The Euro Area's Tightrope Walk: Debt and Competitiveness in Italy and Spain

- Competitiveness adjustment in struggling southern euro-area members requires persistently lower inflation than in major trading partners, but low inflation worsens public debt sustainability. When average euro-area inflation undershoots the two percent target, the conflict between intra-euro relative price adjustment and debt sustainability is more severe. - In our baseline scenario, the projected public debt ratio reduction in Italy and Spain is too slow and does not meet the European fiscal rule. Debt projections are very sensitive to underlying assumptions and even small negative deviations from GDP growth, inflation and budget surplus assumptions can easily result in a runaway debt trajectory. - The case for a greater than five percent of GDP primary budget surplus is very weak. Beyond vitally important structural reforms, the top priority is to ensure that euro-area inflation does not undershoot the two percent target, which requires national policy actions and more accommodative monetary policy. The latter would weaken the euro exchange rate, thereby facilitating further intra-euro adjustment. More effective policies are needed to foster growth. But if all else fails, the European Central Bank’s Outright Monetary Transactions could reduce borrowing costs.

Inflation, currency substitution and dollarization: The case of Argentina

This dissertation discusses the relationship between inflation, currency substitution and dollarization that has taken place in Argentina for the past several decades.^ First, it is shown that when consumers are able to hold only domestic monetary balances (without capital mobility) an increase in the rate of inflation will produce a balance of payments deficit. We then look at the same issue but with heterogeneous consumers, this heterogeneity being generated by non-proportional lump-sum transfers.^ Second, we discussed some necessary assumptions related to currency substitution models and concluded that there was no a-priori conclusion on whether currencies should be assumed to be "cooperant" or "non-cooperant" in utility. That is to say, whether individuals held different currencies together or one instead of the other.^ Third, we went into discussing the issue of currency substitution as being a constraint on governments' inflationary objectives rather than a choice of those governments to avoid hyperinflations. We showed that imperfect substitutability between currencies does not "reduce the scope for rational (hyper)inflationary processes" as it had been previously argued. It will ultimately depend on the parametrization used and not on the intrinsic characteristics of imperfect substitutability between currencies.^ We further showed that in Argentina, individuals have been able to endogenize the money supply by holding foreign monetary balances. We argued that the decision to hold foreign monetary balances by individuals is always a second best due to the trade-off between holding foreign monetary balances and consumption. For some levels of income, consumption, and foreign inflation, individuals would prefer to hold domestic monetary balances rather than foreign ones.^ We then modeled the distinction between dollarization and currency substitution. We concluded that although dollarization is necessary for currency substitution to take place, the decision to use foreign monetary balances for transactions purposes is largely independent from the dollarization process.^ Finally, we concluded that Argentina should not fully dollarize its economy because dollarization is always a second best to using a domestic currency. Further, we argued that a fixed exchange system would be better than a flexible exchange rate or a "crawling-peg" system because of the characteristics of the political system and the possibilities of "mass praetorianism" to develop, which is intricately linked to "populist" solutions. ^

Essays on financial crises

This dissertation analyzes recent financial crises in developed and developing countries. The research emphasizes the effects of institutional factors on the international banking and currency crises and their output losses. ^ Chapter two examines the roles of regulation, supervision, and countries' institutional environment in determining the probability of banking crises for a panel of fifteen developed countries from 1975 to 1998. The results from a multivariate logit model indicated that countries with greater government involvement, less capital standard requirements, and lower lending limits on a single borrower are associated with a higher probability of banking crises. ^ Chapter three studies whether output loss in banking crisis differs in market-based or bank-based financial systems. Using existing banking crisis data for sixty-nine countries during 1970–1999, we investigate whether the underlying financial system affects the output loss. The results show that output losses are more serious in market-based economies than those in bank-based economies. Longer crisis duration tends to increase the output losses in banking crises. Finally, countries with deposit insurance and strict law enforcement have less output losses. ^ Chapter four uses macroeconomic and institutional measures to explain the extent of exchange rate depreciation and the decline in stock prices for emerging countries affected by the Mexican currency crisis of 1994–95. The results show that countries with more government budget deficits, and worse reserve adequacies tend to experience large exchange rate depreciation. The institutional measures do not explain much the extent of both the exchange rate depreciation and the decline in stock prices. ^

