Learning the ropes and embracing the rules: CFSP institutions as arenas for learning and strategic socialisation

The aim of this article is to analyse those situations in which learning and socialisation take place within the context of the Common Foreign and Security Policy (CFSP), in particular, at the level of experts in the Council Working Groups. Learning can explain the institutional development of CFSP and changes in the foreign policies of the Member States. Some scope conditions for learning and channels of institutionalisation are identified. Socialisation, resulting from learning within a group, is perceived as a strategic action by reflective actors. National diplomats, once they arrive in Brussels, learn the new code of conduct of their Working Groups. They are embedded in two environments and faced with two logics: the European one in the Council and the national one in the Ministries of Foreign Affairs (MFA). The empirical evidence supports the argument that neither rational nor sociological approaches alone can account for these processes.

Academic Institutions and the Olympic Movement

This paper was presented in the V Forum on Sport, Education and Culture Forum by the IOC undertaken in Beijing, in October, 2006. This aim of this paper is to explore the potential of the relations between the Olympic Movement and academic institutions, and in particular the role of universities.

Three essays on the psychology of investment and financial markets

Préface My thesis consists of three essays where I consider equilibrium asset prices and investment strategies when the market is likely to experience crashes and possibly sharp windfalls. Although each part is written as an independent and self contained article, the papers share a common behavioral approach in representing investors preferences regarding to extremal returns. Investors utility is defined over their relative performance rather than over their final wealth position, a method first proposed by Markowitz (1952b) and by Kahneman and Tversky (1979), that I extend to incorporate preferences over extremal outcomes. With the failure of the traditional expected utility models in reproducing the observed stylized features of financial markets, the Prospect theory of Kahneman and Tversky (1979) offered the first significant alternative to the expected utility paradigm by considering that people focus on gains and losses rather than on final positions. Under this setting, Barberis, Huang, and Santos (2000) and McQueen and Vorkink (2004) were able to build a representative agent optimization model which solution reproduced some of the observed risk premium and excess volatility. The research in behavioral finance is relatively new and its potential still to explore. The three essays composing my thesis propose to use and extend this setting to study investors behavior and investment strategies in a market where crashes and sharp windfalls are likely to occur. In the first paper, the preferences of a representative agent, relative to time varying positive and negative extremal thresholds are modelled and estimated. A new utility function that conciliates between expected utility maximization and tail-related performance measures is proposed. The model estimation shows that the representative agent preferences reveals a significant level of crash aversion and lottery-pursuit. Assuming a single risky asset economy the proposed specification is able to reproduce some of the distributional features exhibited by financial return series. The second part proposes and illustrates a preference-based asset allocation model taking into account investors crash aversion. Using the skewed t distribution, optimal allocations are characterized as a resulting tradeoff between the distribution four moments. The specification highlights the preference for odd moments and the aversion for even moments. Qualitatively, optimal portfolios are analyzed in terms of firm characteristics and in a setting that reflects real-time asset allocation, a systematic over-performance is obtained compared to the aggregate stock market. Finally, in my third article, dynamic option-based investment strategies are derived and illustrated for investors presenting downside loss aversion. The problem is solved in closed form when the stock market exhibits stochastic volatility and jumps. The specification of downside loss averse utility functions allows corresponding terminal wealth profiles to be expressed as options on the stochastic discount factor contingent on the loss aversion level. Therefore dynamic strategies reduce to the replicating portfolio using exchange traded and well selected options, and the risky stock.

New methods for detecting antibiotic resistant bacteria and preventing their spread

