Three essays in international finance

Executive Summary The first essay of this dissertation investigates whether greater exchange rate uncertainty (i.e., variation over time in the exchange rate) fosters or depresses the foreign investment of multinational firms. In addition to the direct capital financing it supplies, foreign investment can be a source of valuable technology and know-how, which can have substantial positive effects on a host country's economic growth. Thus, it is critically important for policy makers and central bankers, among others, to understand how multinationals base their investment decisions on the characteristics of foreign exchange markets. In this essay, I first develop a theoretical framework to improve our knowledge regarding how the aggregate level of foreign investment responds to exchange rate uncertainty when an economy consists of many firms, each of which is making decisions. The analysis predicts a U-shaped effect of exchange rate uncertainty on the total level of foreign investment of the economy. That is, the effect is negative for low levels of uncertainty and positive for higher levels of uncertainty. This pattern emerges because the relationship between exchange rate volatility and 'the probability of investment is negative for firms with low productivity at home (i.e., firms that find it profitable to invest abroad) and the relationship is positive for firms with high productivity at home (i.e., firms that prefer exporting their product). This finding stands in sharp contrast to predictions in the existing literature that consider a single firm's decision to invest in a unique project. The main contribution of this research is to show that the aggregation over many firms produces a U-shaped pattern between exchange rate uncertainty and the probability of investment. Using data from industrialized countries for the period of 1982-2002, this essay offers a comprehensive empirical analysis that provides evidence in support of the theoretical prediction. In the second essay, I aim to explain the time variation in sovereign credit risk, which captures the risk that a government may be unable to repay its debt. The importance of correctly evaluating such a risk is illustrated by the central role of sovereign debt in previous international lending crises. In addition, sovereign debt is the largest asset class in emerging markets. In this essay, I provide a pricing formula for the evaluation of sovereign credit risk in which the decision to default on sovereign debt is made by the government. The pricing formula explains the variation across time in daily credit spreads - a widely used measure of credit risk - to a degree not offered by existing theoretical and empirical models. I use information on a country's stock market to compute the prevailing sovereign credit spread in that country. The pricing formula explains a substantial fraction of the time variation in daily credit spread changes for Brazil, Mexico, Peru, and Russia for the 1998-2008 period, particularly during the recent subprime crisis. I also show that when a government incentive to default is allowed to depend on current economic conditions, one can best explain the level of credit spreads, especially during the recent period of financial distress. In the third essay, I show that the risk of sovereign default abroad can produce adverse consequences for the U.S. equity market through a decrease in returns and an increase in volatility. The risk of sovereign default, which is no longer limited to emerging economies, has recently become a major concern for financial markets. While sovereign debt plays an increasing role in today's financial environment, the effects of sovereign credit risk on the U.S. financial markets have been largely ignored in the literature. In this essay, I develop a theoretical framework that explores how the risk of sovereign default abroad helps explain the level and the volatility of U.S. equity returns. The intuition for this effect is that negative economic shocks deteriorate the fiscal situation of foreign governments, thereby increasing the risk of a sovereign default that would trigger a local contraction in economic growth. The increased risk of an economic slowdown abroad amplifies the direct effect of these shocks on the level and the volatility of equity returns in the U.S. through two channels. The first channel involves a decrease in the future earnings of U.S. exporters resulting from unfavorable adjustments to the exchange rate. The second channel involves investors' incentives to rebalance their portfolios toward safer assets, which depresses U.S. equity prices. An empirical estimation of the model with monthly data for the 1994-2008 period provides evidence that the risk of sovereign default abroad generates a strong leverage effect during economic downturns, which helps to substantially explain the level and the volatility of U.S. equity returns.

Mechanical properties of rat cardiac skinned fibers are altered by chronic growth hormone hypersecretion.

