Electoral Uncertainty and the Deficit Bias in a New Keynesian Economy

Recent attempts to incorporate optimal fiscal policy into New Keynesian models subject to nominal inertia, have tended to assume that policy makers are benevolent and have access to a commitment technology. A separate literature, on the New Political Economy, has focused on real economies where there is strategic use of policy instruments in a world of political conflict. In this paper we combine these literatures and assume that policy is set in a New Keynesian economy by one of two policy makers facing electoral uncertainty (in terms of infrequent elections and an endogenous voting mechanism). The policy makers generally share the social welfare function, but differ in their preferences over fiscal expenditure (in its size and/or composition). Given the environment, policy shall be realistically constrained to be time-consistent. In a sticky-price economy, such heterogeneity gives rise to the possibility of one policy maker utilising (nominal) debt strategically to tie the hands of the other party, and influence the outcome of any future elections. This can give rise to a deficit bias, implying a sub-optimally high level of steady-state debt, and can also imply a sub-optimal response to shocks. The steady-state distortions and inflation bias this generates, combined with the volatility induced by the electoral cycle in a sticky-price environment, can significantly

When is Monetary Policy All we Need?

We consider optimal monetary and scal policies in a New Keynesian model of a small open economy with sticky prices and wages. In this benchmark setting monetary policy is all we need - analytical results demonstrate that variations in government spending should play no role in the stabilization of shocks. In extensions we show, rstly, that this is even when true when allowing for in ation inertia through backward-looking rule-of-thumb price and wage-setting, as long as there is no discrepancy between the private and social evaluation of the marginal rate of substitution between consumption and leisure. Secondly, the optimal neutrality of government spending is robust to the issuance of public debt. In the presence of debt government spending will deviate from the optimal steady-state but only to the extent required to cover the deficit, not to provide any additional macroeconomic stabilization. However, unlike government spending variations in tax rates can play a complementary role to monetary policy, as they change relative prices rather than demand.

Discretionary Policy in a Monetary Union with Sovereign Debt

This paper examines the interactions between multiple national fiscal policy- makers and a single monetary policy maker in response to shocks to government debt in some or all of the countries of a monetary union. We assume that national governments respond to excess debt in an optimal manner, but that they do not have access to a commitment technology. This implies that national fi scal policy gradually reduces debt: the lack of a commitment technology precludes a random walk in steady state debt, but the need to maintain national competitiveness avoids excessively rapid debt reduction. If the central bank can commit, it adjusts its policies only slightly in response to higher debt, allowing national fiscal policy to undertake most of the adjustment. However if it cannot commit, then optimal monetary policy involves using interest rates to rapidly reduce debt, with signifi cant welfare costs. We show that in these circumstances the central bank would do better to ignore national fiscal policies in formulating its policy.

Fiscal Sustainability in a New Keynesian Model

Recent work on optimal monetary and fiscal policy in New Keynesian models suggests that it is optimal to allow steady-state debt to follow a random walk. Leith and Wren-Lewis (2012) consider the nature of the timeinconsistency involved in such a policy and its implication for discretionary policy-making. We show that governments are tempted, given inflationary expectations, to utilize their monetary and fiscal instruments in the initial period to change the ultimate debt burden they need to service. We demonstrate that this temptation is only eliminated if following shocks, the new steady-state debt is equal to the original (efficient) debt level even though there is no explicit debt target in the government’s objective function. Analytically and in a series of numerical simulations we show which instrument is used to stabilize the debt depends crucially on the degree of nominal inertia and the size of the debt-stock. We also show that the welfare consequences of introducing debt are negligible for precommitment policies, but can be significant for discretionary policy. Finally, we assess the credibility of commitment policy by considering a quasi-commitment policy which allows for different probabilities of reneging on past promises. This on-line Appendix extends the results of this paper.

Fiscal Sustainability in a New Keynesian Model

Recent work on optimal monetary and fiscal policy in New Keynesian models suggests that it is optimal to allow steady-state debt to follow a random walk. Leith and Wren-Lewis (2012) consider the nature of the timeinconsistency involved in such a policy and its implication for discretionary policy-making. We show that governments are tempted, given inflationary expectations, to utilize their monetary and fiscal instruments in the initial period to change the ultimate debt burden they need to service. We demonstrate that this temptation is only eliminated if following shocks, the new steady-state debt is equal to the original (efficient) debt level even though there is no explicit debt target in the government’s objective function. Analytically and in a series of numerical simulations we show which instrument is used to stabilize the debt depends crucially on the degree of nominal inertia and the size of the debt-stock. We also show that the welfare consequences of introducing debt are negligible for precommitment policies, but can be significant for discretionary policy. Finally, we assess the credibility of commitment policy by considering a quasi-commitment policy which allows for different probabilities of reneging on past promises. This on-line Appendix extends the results of this paper.

A mega-analysis of genome-wide association studies for major depressive disorder.