Essays on the determinants of private investment: The effects of relative price uncertainty and political instability

The objective of this study was to provide empirical evidence on the effects of relative price uncertainty and political instability on private investment. My effort is expressed in a single-equation model using macroeconomic and socio-political data from eight Latin American countries for the period 1970–1996. Relative price uncertainty is measured by the implied volatility of the exchange rate and political instability is measured by using indicators of social unrest and political violence. ^ I found that, after controlling for other variables, relative price uncertainty and political instability are negatively associated with private investment. Macroeconomic and political stability are key ingredients for the achievement of a strong investment response. This highlights the need to develop the state and build a civil society in which citizens can participate in decision-making and express consent without generating social turmoil. At the same time the government needs to implement structural policies along with relative price adjustments to eliminate excess volatility in price movements in order to provide a stable environment for investment. ^

Essays on international macroeconomics and conflict analysis

This dissertation addressed two broad problems in international macroeconomics and conflict analysis. The first problem in the first chapter looked at the behavior of exchange rate and its interaction with industry-level tradable goods prices for three countries, USA, UK and Japan. This question has important monetary policy implications. Here, I computed to what extent changes in exchange rate affected prices of consumer, producer, and export goods. I also studied the timing of these changes in these prices. My results, based on thirty-four industrial prices for USA, UK and Japan, supported the view that changes in exchange rates significantly affect prices of industrial and consumer goods. It also provided an insight to the underlying economic process that led to changes in relative prices. ^ In the second chapter, I explored the predictability of future inflation by incorporating shocks to exchange rates and clearly specified the transmission mechanisms that link exchange rates to industry-level consumer and producer prices. Employing a variety of linear and state-of-the-art nonlinear models, I also predicted growth rates of future prices. Comparing levels of inflation obtained from the above approaches showed superiority of the structural model incorporating the exchange rate pass-through effect. ^ The second broad issue addressed in the third chapter of the dissertation investigated the economic motives for conflict, manifested by rebellion and civil war for seventeen Latin American countries. Based on the analytical framework of Garfinkel, Skaperdas and Syropoulos (2004), I employed ordinal regressions and Markov switching for a panel of seventeen countries to identify trade and openness factors responsible for conflict occurrence and intensity. The results suggested that increased trade openness reduced high intensity domestic conflicts but overdependence on agricultural exports, along with a lack of income earning opportunities lead to more conflicts. Thereafter, using the Cox Proportional Hazard model I studied “conflict duration” and found that over-reliance on agricultural exports explained a major part of the length of conflicts in addition to various socio-political factors. ^

Essays in open economy macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. ^ The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. ^ The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. ^ The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend. ^

Genetic algorithms and investment strategies: A global perspective

The profitability of momentum portfolios in the equity markets is derived from the continuation of stock returns over medium time horizons. The empirical evidence of momentum, however, is significantly different across markets around the world. The purpose of this dissertation is to: (1) help global investors determine the optimal selection and holding periods for momentum portfolios, (2) evaluate the profitability of the optimized momentum portfolios in different time periods and market states, (3) assess the investment strategy profits after considering transaction costs, and (4) interpret momentum returns within the framework of prior studies on investors’ behavior. Improving on the traditional practice of selecting arbitrary selection and holding periods, a genetic algorithm (GA) is employed. The GA performs a thorough and structured search to capture the return continuations and reversals patterns of momentum portfolios. Three portfolio formation methods are used: price momentum, earnings momentum, and earnings and price momentum and a non-linear optimization procedure (GA). The focus is on common equity of the U.S. and a select number of countries, including Australia, France, Germany, Japan, the Netherlands, Sweden, Switzerland and the United Kingdom. The findings suggest that the evolutionary algorithm increases the annualized profits of the U.S. momentum portfolios. However, the difference in mean returns is statistically significant only in certain cases. In addition, after considering transaction costs, both price and earnings and price momentum portfolios do not appear to generate abnormal returns. Positive risk-adjusted returns net of trading costs are documented solely during “up” markets for a portfolio long in prior winners only. The results on the international momentum effects indicate that the GA improves the momentum returns by 2 to 5% on an annual basis. In addition, the relation between momentum returns and exchange rate appreciation/depreciation is examined. The currency appreciation does not appear to influence significantly momentum profits. Further, the influence of the market state on momentum returns is not uniform across the countries considered. The implications of the above findings are discussed with a focus on the practical aspects of momentum investing, both in the U.S. and globally.