Chronic growth hormone (GH) hypersecretion in rats leads to increased isometric force without affecting the unloaded shortening velocity of isolated cardiac papillary muscles, despite a marked isomyosin shift toward V3. To determine if alterations occurred at the level of the contractile proteins in rats bearing a GH-secreting tumor (GH rats), we examined the mechanical properties of skinned fibers to eliminate the early steps of the excitation-contraction coupling mechanism. We found that maximal active tension and stiffness at saturating calcium concentrations (pCa 4.5) were markedly higher in GH rats than in control rats (tension, 52.9 +/- 5.2 versus 38.1 +/- 4.6 mN.mm-2, p < 0.05; stiffness, 1,105 +/- 120 versus 685 +/- 88 mN.mm-2.microns-1, p < 0.01), whereas values at low calcium concentrations (pCa 9) were unchanged. In addition, the calcium sensitivity of the contractile proteins was slightly but significantly higher in GH rats than in control rats (delta pCa 0.04, p < 0.001). The crossbridge cycling rate, reflected by the response to quick length changes, was lower in GH rats than in control rats (62.0 +/- 2.6 versus 77.4 +/- 6.6 sec-1, p < 0.05), in good agreement with a decrease in the proportion of alpha-myosin heavy chains in the corresponding papillary muscles (45.5 +/- 2.0% versus 94.6 +/- 2.4%, p < 0.001). The changes in myosin heavy chain protein phenotype were paralleled by similar changes of the corresponding mRNAs, indicating that the latter occurred mainly at a pretranslational level. These results demonstrate that during chronic GH hypersecretion in rats, alterations at the myofibrillar level contribute to the increase in myocardial contractility observed in intact muscle.

Spinal modulations accompany peripheral fatigue during prolonged tennis playing.

To examine the time course of alteration in neural process (spinal loop properties) during prolonged tennis playing, 12 competitive players performed a series of neuromuscular tests every 30 min during a 3-h match protocol. Muscle activation (twitch interpolation) and normalized EMG activity were assessed during maximal voluntary contraction (MVC) of plantar flexors. Spinal reflexes and M-waves were evoked at rest (i.e., H(max) and M(max) , respectively) and during MVC (i.e., H(sup) , V-wave, M(sup) , respectively). MVC torque declined significantly (P<0.001) across the match protocol, due to decrease (P<0.001) in muscle activation and in normalized EMG activity. The impairment in MVC was significantly correlated (r=0.77; P<0.05) with the decline in muscle activation. H(max) /M(max) (P<0.001), H(sup) /M(sup) (P<0.01) and V/M(sup) (P<0.05) ratios were depressed with fatigue and decreased by ∼80%, 46% and 61% at the end of exercise, respectively. Simultaneously, peak twitch torque and M-wave amplitude were significantly (P<0.01) altered with exercise, suggesting peripheral alterations. During prolonged tennis playing, the compromised voluntary strength capacity is linked to a reduced neural input to the working muscles. This central activation deficit partly results from a modulation in spinal loop properties.

P2X1 receptors and the endothelium

Adenosine triphosphate (ATP) is now established as a principle vaso-active mediator in the vasculature. Its actions on arteries are complex, and are mediated by the P2X and P2Y receptor families. It is generally accepted that ATP induces a bi-phasic response in arteries, inducing contraction via the P2X and P2Y receptors on the smooth muscle cells, and vasodilation via the actions of P2Y receptors located on the endothelium. However, a number of recent studies have placed P2X1 receptors on the endothelium of some arteries. The use of a specific P2X1 receptor ligand, a, b methylene ATP has demonstrated that P2X1 receptors also have a bi-functional role. The actions of ATP on P2X1 receptors is therefore dependant on its location, inducing contraction when located on the smooth muscle cells, and dilation when expressed on the endothelium, comparable to that of P2Y receptors.

