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.

Changes associated with laboratory rearing in antennal sensilla patterns of Triatoma infestans, Rhodnius prolixus, and Rhodnius pallescens (Hemiptera, Reduviidae, Triatominae)

We examined changes in the array of antennal sensilla of three species of Triatominae (Triatoma infestans, Rhodnius prolixus, and R. pallescens) following their establishment for different periods in laboratory culture. In each case, the laboratory colonies were compared with conspecific samples taken directly from the field, by quantitative analysis of the sensilla arrays on the three distal segments of the antenna in terms of the densities of three types of chemoreceptors (basiconics and thick and thin walled trichoids) and one type of mechanoreceptor (bristles). Sensilla densities were compared by ANOVA or non-parametric tests, and by multivariate discriminant analysis. Strains of the same species reared in different laboratories showed significant differences in their sensilla arrays, especially when compared to field-collected material from the same geographic origin. A Bolivian strain of T. infestans reared in the laboratory for 15 years and fed at monthly intervals, showed greatest differences from its conspecific wild forms, especially in terms of reductions in the number of chemoreceptors. By contrast, an Argentine strain of T. infestans reared for 25 years in the laboratory and fed weekly, showed a relative increase in the density of mechanoreceptors. A Colombian strain of R. prolixus reared for 20 years and fed weekly or fortnightly, showed only modest differences in the sensilla array when compared to its wild populations from the same area. However, a Colombian strain of R. pallescens reared for 12 years and fed fortnightly, did show highly significant reductions in one form of chemoreceptor compared to its conspecific wild populations. For all populations, multivariate analysis clearly discriminated between laboratory and field collected specimens, suggesting that artificial rearing can lead to modifications in the sensory array. This not only supports the idea of morphological plasticity in these species, but also suggests caution in the use of long-established laboratory material for experimental studies designed to extrapolate the natural behaviour and physiology of these species.

IS6110 restriction fragment length polymorphism typing of Mycobacterium tuberculosis isolates from East Azerbaijan Province of Iran

To investigate the genetic variation among Mycobacterium tuberculosis isolates in the East Azerbaijan Province of Iran and to evaluate the level of and risk factors for recent transmission of tuberculosis (TB), we performed IS6110-based restriction fragment length polymorphism analysis of strains, isolated from 105 patients during the period of September 2002 to March 2003 in TB centers and university hospitals of the province. Among 105 isolates, 81 different IS6110 patterns were found, of which 70 were observed only once and 11 were shared by two to eight isolates. Ninety-six isolates (91.4%) were found to have more than five copies of IS6110 and together with high patterns polymorphism, shows that IS6110-RFLP typing could be useful for studying the epidemiology of TB in Azerbaijan. The minimum estimated rate of recent transmission was 23%, suggesting that the degree of recent transmission in East Azerbaijan Province is relatively low. Clustering was not associated with age, sex or site of infection of TB but drug-resistant isolates were less likely to be clustered than sensitive isolates (p < 0.05).

Final Report, Secondary Road Fund Distribution Advisory Committee, 2002-2005

This report presents the findings and recommendations of the Secondary Road Fund Distribution Advisory Committee (SRFDAC) established by SF 2192 of the 2002 Iowa Acts.

Political mobilisation and models of trade unionism : Southern Europe in comparative perspective

The relationship between union membership and political mobilization has been studied under many perspectives, but quantitative cross-national analyses have been hampered by the absence of international comparable survey data until the first round of the European Social Survey (ESS-2002) was made available. Using different national samples from this survey in four moments of time (2002, 2004 and 2006), our paper provides evidence of cross-country divergence in the empirical association between political mobilisation and trade union membership. Cross-national differences in union members’ political mobilization, we argue, can be explained by the existence of models of unionism that in turn differ with respect to two decisive factors: the institutionalisation of trade union activity and the opportunities left-wing parties have available for gaining access to executive power.

Membership and internal democracy. Immigrant organisations in the city of Oslo

Immigrant organisations in the City of Oslo receive support from the government for their daily operation. In order to receive such support, each organisation must be membership-based and have internal democratic procedures. This paper raises the question of how we can understand this combination of support for ethnic based organisations and requirements of membership and internal democracy. It explores the usefulness of two partly overlapping ways of understanding this policy and discusses their interrelationship. Firstly, within the context of the crisis of multiculturalism, the paper discusses whether this combination is based on the aim of strengthening the organisations’ procedural commitment to liberal-democratic principles. Secondly, the paper analyses whether requirements of membership and internal democracy can mainly be understood within the framework of the Nordic model of voluntary organisation. By comparing the policy at three empirical levels, the paper concludes that this combination can mainly be understood within the framework of the traditional historical Nordic model, but that there is an ambiguity in this policy related to minority rights.