Prior genome-wide association studies (GWAS) of major depressive disorder (MDD) have met with limited success. We sought to increase statistical power to detect disease loci by conducting a GWAS mega-analysis for MDD. In the MDD discovery phase, we analyzed more than 1.2 million autosomal and X chromosome single-nucleotide polymorphisms (SNPs) in 18 759 independent and unrelated subjects of recent European ancestry (9240 MDD cases and 9519 controls). In the MDD replication phase, we evaluated 554 SNPs in independent samples (6783 MDD cases and 50 695 controls). We also conducted a cross-disorder meta-analysis using 819 autosomal SNPs with P<0.0001 for either MDD or the Psychiatric GWAS Consortium bipolar disorder (BIP) mega-analysis (9238 MDD cases/8039 controls and 6998 BIP cases/7775 controls). No SNPs achieved genome-wide significance in the MDD discovery phase, the MDD replication phase or in pre-planned secondary analyses (by sex, recurrent MDD, recurrent early-onset MDD, age of onset, pre-pubertal onset MDD or typical-like MDD from a latent class analyses of the MDD criteria). In the MDD-bipolar cross-disorder analysis, 15 SNPs exceeded genome-wide significance (P<5 × 10(-8)), and all were in a 248 kb interval of high LD on 3p21.1 (chr3:52 425 083-53 822 102, minimum P=5.9 × 10(-9) at rs2535629). Although this is the largest genome-wide analysis of MDD yet conducted, its high prevalence means that the sample is still underpowered to detect genetic effects typical for complex traits. Therefore, we were unable to identify robust and replicable findings. We discuss what this means for genetic research for MDD. The 3p21.1 MDD-BIP finding should be interpreted with caution as the most significant SNP did not replicate in MDD samples, and genotyping in independent samples will be needed to resolve its status.

Significant correction of disease after postnatal administration of recombinant ectodysplasin A in canine X-linked ectodermal dysplasia.

Patients with defective ectodysplasin A (EDA) are affected by X-linked hypohidrotic ectodermal dysplasia (XLHED), a condition characterized by sparse hair, inability to sweat, decreased lacrimation, frequent pulmonary infections, and missing and malformed teeth. The canine model of XLHED was used to study the developmental impact of EDA on secondary dentition, since dogs have an entirely brachyodont, diphyodont dentition similar to that in humans, as opposed to mice, which have only permanent teeth (monophyodont dentition), some of which are very different (aradicular hypsodont) than brachyodont human teeth. Also, clinical signs in humans and dogs with XLHED are virtually identical, whereas several are missing in the murine equivalent. In our model, the genetically missing EDA was compensated for by postnatal intravenous administration of soluble recombinant EDA. Untreated XLHED dogs have an incomplete set of conically shaped teeth similar to those seen in human patients with XLHED. After treatment with EDA, significant normalization of adult teeth was achieved in four of five XLHED dogs. Moreover, treatment restored normal lacrimation and resistance to eye and airway infections and improved sweating ability. These results not only provide proof of concept for a potential treatment of this orphan disease but also demonstrate an essential role of EDA in the development of secondary dentition.

Generic optimality conditions for semi-algebraic convex programs

We consider linear optimization over a nonempty convex semi-algebraic feasible region F. Semidefinite programming is an example. If F is compact, then for almost every linear objective there is a unique optimal solution, lying on a unique \active" manifold, around which F is \partly smooth", and the second-order sufficient conditions hold. Perturbing the objective results in smooth variation of the optimal solution. The active manifold consists, locally, of these perturbed optimal solutions; it is independent of the representation of F, and is eventually identified by a variety of iterative algorithms such as proximal and projected gradient schemes. These results extend to unbounded sets F.

Gastrointestinal immune responses in HIV infected subjects

The gut associated lymphoid tissue is responsible for specific responses to intestinal antigens. During HIV infection, mucosal immune deficiency may account for the gastrointestinal infections. In this review we describe the humoral and cellular mucosal immune responses in normal and HIV-infected subjects.

EIU in the rat promotes the potential of syngeneic retinal cells injected into the vitreous cavity to induce PVR.