Tethyan margins in space and time

Rifting processes, leading to sea-floor spreading, are characterized by a sequence of events: transtensive phase of extension with syn-rift volcanism; simple shear extension accompanied by lithospheric thinning and asthenospheric up-welling and thermal uplift of the rift shoulder and asymmetric volcanism. The simple shear model of extension leads to an asymmetric model of passive margin: a lower plate tilted block margin and an upper plate flexural, ramp-like margin- Both will be affected by thermal contraction and subsidence, starting soon after sea-floor spreading. Based on these actualistic models Tethyan margins are classified as one type or the other. Their evolution from the first transtensional phase of extension to the passive margin stage are analyzed. Four main rifting events are recognized in the Tethyan realm: an episode of lower Paleozoic events leading to the formation of the Paleotethys; a Late Paleozoic event leading to the opening of the Permotethys and East Mediterranean basin: an early Mesozoic event leading to the opening of the Pindos Neotethys and a Jurassic event related to the opening of the Alpine/Atlantic Neotethys. Type margins are given as example of each rifting event: -Northern Iran (Alborz) as a type area for the Late Ordovician to Silurian rifting of Paleotethys. -Northern India and Oman for the Late Carboniferous to early Permian rifting of Permotethys. -The East Mediterranean (Levant, Tunisia) as a Late Carboniferous rifting event. -The Neotethyan rifting phases are separated in two types: an eastern Pindos system found in Turkey and Greece is genetically linked to the Permotethys with a sea-floor spreading delayed until middle Triassic: a western Alpine system directly linked to the opening of the central Atlantic is characterized by a Late Triassic transtensive phase, an early to Middle Liassic break-away phase and. following sea-floor spreading, a thermal subsidence phase starting in Dogger. Problems related to the closure of the Paleozoic oceanic domains are reviewed. A Late Permian, early Triassic phase of `'docking'' between an European accretionary prism (Chios) and a Paleotethyan margin is supported by recent findings in the Mediterranean area. Back-arc rifting within the European active margin led to the formation of marginal seas during Permian and Triassic times and will contribute to the closure of the Paleozoic oceans.

Artificial muscle to wash blood out of fibrillating atrium: an alternative to lifelong anticoagulation.

The Atripump is a motorless, volume displacement pump based on artificial muscle technology that could reproduce the pump function of normal atrium. It could help prevent blood clots due to blood stagnation and eventually avoid anticoagulation therapy in atrial fibrillation (AF). An animal study has been designed to assess mechanical effects of this pump on fibrillating atrium. The Atripump is a dome shaped silicone coated nitinol actuator. A pacemaker like control unit drives the actuator. In five adult sheep, the right atrium (RA) was exposed and dome sutured onto the epicardium. Atrial fibrillation was induced using rapid epicardial pacing (600 beats/min). Ejection fraction of the RA was obtained with intracardiac ultrasound in baseline, AF and Atripump assisted AF conditions. The dome's contraction rate was 60/min with power supply of 12V, 400 mA for 200 ms and ran for 2 hours in total. Mean temperature on the RA was 39+/-1.5 degrees C. Right atrium ejection fraction was 31% in baseline conditions, 5% and 20% in AF and assisted AF, respectively. In two animals a thrombus appeared in the right appendix and washed out once the pump was turned on. The Atripump washes blood out the RA acting as an anticoagulant device. Possible clinical implications in patients with chronic AF are prevention of embolism of cardiac origin and avoidance of hemorrhagic complication due to chronic anticoagulation.

Cardiac rotation and relaxation after anterolateral myocardial infarction.

