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.

The relation of body mass index and abdominal adiposity with dyslipidemia in 27 general populations of the WHO MONICA Project.

The association between adiposity measures and dyslipidemia has seldom been assessed in a multipopulational setting. 27 populations from Europe, Australia, New Zealand and Canada (WHO MONICA project) using health surveys conducted between 1990 and 1997 in adults aged 35-64 years (n = 40,480). Dyslipidemia was defined as the total/HDL cholesterol ratio >6 (men) and >5 (women). Overall prevalence of dyslipidemia was 25% in men and 23% in women. Logistic regression showed that dyslipidemia was strongly associated with body mass index (BMI) in men and with waist circumference (WC) in women, after adjusting for region, age and smoking. Among normal-weight men and women (BMI<25 kg/m(2)), an increase in the odds for being dyslipidemic was observed between lowest and highest WC quartiles (OR = 3.6, p < 0.001). Among obese men (BMI ≥ 30), the corresponding increase was smaller (OR = 1.2, p = 0.036). A similar weakening was observed among women. Classification tree analysis was performed to assign subjects into classes of risk for dyslipidemia. BMI thresholds (25.4 and 29.2 kg/m(2)) in men and WC thresholds (81.7 and 92.6 cm) in women came out at first stages. High WC (>84.8 cm) in normal-weight men, menopause in women and regular smoking further defined subgroups at increased risk. standard categories of BMI and WC, or their combinations, do not lead to optimal risk stratification for dyslipidemia in middle-age adults. Sex-specific adaptations are necessary, in particular by taking into account abdominal obesity in normal-weight men, post-menopausal age in women and regular smoking in both sexes.

Development and validation of the Family Vulnerability Index to Disability and Dependence (FVI-DD)

This exploratory, descriptive, cross-sectional, and quantitative study aimed to develop and validate an index of family vulnerability to disability and dependence (FVI-DD). This study was adapted from the Family Development Index, with the addition of social and health indicators of disability and dependence. The instrument was applied to 248 families in the city of Sao Paulo, followed by exploratory factor analysis. Factor validation was performed using the concurrent and discriminant validity of the Lawton scale and Katz Index. The descriptive level adopted for the study was p < 0.05. The final vulnerability index comprised 50 questions classified into seven factors contemplating social and health dimensions, and this index exhibited good internal consistency (Cronbach’s alpha = 0.82). FVI-DD was validated using both the Lawton scale and Katz Index. We conclude that FVI-DD can accurately and reliably assess family vulnerability to disability and dependence.

Ankle-Brachial Index: Nurses Strategy To Cardiovascular Disease Risk Factors Identification

Elevated risk of fatal and non-fatal cardiovascular events is associated with high prevalence of peripheral arterial disease, with assessment through the ankle-brachial index (ABI). This study aimed to demonstrate that the ABI and the Edinburgh Claudication Questionnaire are tools to be used by nurses in prevention and/or treatment of CVD (cardiovascular disease). A cross-sectional study was carried out with patients from a cardiovascular clinic. The Edinburgh Claudication Questionnaire was applied and the ABI was measured with the formula (ABI= Blood Pressure Ankle/Blood Pressure Brachial). A total of 115 patients were included, most were females (57.4%), aged 60.6 ± 12.5 years. The most prevalent risk factors were hypertension (64.3%), physical inactivity (48.7%) and family history (58.3%). The study showed that abnormal ABI was frequently found and 42.6% of the patients with abnormal ABI showed intermittent claudication. The method to evaluate the ABI associated to the Edinburg Claudication Questionnaire, can be easily used by nurses in the clinical evaluation of asymptomatic and symptomatic CVD patients.

Study of adaptation and validation of the Practice environment scale of the nursing work index for the portuguese reality

Objective: Testing the psychometric properties of the Portuguese version of the Practice Environment Scale of the Nursing Work Index. Method: A descriptive, analytical and cross-sectional study, for the cross-cultural adaptation and validation of the psychometric properties of the scale. The study participants were 236 nurses from two hospitals in the regions of Lisbon and Vale do Tejo. Results: The 0.92 Cronbach’s alpha was obtained for overall reliability and support of a five-dimension structure. Conclusion: The excellent quality of adjustment of analysis confirms the validity of the adapted version to hospital care settings, although there was no total coincidence of items in the five dimensions


Cross-cultural adaptation of the Quality of Life Index Spinal Cord Injury - Version III