Evaluation of wind-induced internal pressure in low-rise buildings: A multi scale experimental and numerical approach

Hurricane is one of the most destructive and costly natural hazard to the built environment and its impact on low-rise buildings, particularity, is beyond acceptable. The major objective of this research was to perform a parametric evaluation of internal pressure (IP) for wind-resistant design of low-rise buildings and wind-driven natural ventilation applications. For this purpose, a multi-scale experimental, i.e. full-scale at Wall of Wind (WoW) and small-scale at Boundary Layer Wind Tunnel (BLWT), and a Computational Fluid Dynamics (CFD) approach was adopted. This provided new capability to assess wind pressures realistically on internal volumes ranging from small spaces formed between roof tiles and its deck to attic to room partitions. Effects of sudden breaching, existing dominant openings on building envelopes as well as compartmentalization of building interior on the IP were systematically investigated. Results of this research indicated: (i) for sudden breaching of dominant openings, the transient overshooting response was lower than the subsequent steady state peak IP and internal volume correction for low-wind-speed testing facilities was necessary. For example a building without volume correction experienced a response four times faster and exhibited 30–40% lower mean and peak IP; (ii) for existing openings, vent openings uniformly distributed along the roof alleviated, whereas one sided openings aggravated the IP; (iii) larger dominant openings exhibited a higher IP on the building envelope, and an off-center opening on the wall exhibited (30–40%) higher IP than center located openings; (iv) compartmentalization amplified the intensity of IP and; (v) significant underneath pressure was measured for field tiles, warranting its consideration during net pressure evaluations. The study aimed at wind driven natural ventilation indicated: (i) the IP due to cross ventilation was 1.5 to 2.5 times higher for Ainlet/Aoutlet>1 compared to cases where Ainlet/Aoutlet<1, this in effect reduced the mixing of air inside the building and hence the ventilation effectiveness; (ii) the presence of multi-room partitioning increased the pressure differential and consequently the air exchange rate. Overall good agreement was found between the observed large-scale, small-scale and CFD based IP responses. Comparisons with ASCE 7-10 consistently demonstrated that the code underestimated peak positive and suction IP.

Essays in Open Economy Macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend.

Genetic Algorithms and Investment Strategies: A Global Perspective

The profitability of momentum portfolios in the equity markets is derived from the continuation of stock returns over medium time horizons. The empirical evidence of momentum, however, is significantly different across markets around the world. The purpose of this dissertation is to: 1) help global investors determine the optimal selection and holding periods for momentum portfolios, 2) evaluate the profitability of the optimized momentum portfolios in different time periods and market states, 3) assess the investment strategy profits after considering transaction costs, and 4) interpret momentum returns within the framework of prior studies on investors’ behavior. Improving on the traditional practice of selecting arbitrary selection and holding periods, a genetic algorithm (GA) is employed. The GA performs a thorough and structured search to capture the return continuations and reversals patterns of momentum portfolios. Three portfolio formation methods are used: price momentum, earnings momentum, and earnings and price momentum and a non-linear optimization procedure (GA). The focus is on common equity of the U.S. and a select number of countries, including Australia, France, Germany, Japan, the Netherlands, Sweden, Switzerland and the United Kingdom. The findings suggest that the evolutionary algorithm increases the annualized profits of the U.S. momentum portfolios. However, the difference in mean returns is statistically significant only in certain cases. In addition, after considering transaction costs, both price and earnings and price momentum portfolios do not appear to generate abnormal returns. Positive risk-adjusted returns net of trading costs are documented solely during “up” markets for a portfolio long in prior winners only. The results on the international momentum effects indicate that the GA improves the momentum returns by 2 to 5% on an annual basis. In addition, the relation between momentum returns and exchange rate appreciation/depreciation is examined. The currency appreciation does not appear to influence significantly momentum profits. Further, the influence of the market state on momentum returns is not uniform across the countries considered. The implications of the above findings are discussed with a focus on the practical aspects of momentum investing, both in the U.S. and globally.