BACKGROUND: Both systolic and diastolic dysfunction have been observed in patients with anterolateral myocardial infarction. Diastolic dysfunction is related to disturbances in relaxation and diastolic filling. OBJECTIVE: To analyse cardiac rotation, regional shortening and diastolic relaxation in patients with anterolateral infarction. METHODS: Cardiac rotation and relaxation in controls and patients with chronic anterolateral infarction were assessed by myocardial tagging. Myocardial tagging is based on magnetic resonance imaging and allows us to label specific myocardial regions for imaging cardiac motion (rotation, translation and radial displacement). A rectangular grid was placed on the myocardium (basal, equatorial and apical short-axis plane) of each of 18 patients with chronic anterolateral infarction and 13 controls. Cardiac rotation, change in area and shortening of circumference were determined in each case. RESULTS: The left ventricle in controls performs a systolic wringing motion with a clockwise rotation at the base and a counterclockwise rotation at the apex when viewed from the apex. During relaxation a rotational motion in the opposite direction (namely untwisting) can be observed. In patients with anterolateral infarction, there is less systolic rotation at the apex and diastolic untwisting is delayed and prolonged in comparison with controls. In the presence of a left ventricular aneurysm (n = 4) apical rotation is completely lost. There is less shortening of circumference in infarcted and remote regions. CONCLUSIONS: The wringing motion of the myocardium might be an important mechanism involved in maintaining normal cardiac function with minimal expenditure of energy. This mechanism no longer operates in patients with left ventricular aneurysms and operates significantly less than normal in those with anterolateral hypokinaesia. Diastolic untwisting is significantly delayed and prolonged in patients with anterolateral infarction, which could explain the occurrence of diastolic dysfunction in these patients.

mitoKATP channel activation in the postanoxic developing heart protects E-C coupling via NO-, ROS-, and PKC-dependent pathways.

Whereas previous studies have shown that opening of the mitochondrial ATP-sensitive K(+) (mitoK(ATP)) channel protects the adult heart against ischemia-reperfusion injury, it remains to be established whether this mechanism also operates in the developing heart. Isolated spontaneously beating hearts from 4-day-old chick embryos were subjected to 30 min of anoxia followed by 60 min of reoxygenation. The chrono-, dromo-, and inotropic disturbances, as well as alterations of the electromechanical delay (EMD), reflecting excitation-contraction (E-C) coupling, were investigated. Production of reactive oxygen species (ROS) in the ventricle was determined using the intracellular fluorescent probe 2',7'-dichlorofluorescin (DCFH). Effects of the specific mitoK(ATP) channel opener diazoxide (Diazo, 50 microM) or the blocker 5-hydroxydecanoate (5-HD, 500 microM), the nitric oxide synthase (NOS) inhibitor N(G)-nitro-L-arginine methyl ester (L-NAME, 50 microM), the antioxidant N-(2-mercaptopropionyl)glycine (MPG, 1 mM), and the PKC inhibitor chelerythrine (Chel, 5 microM) on oxidative stress and postanoxic functional recovery were determined. Under normoxia, the baseline parameters were not altered by any of these pharmacological agents, alone or in combination. During the first 20 min of postanoxic reoxygenation, Diazo doubled the peak of ROS production and, interestingly, accelerated recovery of ventricular EMD and the PR interval. Diazo-induced ROS production was suppressed by 5-HD, MPG, or L-NAME, but not by Chel. Protection of ventricular EMD by Diazo was abolished by 5-HD, MPG, L-NAME, or Chel, whereas protection of the PR interval was abolished by L-NAME exclusively. Thus pharmacological opening of the mitoK(ATP) channel selectively improves postanoxic recovery of cell-to-cell communication and ventricular E-C coupling. Although the NO-, ROS-, and PKC-dependent pathways also seem to be involved in this cardioprotection, their interrelation in the developing heart can differ markedly from that in the adult myocardium.

Activity of praziquantel on in vitro transformed Schistosoma mansoni sporocysts

Praziquantel (PZQ) is effective against all the evolutive phases of Schistosoma mansoni. Infected Biomphalaria glabrata snails have their cercarial shedding interrupted when exposed to PZQ. Using primary in vitro transformed sporocysts, labeled with the probe Hoechst 33258 (indicator of membrane integrity), and lectin of Glycine max (specific for carbohydrate of N-acetylgalactosamine membrane), we evaluated the presence of lysosomes at this evolutive phase of S. mansoni, as well as the influence of PZQ on these acidic organelles and on the tegument of the sporocyst. Although the sporocyst remained alive, it was observed that there was a marked contraction of its musculature, and there occurred a change in the parasite's structure. Also, the acidic vesicles found in the sporocysts showed a larger delimited area after contact of the parasites with PZQ. Damages to the tegument was also observed, as show a well-marked labeling either with Hoechst 33258 or with lectin of Glycine max after contact of sporocysts with the drug. These results could partially explain the interruption/reduction mechanism of cercarial shedding in snails exposed to PZQ.

