Effects of competition over quality-adjusted price indexes: an application to the Spanish automobile market

Using a newly constructed data set, we calculate quality-adjusted price indexes after estimating hedonic price regressions from 1988 to 2004 in the Spanish automobile market. The increasing competition was favoured by the removal of trade restrictions and the special plans for the renewal of the Spanish automobile fleet. We find that the increasing degree of competition during those years led to an overall drop in automobile prices by 20 percent which implied considerable consumer gains thanks to higher market efficiency. Additionally, our results indicate that loyalty relevance and discrepancies in automobile reliability declined during those years. This is captured.

Stock market volatility and learning

Introducing bounded rationality in a standard consumption-based asset pricing model with time separable preferences strongly improves empirical performance. Learning causes momentum and mean reversion of returns and thereby excess volatility, persistence of price-dividend ratios, long-horizon return predictability and a risk premium, as in the habit model of Campbell and Cochrane (1999), but for lower risk aversion. This is obtained, even though our learning scheme introduces just one free parameter and we only consider learning schemes that imply small deviations from full rationality. The findings are robust to the learning rule used and other model features. What is key is that agents forecast future stock prices using past information on prices.

Market effects of foreign exchange coordinated intervention

In this article we develop a theoretical microstructure model of coordinated central bank intervention based on asymmetric information. We study the economic implications of coordination on some measures of market quality and show that the model predicts higher volatility and more significant exchange rate changes when central banks coordinate compared to when they intervene unilaterally. Both these predictions are in line with empirical evidence. Keywords: coordinated foreign exchange intervention, market microstructure. JEL Classification: D82, E58, F31, G14

Donor-derived aspergillosis from use of a solid organ recipient as a multiorgan donor.

The growing need for organs and the scarcity of donors has resulted in an increased use of extended criteria donors. We report a case where a recipient of a cardiac graft was used as an organ donor. Death of the recipient occurred 9 days after transplantation and was attributed to presumed cerebral hemorrhage, which post mortem was diagnosed as invasive aspergillosis of the brain. One recipient of a kidney transplant lost the graft due to infection with Aspergillus fumigatus, whereas prompt initiation of therapy successfully prevented disseminated aspergillosis in the other recipients. Despite the pressure to extend the use of organs by lowering the acceptance criteria, organs should only be accepted if the cause of death of the donors is unequivocally explained.