OBJECTIVE To translate and culturally adapt to Portuguese the Ferrans and Powers Quality of Life Index Spinal Cord Injury - Version III and characterize the sample in relation to sociodemographic and clinical aspects. METHOD A methodological study with view to cross-cultural adaptation, following the particular steps of this method: initial translation, translation synthesis, back-translation (translation back to the original language), review by a committee of judges and pretest of the final version. The pretest was carried out with 30 patients with spinal cord injury. RESULTS An index of 74 items divided into two parts (satisfaction/importance) was obtained. The criteria of semantic equivalence were evaluated as very adequate translation, higher than 87%, and vocabulary and were grammar higher than 86%. Idiomatic equivalence was higher than 74%, experimental greater than 78% and conceptual was greater than 70%. CONCLUSION After cross-cultural adaptation, the instrument proved semantic, idiomatic, experimental and conceptual adequacy, in addition to helping the evaluation of the quality of life of people with spinal cord injury.

Carotid-Subclavian Artery Index : Validation of an Echocardiographic Index to Detect Coarctation : P67

Introduction: Due to patency of the arterial duct and the parallel circulation during the fetal life, coarctation remains a difficult diagnosis prenatally and even shortly after birth. Fisrtly, our study aimed to assess accuracy of a new cardiographie index based on morphologie measurements of the distal aortic arch, the Carotid-Subclavian Artery Index (CSA Index), the ratio of the distal transverse aortic arch diameter to the distance between the left carotid artery and the left subclavian artery, in detecting coarctation in newborns, infants and children, independently of other cardiac lesions. Secondly, to assess the additive value of another morphologie index in predicting coarctation, the 1/0 ratio, the ratio of isthmus to descending aorta diameter. Methods: It is a retrospective cohort study in a tertiary care children's hospital. Offline echocardiographic measurements of great vessels and aortic arch dimensions were done in 69 patients with coarctation. We calculate their CSA index, and their 1/0 ratio. Values of CSA Index and 1/0 ratio from coarctation group were compared with those from a normal local control population. Results: 69 echocardiograms from patients with coarctation were analysed. Compared with controls, patients with coarctation had a significantly lower CSA index (0.88 ±0.49 vs 2.65 ±0.82, p <0.0001) and 1/0 ratio. The same significant difference was observed, independently of age and other associated defects, even complex ones. CSA Index confirmed its good sensitivity and specificity (99% and 96% respectively). This was not improved by adding the I/D ratio. Conclusions: An abnormal CSA index is highly suggestive of coarctation independently of age, of the presence of a patent ductus arteriosus or of other cardiac defects. The addition of another anatomie index, the I/D ratio, was not helpful in our study.

Assessing dispositional empathy in adults: A French validation of the Interpersonal Reactivity Index (IRI).

The goal of this study was to validate a French version of the Interpersonal Reactivity Index (IRI), a self-report questionnaire comprised of four subscales assessing affective (empathic concern and personal distress) and cognitive (fantasy and perspective taking) components of empathy. To accomplish this, 322 adults (18 to 89 years) completed the French version of the IRI (F-IRI). A confirmatory factor analysis confirmed the four-factor structure of the original IRI. The F-IRI showed good scale score reliability, test-retest reliability, and convergent validity, tested with the French version of the Empathy Quotient. These findings confirmed the reliability and validity of the F-IRI and suggest that the F-IRI is a useful instrument to measure self-reported empathy. In addition, we observed sex and age differences consistent with findings in the literature. Women reported higher scores in empathic concern and fantasy than men. Older adults reported less personal distress and less fantasy. (PsycINFO Database Record (c) 2013 APA, all rights reserved)

Validity of the Katz Index to assess activities of daily living by informants in neuropathological studies

Abstract OBJECTIVE To analyze the evidences of construct validity of the Katz Index for the retrospective assessment of activities of daily living (ADL) by informants, to assist neuropathological studies in the elderly. METHOD A cross-sectional study analyzed the functional ability of ADL measure by the Katz Index, of 650 cases randomly selected from the Brazilian Brain Bank of the Ageing Brain Study Group (BBBABSG) database. Sample was divided in two subsamples for the analysis (N=325, each) and then stratified according to cognitive decline assessed by the Clinical Dementia Rating Scale (CDR). Factor analyses with calculations of internal consistency and invariance were performed. RESULTS Factor analysis evidenced a unidimensional instrument with optimal internal consistency, in all subgroups. Goodness of fit indices were obtained after two treatments of covariance, indicating adequacy of the scale for assessing ADL by informants. The scale is invariant to cognitive decline meaning that it can be used for subjects with or without cognitive impairment. CONCLUSION Katz Index is valid for the retrospective assessment of basic ADL by informants, with optimal reliability.

