The mode of presentation was pain in 6 patients, neurological disorders in 10 and necrosis in 4. Moreover, 3 patients had cardiac insufficiency due to high flow in the fistula. The procedure was technically successful in 100% of cases. Re-intervention was necessary in 2 patients due to hematoma. Recovery of the initial symptoms occurred in 13 patients (93%). The mean flow reduction was 1200 ml/min (600-2000). In 1 patient, a persistent steal syndrome despite flow reduction to 1400 ml/min resulted in fistula closure 2 months later. At a mean follow-up of 22 months (4-35), all remaining patients (13/14) presented a patent fistula without recurrence.Conclusion: This new approach seems to be safe and effective in the treatment of symptomatic high flow native AV fistulas by significantly reducing the flow and avoiding closure of the vascular access. Longer follow-up with more patients are necessary to evaluate the risk of recurrence.

An external site controls closing of the epithelial Na+ channel ENaC.

Members of the ENaC/degenerin family of ion channels include the epithelial sodium channel (ENaC), acid-sensing ion channels (ASICs) and the nematode Caenorhabditis elegans degenerins. These channels are activated by a variety of stimuli such as ligands (ASICs) and mechanical forces (degenerins), or otherwise are constitutively active (ENaC). Despite their functional heterogeneity, these channels might share common basic mechanisms for gating. Mutations of a conserved residue in the extracellular loop, namely the 'degenerin site' activate all members of the ENaC/degenerin family. Chemical modification of a cysteine introduced in the degenerin site of rat ENaC (betaS518C) by the sulfhydryl reagents MTSET or MTSEA, results in a approximately 3-fold increase in the open probability. This effect is due to an 8-fold shortening of channel closed times and an increase in the number of long openings. In contrast to the intracellular gating domain in the N-terminus which is critical for channel opening, the intact extracellular degenerin site is necessary for normal channel closing, as illustrated by our observation that modification of betaS518C destabilises the channel closed state. The modification by the sulfhydryl reagents is state- and size-dependent consistent with a conformational change of the degenerin site during channel opening and closing. We propose that the intracellular and extracellular modulatory sites act on a common channel gate and control the activity of ENaC at the cell surface.

Equilibrium asset prices and savings of heterogeneous agents in the presence of incomplete markets and portfolio constraints

We study the quantitative properties of a dynamic general equilibrium model in which agents face both idiosyncratic and aggregate income risk, state-dependent borrowing constraints that bind in some but not all periods and markets are incomplete. Optimal individual consumption-savings plans and equilibrium asset prices are computed under various assumptions about income uncertainty. Then we investigate whether our general equilibrium model with incomplete markets replicates two empirical observations: the high correlation between individual consumption and individual income, and the equity premium puzzle. We find that, when the driving processes are calibrated according to the data from wage income in different sectors of the US economy, the results move in the direction of explaining these observations, but the model falls short of explaining the observed correlations quantitatively. If the incomes of agents are assumed independent of each other, the observations can be explained quantitatively.

Canonical correspondence analysis in social science research

The use of simple and multiple correspondence analysis is well-established in socialscience research for understanding relationships between two or more categorical variables.By contrast, canonical correspondence analysis, which is a correspondence analysis with linearrestrictions on the solution, has become one of the most popular multivariate techniques inecological research. Multivariate ecological data typically consist of frequencies of observedspecies across a set of sampling locations, as well as a set of observed environmental variablesat the same locations. In this context the principal dimensions of the biological variables aresought in a space that is constrained to be related to the environmental variables. Thisrestricted form of correspondence analysis has many uses in social science research as well,as is demonstrated in this paper. We first illustrate the result that canonical correspondenceanalysis of an indicator matrix, restricted to be related an external categorical variable, reducesto a simple correspondence analysis of a set of concatenated (or stacked ) tables. Then weshow how canonical correspondence analysis can be used to focus on, or partial out, aparticular set of response categories in sample survey data. For example, the method can beused to partial out the influence of missing responses, which usually dominate the results of amultiple correspondence analysis.

Aging and the lateralization of oscillatory activities related to external and internal motor preparation

Selection of action may rely on external guidance or be motivated internally, engaging partially distinct cerebral networks. With age, there is an increased allocation of sensorimotor processing resources, accompanied by a reduced differentiation between the two networks of action selection. The present study examines the age effects on the motor-related oscillatory patterns related to the preparation of externally and internally guided movements. Thirty-two older and 30 younger adults underwent three delayed motor tasks with S1 as preparatory and S2 as imperative cue: Full, laterality instructed by S1 (external guidance); Free, laterality freely selected (internal guidance); None, laterality instructed by S2 (no preparation). Electroencephalogram (EEG) was recorded using 64 surface electrodes. Motor-Related Amplitude Asymmetries (MRAA), indexing the lateralization of oscillatory activities, were analyzed within the S1-S2 interval in the mu (9-12 Hz) and low beta (15-20 Hz) motor-related frequency bands. Reaction times to S2 were slower in older than younger subjects, and slower in the Free than in the Full condition in older subjects only. In the Full condition, there were significant mu MRAA in both age groups, and significant low beta MRAA only in older adults. The Free condition was associated with large mu MRAA in younger adults and limited low beta MRAA in older adults. In younger subjects, the lateralization of mu activity in both Full and Free conditions indicated effective external and internal motor preparation. In older subjects, external motor preparation was associated with lateralization of low beta in addition with mu activity, compatible with an increase of motor-related resources. In contrast, absence of mu and limited low beta lateralization in internal motor preparation was concomitant with reaction time slowing and suggested less efficient cerebral processes subtending free movement selection in older adults, indicating reduced capacity for internally driven action with age.

On the impact of leverage constraints on asset prices and trading volume

Researchers have used stylized facts on asset prices and trading volumein stock markets (in particular, the mean reversion of asset returnsand the correlations between trading volume, price changes and pricelevels) to support theories where agents are not rational expected utilitymaximizers. This paper shows that this empirical evidence is in factconsistent with a standard infite horizon perfect information expectedutility economy where some agents face leverage constraints similar tothose found in todays financial markets. In addition, and in sharpcontrast to the theories above, we explain some qualitative differencesthat are observed in the price-volume relation on stock and on futuresmarkets. We consider a continuous-time economy where agents maximize theintegral of their discounted utility from consumption under both budgetand leverage con-straints. Building on the work by Vila and Zariphopoulou(1997), we find a closed form solution, up to a negative constant, for theequilibrium prices and demands in the region of the state space where theconstraint is non-binding. We show that, at the equilibrium, stock holdingsvolatility as well as its ratio to stock price volatility are increasingfunctions of the stock price and interpret this finding in terms of theprice-volume relation.