Effects of two types of fatigue on the VO(2) slow component.

The aim of the study was to test the hypothesis of the involvement of type II fibres in the V.O (2) slow component phenomenon by using two prior fatiguing protocols on the knee extensor muscles. Nine subjects performed three constant-load cycling exercises at a work rate corresponding to 80 % of their V.O (2) max: (i) preceded by a 20-min fatiguing protocol using electromyostimulation (EMS), (ii) preceded by a 20-min fatiguing protocol using voluntary contractions (VOL), and (iii) without fatiguing protocol (NFP). Voluntary and evoked neuromuscular properties of the knee extensor muscles were tested before (PRE) and after (POST) the two fatiguing protocols. Results show a significant reduction in voluntary force after both fatiguing protocols (-19.9 % and -11.8 %, in EMS and VOL, respectively p<0.01). After EMS, this decrease was greater than after VOL (p<0.05) and was combined with a slackening of muscle contractile properties which was absent after VOL (p<0.05). Regarding the effects on oxygen uptake kinetics, the appearance of the slow component was delayed after EMS and its amplitude was lower than those obtained in VOL and NFP conditions (0.48+/-0.07 vs. 0.75+/-0.09 and 0.69+/-0.08 L . min (-1), respectively; p<0.05). It can thus be concluded that exercises dedicated to preferentially fatiguing type II fibres may alter V.O (2) kinetics.

Feeding behavior of Triatoma vitticeps (Reduviidae: Triatominae) in the state of Minas Gerais, Brazil

The objective of this study was to evaluate the feeding behavior of Triatoma vitticeps through the identification of its food sources and the characterization of the blood ingestion process. In addition, we aimed to verify if the saliva of this vector interferes with the perception of the host during the feedings by creating a nervous impulse. Here, we demonstrated that the T. vitticeps saliva reduces, gradually and irreversibly, the amplitude of the compound action potential of the nervous fibre, which helps decrease the perception of the insect by the host. The precipitin reaction demonstrated the feeding eclecticism of this vector, with the identification of eight food sources - most of them found simultaneously in the same insect. The analysis of the electrical signals produced by the cibarial pump during meals demonstrated that the best feeding performance of T. vitticeps nymphs that fed on pigeons is mainly due to the higher contraction frequency of the pump. The longer contact period with the host to obtain a complete meal compared with other triatominae species of the same instar could favor the occurrence of multiple blood sources in T. vitticeps under natural conditions, as it was evidenced by the precipitin test.

High throughput 3D super-resolution microscopy reveals Caulobacter crescentus in vivo Z-ring organization.

We created a high-throughput modality of photoactivated localization microscopy (PALM) that enables automated 3D PALM imaging of hundreds of synchronized bacteria during all stages of the cell cycle. We used high-throughput PALM to investigate the nanoscale organization of the bacterial cell division protein FtsZ in live Caulobacter crescentus. We observed that FtsZ predominantly localizes as a patchy midcell band, and only rarely as a continuous ring, supporting a model of "Z-ring" organization whereby FtsZ protofilaments are randomly distributed within the band and interact only weakly. We found evidence for a previously unidentified period of rapid ring contraction in the final stages of the cell cycle. We also found that DNA damage resulted in production of high-density continuous Z-rings, which may obstruct cytokinesis. Our results provide a detailed quantitative picture of in vivo Z-ring organization.

A key role of TRPC channels in the regulation of electromechanical activity of the developing heart.