Why a Water Quality Index?, 2005

Iowa has nearly 72,000 miles of streams. With one week of camping, miles of paddling, on-going educational opportunities, and hundreds of dedicated and hard-working Iowans, Project AWARE can make a difference – one stretch of river, one week a year, one piece of trash at a time. If it seems like a vacation to the participants…it is. They just learn and improve the river as they go.

The association between body mass index and patients' experiences with inpatient care.

OBJECTIVE: To explore the association between patients' body mass index (BMI) and their experiences with inpatient care. DESIGN: Cross-sectional. Mail survey. SETTING: University Hospital of Geneva. PARTICIPANTS: Questionnaires were mailed to 2385 eligible adult patients, 6 weeks after discharge (response rate = 69%). MAIN OUTCOME MEASURES: Patients' experiences with care were measured using the Picker inpatient survey questionnaire. BMI was calculated using self-reported height and weight. Main dependent variables were the global Picker patient experience (PPE-15) score and nine dimension-specific problem scores, scored from 0 (no reported problems) to 1 (all items coded as problems). We used linear regressions, adjusting for age, gender, education, subjective health, smoking and hospitalization, to assess the association between patients' BMI and their experiences with inpatient care. RESULTS: Of the patients, 4.8% were underweight, 50.8% had normal weight, 30.3% were overweight and 14.1% were obese. Adjusted analysis shows that compared with normal weight, obesity was significantly associated with fewer problematic items in the surgery-related information domain, and being underweight or overweight was associated with more problematic items in the involvement of family/friends domain. The global PPE-15 score was significantly higher (more problems) for underweight patients. CONCLUSIONS: Underweight patients, but not obese patients, reported more problems during hospitalization.

Beyond Smith's rule: An optimal dynamic index, rule for single machine stochastic scheduling with convex holding costs

Most research on single machine scheduling has assumedthe linearity of job holding costs, which is arguablynot appropriate in some applications. This motivates ourstudy of a model for scheduling $n$ classes of stochasticjobs on a single machine, with the objective of minimizingthe total expected holding cost (discounted or undiscounted). We allow general holding cost rates that are separable,nondecreasing and convex on the number of jobs in eachclass. We formulate the problem as a linear program overa certain greedoid polytope, and establish that it issolved optimally by a dynamic (priority) index rule,whichextends the classical Smith's rule (1956) for the linearcase. Unlike Smith's indices, defined for each class, ournew indices are defined for each extended class, consistingof a class and a number of jobs in that class, and yieldan optimal dynamic index rule: work at each time on a jobwhose current extended class has larger index. We furthershow that the indices possess a decomposition property,as they are computed separately for each class, andinterpret them in economic terms as marginal expected cost rate reductions per unit of expected processing time.We establish the results by deploying a methodology recentlyintroduced by us [J. Niño-Mora (1999). "Restless bandits,partial conservation laws, and indexability. "Forthcomingin Advances in Applied Probability Vol. 33 No. 1, 2001],based on the satisfaction by performance measures of partialconservation laws (PCL) (which extend the generalizedconservation laws of Bertsimas and Niño-Mora (1996)):PCL provide a polyhedral framework for establishing theoptimality of index policies with special structure inscheduling problems under admissible objectives, which weapply to the model of concern.

A genome-wide approach accounting for body mass index identifies genetic variants influencing fasting glycemic traits and insulin resistance.

Recent genome-wide association studies have described many loci implicated in type 2 diabetes (T2D) pathophysiology and β-cell dysfunction but have contributed little to the understanding of the genetic basis of insulin resistance. We hypothesized that genes implicated in insulin resistance pathways might be uncovered by accounting for differences in body mass index (BMI) and potential interactions between BMI and genetic variants. We applied a joint meta-analysis approach to test associations with fasting insulin and glucose on a genome-wide scale. We present six previously unknown loci associated with fasting insulin at P < 5 × 10(-8) in combined discovery and follow-up analyses of 52 studies comprising up to 96,496 non-diabetic individuals. Risk variants were associated with higher triglyceride and lower high-density lipoprotein (HDL) cholesterol levels, suggesting a role for these loci in insulin resistance pathways. The discovery of these loci will aid further characterization of the role of insulin resistance in T2D pathophysiology.