Role of cytokines in secondary lymphoid organ development

Summary Secondary lymphoid organs are sites of antigen presentation, clonal expansion of B and lymphocytes, and affinity maturation of B lymphocytes. In the intestine, these immune functions occur mainly in Peyer's patches (PP). PP develop through the interplay of two main cell types, haematopoietic cells and meserichyrnal cells. One particular haematopoietic cell type was identified as the inductive cell type in the formation of both PP and lymph nodes and was therefore designated as lymphoid tissue inducer cell. For a successful PP organogenesis, the crucial molecular components involved in the crosstalk of inducer cells and their mesenchymal target cells are adhesion molecules, lymphotoxin (LT) family members, and cytokines. In particular, the interleukin 7 receptor (IL-7R) expressed on inducer cells is absolutely required. To investigate the contribution of the ligand for the IL-7R. the cytokine IL-7, in the process of PP formation, we analyzed double transgenic (TG) mice. These mice resulted from an interbreeding of an IL-7TG mouse strain where the transgene is under the control of the MHC class II promoter with a second transgenic mouse strain, which overexpresses a transactivator for MHC class II genes. Double TG offsprings revealed higher levels of IL-7 mRNA occuring earlier in embryogenesis. Consequently, double TG mice showed a striking phenotype with a 3- to 5-fold increase in PP numbers compared to single IL-7TG or control littermates. Analysis of embryonic double TG intestines demonstrated that the process of PP development was already elevated during development as early as the embryonic day 16.5. Importantly, inducer cells were significantly increased in numbers in these embryonic intestines. Furthermore, the expression of LT? mRNA, which at this early time point is exclusively expressed by inducer cells, was also increased in double TG animals. These data clearly indicate a direct influence of IL-7 on the expansion of lymphoid tissue inducer cells and on the availability of LT? leading to a higher frequency of developing PP in fetal life. Interestingly, in addition to an enhanced frequency of PP development, in double TG mice, three additional phenotypic differences were observed. i) Lymphocyte infiltration in various non-lymphoid organs, such as stomach, salivary gland, and liver. Subsequent analysis demonstrated that B lymphocytes were predominant within these tertiary lymphoid structures. ii) Ectopic lymph node-like structures containing both B and T lymphocytes were found near the inguinal lymph node. iii) Double TG mice had a severe bone resorption syndrome most likely as a consequence of the pro-osteoclastic effect of IL-7. Taken together, these results show that IL-7 plays a key role in the homeostasis of inducer cells, in the generation of PP in the gut, in the formation of ectopic lymphoid tissue, and in bone resorption. Résumé Les organes lymphoïdes secondaires sont les lieux de présentation des antigènes aux lymphocytes, permettant l'expansion des lymphocytes B et T et la maturation d'affinité des lymphocytes B. Dans l'intestin, ces fonctions immunitaires se déroulent dans les plaques de Peyer (PP). Ces plaques se développent grâce à l'interaction des cellules hématopoïétiques avec des cellules mésenchymales. Un type particulier de cellules hématopoïétiques a été identifié comme cellule inductrice dans la formation des PP et des ganglions lymphatiques et de ce fait a été désigné cellule inductrice des tissus lymphoïdes. Durant l'organogénèse des PP, les composants moléculaires cruciaux impliqués dans l'interaction des cellules inductrices et des cellules mésenchymales sont les molécules d'adhésion, les membres de la famille des lymphotoxines (LT) et les cytokines. En particulier, le récepteur de l'interleukine 7 (IL-7R) exprimé par les cellules inductrices est absolument nécessaire. Pour étudier le rôle du ligand de l'IL-7R, l'interleukine IL-7, dans la formation des PP, nous avons croisé une lignée de souris transgénique (TG) surexprimant IL-7 sous contrôle du promoteur MHC class Il avec une lignée de souris transgénique surexprimant un transactivateur des genes MHC class II. Les souris doubles TG présentent une concentration élevée d'ARNm de l'IL-7 durant l'embryogénèse, ce qui résulte en une augmentation du nombre de PP de 3 à 5 fois en comparaison aux souris ayant seul le transgène IL-7 et aux souris contrôles. L'analyse des intestins des souris doubles TG démontre que le processus de développement des PP était élevé dès le jour 16.5 du développement embryonnaire. L'augmentation du nombre des cellules inductrices dans ces intestins embryonnaires est signilicative. De plus l'expression de l'ARNm LT?, qui à ce stade précoce est exclusivement exprimé dans les cellules inductrices, est également augmenté dans les doubles TG. Ces résultats indiquent clairement une influence directe d'IL-7 sur l'expansion des cellules inductrices des tissues lymphoïdes et sur la synthèse de LT? induisant une augmentation des PP se développant durant la vie foetale. En plus du développement accru des PP dans les souris doubles TG, trois différences phénotypiques ont été observées. i) L'infiltration lymphocytaire dans différents organes non-lymphoïdes, comme l'estomac, les glandes salivaires et le foie. Des analyses complémentaires ont demontré que les lymphocytes B étaient prédominants dans ces structures lymphoïdes tertiaires. ii) Des structures de ganglions lymphatiques ectopiques contenant des lymphocytes B et T ont été trouvées près des ganglions lymphatiques inguinaux. iii) Les souris doubles TG présentent un syndrome de résorption osseuse sévère probablement dû à l'effet pro-osteoclaste d'IL-7. Globalement, ces résultats montrent que IL-7 joue un rôle clé dans l'homéostasie des cellules inductrices dans la génèse de PP de l'intestin, dans la formation des tissus lymphoïdes ectopiques et dans la résorption osseuse.

Swiss clinical practice guidelines for skin cancer in organ transplant recipients.

Patients with a solid organ transplant have increased in numbers and in individual survival in Switzerland over the last decades. As a consequence of long-term immunosuppression, skin cancer in solid organ recipients (SOTRs) has been recognized as an important problem. Screening and education of potential SOTRs about prevention of sun damage and early recognition of skin cancer are important before transplantation. Once transplanted, SOTRs should be seen by a dermatologist yearly for repeat education as well as early diagnosis, prevention and treatment of skin cancer. Squamous cell carcinoma of the skin (SCC) is the most frequent cancer in the setting of long-term immunosuppression. Sun protection by behaviour, clothing and daily sun screen application is the most effective prevention. Cumulative sun damage results in field cancerisation with numerous in-situ SCC such as actinic keratosis and Bowen's disease which should be treated proactively. Invasive SCC is cured by complete surgical excision. Early removal is the best precaution against potential metastases of SCC. Reduction of immunosuppression and switch to mTOR inhibitors and potentially, mycophenolate, may reduce the incidence of further SCC. Chemoprevention with the retinoid acitretin reduces the recurrence rate of SCC. The dermatological follow-up of SOTRs should be integrated into the comprehensive post-transplant care.

Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis

This paper empirically analyses the hypothesis of the existence of a dual market for contracts in local services. Large firms that operate on a national basis control the contracts for delivery in the most populated and/or urban municipalities, whereas small firms that operate at a local level have the contracts in the least populated and/or rural municipalities. The dual market implies the high concentration and dominance of major firms in large municipalities, and local monopolies in the smaller ones. This market structure is harmful to competition for the market as the effective number of competitors is low across all municipalities. Thus, it damages the likelihood of obtaining cost savings from privatization.

The Macroeconomics of the labor market: three fundamental views

We distinguish and assess three fundamental views of the labor market regarding the movements in unempoyment: (i) the frictionless equilibrium view; (ii) the chain reaction theory, or prolonged adjustment view; and (iii) the hysteresis view. While the frictionless view implies a clear compartmentalization between the short- and long-run, the hysteresis view implies that all the short-run fluctuations automatically turn into long-run changes in the unemployment rate. We assert the problems faced by these conceptions in explaining the diversity of labor market experiences across the OECD labor markets. We argue that the prolonged adjustment view can overcome these problems since it implies that the short, medium, and long runs are interrelated, merging with one another along an intertemporal continuum.

Stock market integration between new EU member states and the Euro-zone

This paper measures the degree in stock market integration between five Eastern European countries and the Euro-zone. A potentially gradual transition in correlations is accommodated by smooth transition conditional correlation models. We find that the correlation between stock markets has increased from 2001 to 2007. In particular, the Czech and Polish markets show a higher correlation to the Euro-zone. However, this is not a broad-based phenomenon across Eastern Europe. We also find that the increase in correlations is not a reflection of a world-wide phenomenon of financial integration but appears to be specific to the European market. JEL classifications: C32; C51; F36; G15 Keywords: Multivariate GARCH; Smooth Transition Conditional Correlation; Stock Return Comovement; New EU Members.

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

Labour Market Imperfections, International Integration and Selection

Although a large body of literature has focused on the effects of intra-firm differences on export performance, relatively little attention has been devoted to the interaction between firms' selection and international performance and labour market institutions - in contrast with the centrality of the latter to current policy and public debates on the implications of economic globalisation for national policies and institutions. In this paper, we study the effects of labour market unionisation on the process of competitive selection between heterogeneous firms and analyse how the interaction between the two is affected by trade liberalisation between countries with different unionisation patterns.

On the Relationship between Market Power and Bank Risk Taking

We analyse risk-taking behaviour of banks in the context of spatial competition. Banks mobilise unsecured deposits by offering deposit rates, which they invest either in a prudent or a gambling asset. Limited liability along with high return of a successful gamble induce moral hazard at the bank level. We show that when the market power is low, banks invest in the gambling asset. On the other hand, for sufficiently high levels of market power, all banks choose the prudent asset to invest in. We further show that a merger of two neighboring banks increases the likelihood of prudent behaviour. Finally, introduction of a deposit insurance scheme exacerbates banks’ moral hazard problem.

Export-market dynamics and the probability of firm closure: Evidence for the UK

This study presents the first empirical analysis of the determinants of firm closure in the UK with an emphasis on the role of export-market dynamics, using panel data for a nationally representative group of firms operating in all-market based sectors during 1997-2003. Our findings show that the probability of closure is (cet. par.) significantly lower for exporters, particularly those experiencing export-market entry and exit. Having controlled for other attributes associated with productivity (such as size and export status), the following factors are found to increase the firm’s survival prospects: higher capital intensity and TFP, foreign ownership, young age, displacement effects (through relatively high rates of entry of firms in each industry), and belonging to certain industries. Interestingly, increased import penetration (a proxy for lower trade costs) leads to a lower hazard rate for exporting entrants and continuous exporters, whilst inducing a higher hazard rate for domestic producers or those that quit exporting.