Methicillin resistant Staphylococcus aureus (MRSA) bacteria have emerged in the early 1980's in numerous health care institutions around the world. The main transmission mechanism within hospitals and healthcare facilities is through the hands of health care workers. Resistant to several antibiotics, the MRSA is one of the most feared pathogens in the hospital setting since it is very difficult to eradicate with the standard treatments. There are still a limited number of anti-MRSA antibiotics but the first cases of resistance to these compounds have already been reported and their frequency is likely to increase in the coming years. Every year, the MRSA infections result in major human and financial costs, due to the high associated mortality and expenses related to the required care. Measures towards a faster detection of resistant bacteria and establishment of appropriate antibiotic treatment parameters are fundamental. Also as part as infection prevention, diminution of bacteria present on the commonly touched surfaces could also limit the spread and selection of antibiotic resistant bacteria. During my thesis, projects were developed around MRSA and antibiotic resistance investigation using innovative technologies. The thesis was subdivided in three main parts with the use of atomic force microscopy AFM for antibiotic resistance detection in part 1, the importance of the bacterial inoculum size in the selection of antibiotic resistance in part 2 and the testing of antimicrobial surfaces creating by sputtering copper onto polyester in part 3. In part 1 the AFM was used two different ways, first for the measurement of stiffness (elasticity) of bacteria and second as a nanosensor for antibiotic susceptibility testing. The stiffness of MRSA with different susceptibility profiles to vancomycin was investigated using the stiffness tomography mode of the AFM and results have demonstrated and increased stiffness in the vancomycin resistant strains that also paralleled with increased thickness of the bacterial cell wall. Parts of the AFM were also used to build a new antibiotic susceptibility-testing device. This nano sensor was able to measure vibrations emitted from living bacteria that ceased definitively upon antibiotic exposure to which they were susceptible but restarted after antibiotic removal to which they were resistant, allowing in a matter of minute the assessment of antibiotic susceptibility determination. In part 2 the inoculum effect (IE) of vancomycin, daptomycin and linezolid and its importance in antibiotic resistance selection was investigated with MRSA during a 15 days of cycling experiment. Results indicated that a high bacterial inoculum and a prolonged antibiotic exposure were two key factors in the in vitro antibiotic resistance selection in MRSA and should be taken into consideration when choosing the drug treatment. Finally in part 3 bactericidal textile surfaces were investigated against MRSA. Polyesters coated after 160 seconds of copper sputtering have demonstrated a high bactericidal activity reducing the bacterial load of at least 3 logio after one hour of contact. -- Au cours des dernières décennies, des bactéries multirésistantes aux antibiotiques (BMR) ont émergé dans les hôpitaux du monde entier. Depuis lors, le nombre de BMR et la prévalence des infections liées aux soins (IAS) continuent de croître et sont associés à une augmentation des taux de morbidité et de mortalité ainsi qu'à des coûts élevés. De plus, le nombre de résistance à différentes classes d'antibiotiques a également augmenté parmi les BMR, limitant ainsi les options thérapeutiques disponibles lorsqu'elles ont liées a des infections. Des mesures visant une détection plus rapide des bactéries résistantes ainsi que l'établissement des paramètres de traitement antibiotiques adéquats sont primordiales lors d'infections déjà présentes. Dans une optique de prévention, la diminution des bactéries présentes sur les surfaces communément touchées pourrait aussi freiner la dissémination et l'évolution des bactéries résistantes. Durant ma thèse, différents projets incluant des nouvelles technologies et évoluant autour de la résistance antibiotique ont été traités. Des nouvelles technologies telles que le microscope à force atomique (AFM) et la pulvérisation cathodique de cuivre (PCC) ont été utilisées, et le Staphylococcus aureus résistant à la méticilline (SARM) a été la principale BMR étudiée. Deux grandes lignes de recherche ont été développées; la première visant à détecter la résistance antibiotique plus rapidement avec l'AFM et la seconde visant à prévenir la dissémination des BMR avec des surfaces crées grâce à la PCC. L'AFM a tout d'abord été utilisé en tant que microscope à sonde locale afin d'investiguer la résistance à la vancomycine chez les SARMs. Les résultats ont démontré que la rigidité de la paroi augmentait avec la résistance à la vancomycine et que celle-ci corrélait aussi avec une augmentation de l'épaisseur des parois, vérifiée grâce à la microscopie électronique. Des parties d'un AFM ont été ensuite utilisées afin de créer un nouveau dispositif de test de sensibilité aux antibiotiques, un nanocapteur. Ce nanocapteur mesure des vibrations produites par les bactéries vivantes. Après l'ajout d'antibiotique, les vibrations cessent définitivement chez les bactéries sensibles à l'antibiotique. En revanche pour les bactéries résistantes, les vibrations reprennent après le retrait de l'antibiotique dans le milieu permettant ainsi, en l'espace de minutes de détecter la sensibilité de la bactérie à un antibiotique. La PCC a été utilisée afin de créer des surfaces bactéricides pour la prévention de la viabilité des BMR sur des surfaces inertes. Des polyesters finement recouverts de cuivre (Cu), connu pour ses propriétés bactéricides, ont été produits et testés contre des SARMs. Une méthode de détection de viabilité des bactéries sur ces surfaces a été mise au point, et les polyesters obtenus après 160 secondes de pulvérisation au Cu ont démontré une excellente activité bactéricide, diminuant la charge bactérienne d'au moins 3 logio après une heure de contact. En conclusion, l'utilisation de nouvelles technologies nous a permis d'évoluer vers de méthodes de détection de la résistance antibiotique plus rapides ainsi que vers le développement d'un nouveau type de surface bactéricide, dans le but d'améliorer le diagnostic et la gestion des BMR.

Political institutions and the development of telecomunications

It has traditionally been argued that the development of telecommunications infrastructure is dependent on the quality of countries’ political institutions. We estimate the effect of political institutions on the diffusion of three telecommunications services and find it to be much smaller in cellular telephony than in the others. By evaluating the importance of institutions for technologies rather than for industries, we reveal important growth opportunities for developing countries and offer policy implications for alleviating differences between countries in international telecommunications development.

Do Institutions Matter for Foreign Direct Investment?

In this paper the role of institutions in determining foreign direct investment (FDI) is investigated using a large panel of 107 countries during 1981 and 2005. We find that institutions are a robust predictor of FDI and that the most significant institutional aspects are linked to propriety rights, the rule of law and expropriation risk. Using a novel data set, we also study the impact of institutions on FDI at the sectoral level. We find that institutions do not have a significant impact on FDI in the primary sector but that institutional quality matters for FDI in manufacturing and particularly in services. We also provide policy implications for institutional reform.