The State Report Card for No Child Left Behind Iowa Department of Education, December 2006

The No Child Left Behind Act (NCLB) of 2001 requires each state to provide an annual report card to inform stakeholders and the public about the progress of students and schools on indicators of student achievement and other information that relates to student success. The State Report Card provides state level data to serve as a comparison for schools and districts as they consider and implement improvement efforts to increase the success for all Iowa students.

Separated by a common currency? Evidence from the Euro changeover

We study the price convergence of goods and services in the euro area in 2001-2002. To measure the degree of convergence, we compare the prices of around 220 items in 32 European cities. The width of the border is the price di¤erence attributed to the fact that the two cities are in different countries. We find that the 2001 European borders are negative, which suggests that the markets were very integrated before the euro changeover. Moreover, we do not identify an integration effect attributable to the introduction of the euro. We then explore the determinants of the European borders. We find that different languages, wealth and population differences tend to split the markets. Historical inflation, though, tends to lead to price convergence.

Final Report, Secondary Road Fund Distribution Advisory Committee, 2002-2005

This report presents the findings and recommendations of the Secondary Road Fund Distribution Advisory Committee (SRFDAC) established by SF 2192 of the 2002 Iowa Acts.

International capital flows and credit market imperfections: A tale of two frictions

The financial crisis of 2007-08 has underscored the importance of adverse selection in financialmarkets. This friction has been mostly neglected by macroeconomic models of financialimperfections, however, which have focused almost exclusively on the effects of limited pledgeability.In this paper, we fill this gap by developing a standard growth model with adverseselection. Our main results are that, by fostering unproductive investment, adverse selection:(i) leads to an increase in the economy s equilibrium interest rate, and; (ii) it generates a negativewedge between the marginal return to investment and the equilibrium interest rate. Underfinancial integration, we show how this translates into excessive capital inflows and endogenouscycles. We also extend our model to the more general case in which adverse selection and limitedpledgeability coexist. We conclude that both frictions complement one another and show thatlimited pledgeability exacerbates the effects of adverse selection.

Informe del Seminari sobre la convergència europea en els ensenyaments de Biblioteconomia i Documentació (22 de febrer de 2002)

En els dos darrers anys la Universitat de Barcelona ha estat atenta als desenvolupaments que tenen lloc en l'àmbit europeu en el tema de la convergència europea dels ensenyaments universitaris, que té com a punt de partida la Declaració de Bolonya. Des del primer moment, la UB ha estat molt sensible a aquesta convergència i ha liderat una sèrie de reunions i treballs en el si de la universitat espanyola per debatre aquesta qüestió i preparar un futur europeu. El rectorat de la UB també ha tingut informada la seva comunitat de tots aquests desenvolupaments i ha organitzat una sèrie de seminaris i reunions de treball per informar els càrrecs acadèmics i el professorat i sensibilitzar-los de cara a iniciar el treball cap a aquesta convergència europea dels ensenyaments universitaris. D'acord, doncs, amb aquesta línia prioritària de la Universitat de Barcelona, aquest curs 2001-2002 la Facultat de Biblioteconomia i Documentació ha posat en marxa, amb l'ajuda de la Divisió de Ciències de l'Educació, un pla de millora docent on s'emmarquen una sèrie d'actuacions de cara a estudiar la implantació del sistema europeu de crèdits en algunes matèries troncals dels ensenyaments de Biblioteconomia i Documentació. Recentment, la Universitat de Barcelona també ha aprovat que l'ensenyament de Documentació que s'imparteix a la facultat sigui un dels ensenyaments pilot a fer la transició cap al sistema de crèdits europeu.

Maize response to nitrogen fertilization timing in two tillage systems in a soil with high organic matter content

No-tillage systems, associated to black oat as preceding cover crop, have been increasingly adopted. This has motivated anticipated maize nitrogen fertilization, transferring it from the side-dress system at the stage when plants have five to six expanded leaves to when the preceding cover crop is eliminated or to maize sowing. This study was conducted to evaluate the effects of soil tillage system and timing of N fertilization on maize grain yield and agronomic efficiency of N applied to a soil with high organic matter content. A three-year field experiment was conducted in Lages, state of Santa Catarina, from 1999 onwards. Treatments were set up in a split plot arrangement. Two soil tillage systems were tested in the main plots: conventional tillage (CT) and no-tillage (NT). Six N management systems were assessed in the split-plots: S1 - control, without N application; S2 - all N (100 kg ha-1) applied at oat desiccation; S3 - all N applied at maize sowing; S4 - all N side-dressed when maize had five expanded leaves (V5 growth stage); S5 - 1/3 of N rate applied at maize sowing and 2/3 at V5; S6 - 2/3 of nitrogen rate applied at maize sowing and 1/3 at V5. Maize response to the time and form of splitting N was not affected by the soil tillage system. Grain yield ranged from 6.0 to 11.8 t ha-1. The anticipation of N application (S2 and S3) decreased grain yield in two of three years. In the rainiest early spring season (2000/2001) of the experiment, S4 promoted an yield advantage of 2.2 t ha-1 over S2 and S3. Application of total N rate before or at sowing decreased the number of kernels produced per ear in 2000/2001 and 2001/2002 and the number of ears produced per area in 2001/2002, resulting in reduced grain yield. The agronomic efficiency of applied N (kg grain increase/kg of N applied) ranged from 13.9 to 38.8 and was always higher in the S4 than in the S2 and S3 N systems. Short-term N immobilization did not reduce grain yield when no N was applied before or at maize sowing in a soil with high organic matter content, regardless of the soil tillage system.