Aims It is well established that dysfunction of voltage-dependent ion channels results in arrhythmias and conduction disturbances in the foetal and adult heart. However, the involvement of voltage-insensitive cationic TRPC (transient receptor potential canonical) channels remains unclear. We assessed the hypothesis that TRPC channels play a crucial role in the spontaneous activity of the developing heart.Methods and results TRPC isoforms were investigated in isolated hearts obtained from 4-day-old chick embryos. Using RT-PCR, western blotting and co-immunoprecipitation, we report for the first time that TRPC1, 3, 4, 5, 6, and 7 isoforms are expressed at the mRNA and protein levels and that they can form a macromolecular complex with the alpha 1C subunit of the L-type voltage-gated calcium channel (Cav1.2) in atria and ventricle. Using ex vivo electrocardiograms, electrograms of isolated atria and ventricle and ventricular mechanograms, we found that inhibition of TRPC channels by SKF-96365 leads to negative chrono-, dromo-, and inotropic effects, prolongs the QT interval, and provokes first-and second-degree atrioventricular blocks. Pyr3, a specific antagonist of TRPC3, affected essentially atrioventricular conduction. On the other hand, specific blockade of the L-type calcium channel with nifedipine rapidly stopped ventricular contractile activity without affecting rhythmic electrical activity.Conclusions These results give new insights into the key role that TRPC channels, via interaction with the Cav1.2 channel, play in regulation of cardiac pacemaking, conduction, ventricular activity, and contractility during cardiogenesis.

Comprehensive analysis of NRG1 common and rare variants in Hirschsprung patients.

Hirschsprung disease (HSCR, OMIM 142623) is a developmental disorder characterized by the absence of ganglion cells along variable lengths of the distal gastrointestinal tract, which results in tonic contraction of the aganglionic gut segment and functional intestinal obstruction. The RET proto-oncogene is the major gene for HSCR with differential contributions of its rare and common, coding and noncoding mutations to the multifactorial nature of this pathology. Many other genes have been described to be associated with the pathology, as NRG1 gene (8p12), encoding neuregulin 1, which is implicated in the development of the enteric nervous system (ENS), and seems to contribute by both common and rare variants. Here we present the results of a comprehensive analysis of the NRG1 gene in the context of the disease in a series of 207 Spanish HSCR patients, by both mutational screening of its coding sequence and evaluation of 3 common tag SNPs as low penetrance susceptibility factors, finding some potentially damaging variants which we have functionally characterized. All of them were found to be associated with a significant reduction of the normal NRG1 protein levels. The fact that those mutations analyzed alter NRG1 protein would suggest that they would be related with HSCR disease not only in Chinese but also in a Caucasian population, which reinforces the implication of NRG1 gene in this pathology.

Twitch potentia induced by two different modalities of neuromuscular electrical stimulation: implications for motor unit recruitment.

INTRODUCTION: We tested the hypothesis that twitch potentiation would be greater following conventional (CONV) neuromuscular electrical stimulation (50-µs pulse width and 25-Hz frequency) compared with wide-pulse high-frequency (WPHF) neuromuscular electrical stimulation (1-ms, 100-Hz) and voluntary (VOL) contractions, because of specificities in motor unit recruitment (random in CONV vs. random and orderly in WPHF vs. orderly in VOL). METHODS: A single twitch was evoked by means of tibial nerve stimulation before and 2 s after CONV, WPHF, and VOL conditioning contractions of the plantar flexors (intensity: 10% maximal voluntary contraction; duration: 10 s) in 13 young healthy subjects. RESULTS: Peak twitch increased (P<0.05) after CONV (+4.5±4.0%) and WPHF (+3.3±5.9%), with no difference between the 2 modalities, whereas no changes were observed after VOL (+0.8±2.6%). CONCLUSIONS: Our results demonstrate that presumed differences in motor unit recruitment between WPHF and CONV do not seem to influence twitch potentiation results.