Inflation, currency substitution, and dollarization : the case of Argentina

This dissertation discusses the relationship between inflation, currency substitution and dollarization that has taken place in Argentina for the past several decades. First, it is shown that when consumers are able to hold only domestic monetary balances (without capital mobility) an increase in the rate of inflation will produce a balance of payments deficit. We then look at the same issue but with heterogeneous consumers, this heterogeneity being generated by non-proportional lump-sum transfers. Second, we discussed some necessary assumptions related to currency substitution models and concluded that there was no a-priori conclusion on whether currencies should be assumed to be "cooperant" or "non-cooperant" in utility. That is to say, whether individuals held different currencies together or one instead of the other. Third, we went into discussing the issue of currency substitution as being a constraint on governments inflationary objectives rather than a choice of those governments to avoid hyperinflations. We showed that imperfect substitutability between currencies does not "reduce the scope for rational (hyper)inflationary processes" as it had been previously argued. It will ultimately depend on the parametrization used and not on the intrinsic characteristics of imperfect substitutability between currencies. We further showed that in Argentina, individuals have been able to endogenize the money supply by holding foreign monetary balances. We argued that the decision to hold foreign monetary balances by individuals is always a second best due to the trade-off between holding foreign monetary balances and consumption. For some levels of income, consumption, and foreign inflation, individuals would prefer to hold domestic monetary balances rather than foreign ones. We then modeled the distinction between dollarization and currency substitution. We concluded that although dollarization is necessary for currency substitution to take place, the decision to use foreign monetary balances for transactions purposes is largely independent from the dollarization process. Finally, we concluded that Argentina should not fully dollarize its economy because dollarization is always a second best to using a domestic currency. Further, we argued that a fixed exchange system would be better than a flexible exchange rate or a "crawling-peg" system because of the characteristics of the political system and the possibilities of "mass praetorianism" to develop, which is intricately linked to "populist" solutions.

Desindustrialização no Brasil: teorias e evidências para o debate

This study aims to contribute with evidence to reinforce or not the thesis of a possible deindustrialization of the Brazilian economy, with emphasis on period after 1995. The debate began in the late 80s, however, recently the industry deceleration gained strength in discussions academic. Between the main theses in this debate is the new-development that believes in precocious deindustrialization caused primarily by overvaluation exchange rate. However, part of heterodoxy believes the industry downturn is more related to the rate of investment than the exchange rate. Nevertheless, according to the orthodox thesis the loss of competitiveness due to the high cost of production may have caused the de-industrialization in Brazil. On the other hand, part of Orthodoxy does not believe that the country is deindustrializing it, but is occurring convergence of Brazilian industry the world average. Thus, in an attempt to shed light on this debate, this study intends to identify the reasons for the deceleration of the Brazilian industry, emphasizing aspects underexplored in the literature and define whether or not the country suffers a process of deindustrialization. When analyzing various indicators, especially the quantum level we find strong indications that the deceleration of the Brazilian industry can be characterized as a deindustrialization, though still insufficient to qualify as precocious, given the loss of share in physical production in total output and the share of primary goods in the export basket

Termos de troca, preço das commodities e o crescimento brasileiro : uma análise sob o prisma da restrição externa

This study aims to investigate the relationship between terms of trade and the long-term growth of Brazilian economy, from the perspective of external constraint, between the period 1994 to 2014. For this purpose, it is based on Thirlwall's (1979) original contribution, in order to empirically test the terms of trade contribution for determining the Brazilian growth potential product equivalent with Balance of Payments equilibriun. Using cointegration method, which seeks to analyze the long-term relationship between the variables, and subdividing the period into two sub-periods, 1994-2004 and 2004-2014, we estimate and compare real and hypothetical income elasticities and predicted and observed growth rates, with and without the terms of trade, for each period. The obteined results show that the inclusion of terms of trade in the empirical procedure to test the validity of Thirlwall's Law lead to higher growth rates obtained by the model (hypothetical), for the entire period 1994-2014 and for the sub-period 2004 -2014. This "theoretical" relaxation of the external constraint, caused by the inclusion of the terms of trade in traditional Thirlwall's rule, overestimated the average real growth rate for these periods, while the traditional Thirlwall's Law - without terms of trade - has adapted better to the real behavior of Brazilian economy. Thus, despite having contributed potentially for the relaxation of external constraint on Brazilian growth, the effect of terms of trade may have been offset by the negative performance of other Balance of Payments components, as capital flows and interest, profits and dividends payments abroad.