Do institutions matter for economic fluctuations? Weak property rights in a business cycle model for Mexico

This paper shows that introducing weak property rights in the standard real business cycle (RBC) model can help to explain economic fluctuations. This is motivated by the empirical observation that changes in institutions in emerging markets are related to the evolution of the main macroeconomic variables. In particular, in Mexico, the movements in productivity in the data are associated with changes in institutions, so that we can explain productivity shocks to a large extent as shocks to the quality of institutions. We find that the model with shocks to the degree of protection of property rights only - without technology shocks - can match the second moments in the data for Mexico well. In particular, the fit is better than that of the standard neoclassical model with full protection of property rights regarding the auto-correlations and cross-correlations in the data, especially those related to labor. Viewing productivity shocks as shocks to institutions is also consistent with the stylized fact of falling productivity and non-decreasing labor hours in Mexico over 1980-1994, which is a feature that the neoclassical model cannot match.

Financial shocks and the US business cycle

Employing the financial accelerator (FA) model of Bernanke, Gertler and Gilchrist (1999) enhanced to include a shock to the FA mechanism, we construct and study shocks to the efficiency of the financial sector in post-war US business cycles. We find that financial shocks are very tightly linked with the onset of recessions, more so than TFP or monetary shocks. The financial shock invariably remains contractionary for sometime after recessions have ended. The shock accounts for a large part of the variance of GDP and is strongly negatively correlated with the external finance premium. Second-moments comparisons across variants of the model with and without a (stochastic) FA mechanism suggests the stochastic FA model helps us understand the data.

Shocks, Monetary Policy and Institutions: Explaining Unemployment Persistence in Persistence in “Europe” and the United States

This paper examines the rise in European unemployment since the 1970s by introducing endogenous growth into an otherwise standard New Keynesian model with capital accumulation and unemployment. We subject the model to an uncorrelated cost push shock, in order to mimic a scenario akin to the one faced by central banks at the end of the 1970s. Monetary policy implements a disinfl ation by following an interest feedback rule calibrated to an estimate of a Bundesbank reaction function. 40 quarters after the shock has vanished, unemployment is still about 1.8 percentage points above its steady state. Our model also broadly reproduces cross country differences in unemployment by drawing on cross country differences in the size of cost push shock and the associated disinfl ation, the monetary policy reaction function and the wage setting structure.

Booms, Recessions and Financial Turmoil: A Fresh Look at Investment Decisions under Cyclical Uncertainty

The paper studies the interaction between cyclical uncertainty and investment in a stochastic real option framework where demand shifts stochastically between three different states, each with different rates of drift and volatility. In our setting the shifts are governed by a three-state Markov switching model with constant transition probabilities. The magnitude of the link between cyclical uncertainty and investment is quantified using simulations of the model. The chief implication of the model is that recessions and financial turmoil are important catalysts for waiting. In other words, our model shows that macroeconomic risk acts as an important deterrent to investments.

Institutions and the Scale Effect

Growth models which imply a scale effect are commonly refuted on the basis of empirical evidence. A focus on the extent of the market as opposed to the scale of the country has led recent studies to reconsider the role that country scale plays when conditioning on other factors. We consider a variant of a simple learning by doing model to account for the potential role for institutions in determining the strength – and direction – of the scale effect. Using cross-country data, we find a significant interaction between property rights institutions and the effect of scale on long-run growth: In countries with poor property rights institutions, scale is positively related with income per capita; where property rights institutions are good, higher scale is associated with lower per capita ncomes. We find no evidence of such role for contracting institutions.

Financial liberalisation and industrial development in Malawi

It has been suggested that financial liberalisation may be a key policy to promote industrialisation as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalisation on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalisation has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

The Role of Institutions in Cross-Section Income and Panel Data Growth Models: A Deeper Investigation on the Weakness and Proliferation of Instruments

This paper investigates the role of institutions in determining per capita income levels and growth. It contributes to the empirical literature by using different variables as proxies for institutions and by developing a deeper analysis of the issues arising from the use of weak and too many instruments in per capita income and growth regressions. The cross-section estimation suggests that institutions seem to matter, regardless if they are the only explanatory variable or are combined with geographical and integration variables, although most models suffer from the issue of weak instruments. The results from the growth models provides some interesting results: there is mixed evidence on the role of institutions and such evidence is more likely to be associated with law and order and investment profile; government spending is an important policy variable; collapsing the number of instruments results in fewer significant coefficients for institutions.

Financial Distress in Chinese Industry: Microeconomic, Macroeconomic and Institutional Infuences

We study the impact of both microeconomic factors and the macroeconomy on the financial distress of Chinese listed companies over a period of massive economic transition, 1995 to 2006. Based on an economic model of financial distress under the institutional setting of state protection against exit, and using our own firm-level measure of distress, we find important impacts of firm characteristics, macroeconomic instability and institutional factors on the hazard rate of financial distress. The results are robust to unobserved heterogeneity at the firm level, as well as those shared by firms in similar macroeconomic founding conditions. Comparison with related studies for other economies highlights important policy implications.