Effects of Nb doping on the TiO2 anatase-to-rutile phase transition

We study the influence of Nb doping on the TiO2 anatase-to-rutile phase transition, using combined transmission electron microscopy, Raman spectroscopy, x-ray diffraction and selected area electron diffraction analysis. This approach enabled anatase-to-rutile phase transition hindering to be clearly observed for low Nb-doped TiO2 samples. Moreover, there was clear grain growth inhibition in the samples containing Nb. The use of high resolution transmission electron microscopy with our samples provides an innovative perspective compared with previous research on this issue. Our analysis shows that niobium is segregated from the anatase structure before and during the phase transformation, leading to the formation of NbO nanoclusters on the surface of the TiO2 rutile nanoparticles.

Influence of average size and interface passivation on the spectral emission of Si nanocrystals embedded in SiO2

The correlation between the structural (average size and density) and optoelectronic properties [band gap and photoluminescence (PL)] of Si nanocrystals embedded in SiO2 is among the essential factors in understanding their emission mechanism. This correlation has been difficult to establish in the past due to the lack of reliable methods for measuring the size distribution of nanocrystals from electron microscopy, mainly because of the insufficient contrast between Si and SiO2. With this aim, we have recently developed a successful method for imaging Si nanocrystals in SiO2 matrices. This is done by using high-resolution electron microscopy in conjunction with conventional electron microscopy in dark field conditions. Then, by varying the time of annealing in a large time scale we have been able to track the nucleation, pure growth, and ripening stages of the nanocrystal population. The nucleation and pure growth stages are almost completed after a few minutes of annealing time at 1100°C in N2 and afterward the ensemble undergoes an asymptotic ripening process. In contrast, the PL intensity steadily increases and reaches saturation after 3-4 h of annealing at 1100°C. Forming gas postannealing considerably enhances the PL intensity but only for samples annealed previously in less time than that needed for PL saturation. The effects of forming gas are reversible and do not modify the spectral shape of the PL emission. The PL intensity shows at all times an inverse correlation with the amount of Pb paramagnetic centers at the Si-SiO2 nanocrystal-matrix interfaces, which have been measured by electron spin resonance. Consequently, the Pb centers or other centers associated with them are interfacial nonradiative channels for recombination and the emission yield largely depends on the interface passivation. We have correlated as well the average size of the nanocrystals with their optical band gap and PL emission energy. The band gap and emission energy shift to the blue as the nanocrystal size shrinks, in agreement with models based on quantum confinement. As a main result, we have found that the Stokes shift is independent of the average size of nanocrystals and has a constant value of 0.26±0.03 eV, which is almost twice the energy of the Si¿O vibration. This finding suggests that among the possible channels for radiative recombination, the dominant one for Si nanocrystals embedded in SiO2 is a fundamental transition spatially located at the Si¿SiO2 interface with the assistance of a local Si-O vibration.

Influence of premetallization surface treatment on the formation of Schottky Au-nGaN contacts

The influence of premetallization surface preparation on the structural, chemical, and electrical properties of Au-nGaN interfaces has been investigated by x-ray photoemission spectroscopy (XPS), current-voltage measurement (I-V) and cross-section transmission electron microscopy (TEM). XPS analysis showed that the three GaN substrate treatments investigated i.e., ex situ hydrofluoric acid etch, in situ anneal in ultrahigh-vacuum (UHV), and in situ Ga reflux cleaning in UHV result in surfaces increasingly free of oxygen contamination. XPS and TEM characterization of Au-nGaN formed after the three premetallization surface treatments show that HF etching and UHV annealing produce abrupt, well-defined interfaces. Conversely, GaN substrate cleaning in a Ga flux results in Au/GaN intermixing. I-V characterization of Au¿nGaN contacts yields a Schottky barrier height of 1.25 eV with a very low-ideality factor and very good contact uniformity for the premetallization UHV anneal, while the Ga reflux cleaning results in a much lower barrier (0.85 eV), with poor ideality and uniformity. I-V and XPS results suggest a high density of acceptor states at the surface, which is further enhanced by UHV annealing. These results are discussed in the context of current models of Schottky barrier formation.