Radiotherapy Treatment Assessment using DCE-MRI

Abstract

The goal of modern radiotherapy is to precisely deliver a prescribed radiation dose to delineated target volumes that contain a significant amount of tumor cells while sparing the surrounding healthy tissues/organs. Precise delineation of treatment and avoidance volumes is the key for the precision radiation therapy. In recent years, considerable clinical and research efforts have been devoted to integrate MRI into radiotherapy workflow motivated by the superior soft tissue contrast and functional imaging possibility. Dynamic contrast-enhanced MRI (DCE-MRI) is a noninvasive technique that measures properties of tissue microvasculature. Its sensitivity to radiation-induced vascular pharmacokinetic (PK) changes has been preliminary demonstrated. In spite of its great potential, two major challenges have limited DCE-MRI’s clinical application in radiotherapy assessment: the technical limitations of accurate DCE-MRI imaging implementation and the need of novel DCE-MRI data analysis methods for richer functional heterogeneity information.

This study aims at improving current DCE-MRI techniques and developing new DCE-MRI analysis methods for particular radiotherapy assessment. Thus, the study is naturally divided into two parts. The first part focuses on DCE-MRI temporal resolution as one of the key DCE-MRI technical factors, and some improvements regarding DCE-MRI temporal resolution are proposed; the second part explores the potential value of image heterogeneity analysis and multiple PK model combination for therapeutic response assessment, and several novel DCE-MRI data analysis methods are developed.

I. Improvement of DCE-MRI temporal resolution. First, the feasibility of improving DCE-MRI temporal resolution via image undersampling was studied. Specifically, a novel MR image iterative reconstruction algorithm was studied for DCE-MRI reconstruction. This algorithm was built on the recently developed compress sensing (CS) theory. By utilizing a limited k-space acquisition with shorter imaging time, images can be reconstructed in an iterative fashion under the regularization of a newly proposed total generalized variation (TGV) penalty term. In the retrospective study of brain radiosurgery patient DCE-MRI scans under IRB-approval, the clinically obtained image data was selected as reference data, and the simulated accelerated k-space acquisition was generated via undersampling the reference image full k-space with designed sampling grids. Two undersampling strategies were proposed: 1) a radial multi-ray grid with a special angular distribution was adopted to sample each slice of the full k-space; 2) a Cartesian random sampling grid series with spatiotemporal constraints from adjacent frames was adopted to sample the dynamic k-space series at a slice location. Two sets of PK parameters’ maps were generated from the undersampled data and from the fully-sampled data, respectively. Multiple quantitative measurements and statistical studies were performed to evaluate the accuracy of PK maps generated from the undersampled data in reference to the PK maps generated from the fully-sampled data. Results showed that at a simulated acceleration factor of four, PK maps could be faithfully calculated from the DCE images that were reconstructed using undersampled data, and no statistically significant differences were found between the regional PK mean values from undersampled and fully-sampled data sets. DCE-MRI acceleration using the investigated image reconstruction method has been suggested as feasible and promising.

Second, for high temporal resolution DCE-MRI, a new PK model fitting method was developed to solve PK parameters for better calculation accuracy and efficiency. This method is based on a derivative-based deformation of the commonly used Tofts PK model, which is presented as an integrative expression. This method also includes an advanced Kolmogorov-Zurbenko (KZ) filter to remove the potential noise effect in data and solve the PK parameter as a linear problem in matrix format. In the computer simulation study, PK parameters representing typical intracranial values were selected as references to simulated DCE-MRI data for different temporal resolution and different data noise level. Results showed that at both high temporal resolutions (<1s) and clinically feasible temporal resolution (~5s), this new method was able to calculate PK parameters more accurate than the current calculation methods at clinically relevant noise levels; at high temporal resolutions, the calculation efficiency of this new method was superior to current methods in an order of 102. In a retrospective of clinical brain DCE-MRI scans, the PK maps derived from the proposed method were comparable with the results from current methods. Based on these results, it can be concluded that this new method can be used for accurate and efficient PK model fitting for high temporal resolution DCE-MRI.

II. Development of DCE-MRI analysis methods for therapeutic response assessment. This part aims at methodology developments in two approaches. The first one is to develop model-free analysis method for DCE-MRI functional heterogeneity evaluation. This approach is inspired by the rationale that radiotherapy-induced functional change could be heterogeneous across the treatment area. The first effort was spent on a translational investigation of classic fractal dimension theory for DCE-MRI therapeutic response assessment. In a small-animal anti-angiogenesis drug therapy experiment, the randomly assigned treatment/control groups received multiple fraction treatments with one pre-treatment and multiple post-treatment high spatiotemporal DCE-MRI scans. In the post-treatment scan two weeks after the start, the investigated Rényi dimensions of the classic PK rate constant map demonstrated significant differences between the treatment and the control groups; when Rényi dimensions were adopted for treatment/control group classification, the achieved accuracy was higher than the accuracy from using conventional PK parameter statistics. Following this pilot work, two novel texture analysis methods were proposed. First, a new technique called Gray Level Local Power Matrix (GLLPM) was developed. It intends to solve the lack of temporal information and poor calculation efficiency of the commonly used Gray Level Co-Occurrence Matrix (GLCOM) techniques. In the same small animal experiment, the dynamic curves of Haralick texture features derived from the GLLPM had an overall better performance than the corresponding curves derived from current GLCOM techniques in treatment/control separation and classification. The second developed method is dynamic Fractal Signature Dissimilarity (FSD) analysis. Inspired by the classic fractal dimension theory, this method measures the dynamics of tumor heterogeneity during the contrast agent uptake in a quantitative fashion on DCE images. In the small animal experiment mentioned before, the selected parameters from dynamic FSD analysis showed significant differences between treatment/control groups as early as after 1 treatment fraction; in contrast, metrics from conventional PK analysis showed significant differences only after 3 treatment fractions. When using dynamic FSD parameters, the treatment/control group classification after 1st treatment fraction was improved than using conventional PK statistics. These results suggest the promising application of this novel method for capturing early therapeutic response.

The second approach of developing novel DCE-MRI methods is to combine PK information from multiple PK models. Currently, the classic Tofts model or its alternative version has been widely adopted for DCE-MRI analysis as a gold-standard approach for therapeutic response assessment. Previously, a shutter-speed (SS) model was proposed to incorporate transcytolemmal water exchange effect into contrast agent concentration quantification. In spite of richer biological assumption, its application in therapeutic response assessment is limited. It might be intriguing to combine the information from the SS model and from the classic Tofts model to explore potential new biological information for treatment assessment. The feasibility of this idea was investigated in the same small animal experiment. The SS model was compared against the Tofts model for therapeutic response assessment using PK parameter regional mean value comparison. Based on the modeled transcytolemmal water exchange rate, a biological subvolume was proposed and was automatically identified using histogram analysis. Within the biological subvolume, the PK rate constant derived from the SS model were proved to be superior to the one from Tofts model in treatment/control separation and classification. Furthermore, novel biomarkers were designed to integrate PK rate constants from these two models. When being evaluated in the biological subvolume, this biomarker was able to reflect significant treatment/control difference in both post-treatment evaluation. These results confirm the potential value of SS model as well as its combination with Tofts model for therapeutic response assessment.

In summary, this study addressed two problems of DCE-MRI application in radiotherapy assessment. In the first part, a method of accelerating DCE-MRI acquisition for better temporal resolution was investigated, and a novel PK model fitting algorithm was proposed for high temporal resolution DCE-MRI. In the second part, two model-free texture analysis methods and a multiple-model analysis method were developed for DCE-MRI therapeutic response assessment. The presented works could benefit the future DCE-MRI routine clinical application in radiotherapy assessment.

Innovation in the pharmaceutical industry: New estimates of R&D costs.

The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).