PURPOSE: To determine whether syngeneic retinal cells injected in the vitreous cavity of the rat are able to initiate a proliferative process and whether the ocular inflammation induced in rats by lipopolysaccharide (LPS) promotes this proliferative vitreoretinopathy (PVR). METHODS: Primary cultured differentiated retinal Müller glial (RMG) and retinal pigmented epithelial (RPE) cells isolated from 8 to 12 postnatal Lewis rats were injected into the vitreous cavity of 8- to 10-week-old Lewis rats (10(5) cells/eye in 2 microlieter sterile saline), with or without the systemic injection of 150 microgram LPS to cause endotoxin-induced uveitis (EIU). Control groups received an intravitreal injection of 2 microliter saline. At 5, 15, and 28 days after cell injections, PVR was clinically quantified, and immunohistochemistry for OX42, ED1, vimentin (VIM), glial fibrillary acidic protein (GFAP), and cytokeratin was performed. RESULTS: The injection of RMG cells, alone or in combination with RPE cells, induced the preretinal proliferation of a GFAP-positive tissue, that was enhanced by the systemic injection of LPS. Indeed, when EIU was induced at the time of RMG cell injection into the vitreous cavity, the proliferation led to retinal folds and localized tractional detachments. In contrast, PVR enhanced the infiltration of inflammatory cells in the anterior segment of the eye. CONCLUSIONS: In the rat, syngeneic retinal cells of glial origin induce PVR that is enhanced by the coinduction of EIU. In return, vitreoretinal glial proliferation enhanced the intensity and duration of EIU.

The longitudinal association between social functioning and theory of mind in first episode psychosis

Introduction. There is some cross-sectional evidence that theory of mind ability is associated with social functioning in those with psychosis but the direction of this relationship is unknown. This study investigates the longitudinal association between both theory of mind and psychotic symptoms and social functioning outcome in first-episode psychosis. Methods. Fifty-four people with first-episode psychosis were followed up at 6 and 12 months. Random effects regression models were used to estimate the stability of theory of mind over time and the association between baseline theory of mind and psychotic symptoms and social functioning outcome. Results. Neither baseline theory of mind ability (regression coefficients: Hinting test 1.07 95% CI 0.74, 2.88; Visual Cartoon test 2.91 95% CI 7.32, 1.51) nor baseline symptoms (regression coefficients: positive symptoms 0.04 95% CI 1.24, 1.16; selected negative symptoms 0.15 95% CI 2.63, 2.32) were associated with social functioning outcome. There was evidence that theory of mind ability was stable over time, (regression coefficients: Hinting test 5.92 95% CI 6.66, 8.92; Visual Cartoon test score 0.13 95% CI 0.17, 0.44). Conclusions. Neither baseline theory of mind ability nor psychotic symptoms are associated with social functioning outcome. Further longitudinal work is needed to understand the origin of social functioning deficits in psychosis.

Protective effect of intravitreal administration of tresperimus, an immunosuppressive drug, on experimental autoimmune uveoretinitis.

PURPOSE: To test the efficiency of locally administrated tresperimus in experimental autoimmune uveoretinitis (EAU). METHODS: EAU was induced in Lewis rats by S-antigen (S-Ag) immunization. Three intravitreal injections of tresperimus (prevention or prevention/treatment protocols) were performed at different time points after immunization. The pharmacokinetics of tresperimus was evaluated in the ocular tissues and plasma. The in vitro effect of tresperimus was evaluated on macrophages. EAU was graded clinically and histologically. Blood ocular barrier permeability was evaluated by protein concentration in ocular fluids. Immune response to S-Ag was examined by delayed type hypersensitivity, the expression of inflammatory cytokines in lymph nodes, ocular fluids and serum by multiplex ELISA, and in ocular cells by RT-PCR. RESULTS: In vitro, tresperimus significantly reduced the production of inflammatory cytokines by lipopolysaccharide-stimulated macrophages. In vivo, in the treatment protocol, efficient tresperimus levels were measured in the eye but not in the plasma up to 8 days after the last injection. Tresperimus efficiently reduced inflammation, retinal damage, and blood ocular barrier permeability breakdown. It inhibited nitric oxide synthase-2 and nuclear factor κBp65 expression in ocular macrophages. IL-2 and IL-17 were decreased in ocular media, while IL-18 was increased. By contrast, IL-2 and IL-17 levels were not modified in inguinal lymph nodes draining the immunization site. Moreover, cytokine levels in serum and delayed type hypersensitivity to S-Ag were not different in control and treated rats. In the prevention/treatment protocol, ocular immunosuppressive effects were also observed. CONCLUSIONS: Locally administered tresperimus appears to be a potential immunosuppressive agent in the management of intraocular inflammation.

Down-regulation of NOSII gene expression by iontophoresis of anti-sense oligonucleotide in endotoxin-induced uveitis.

Transcorneoscleral iontophoresis was used to enhance ocular penetration of a 21-bp NH(2) protected anti-NOSII oligonucleotides (ODNs) (fluorescein or infrared-41 labeled) in Lewis rats. Both histochemical localization and acrylamide sequencing gels were used. To evaluate the potential to down-regulate NOSII expression in the rat model of endotoxin-induced uveitis (EIU), anti-sense NOSII ODN, scrambled ODN or saline were iontophorezed into these animals' eyes. Iontophoresis facilitated the penetration of intact ODNs into the intraocular tissues of the rat eye and only the eyes receiving ODNs and electrical current demonstrated intact ODNs within the ocular tissues of both segments of the eye. Iontophoresis of anti-NOSII ODN significantly down-regulated the expression of NOSII expression in iris/ciliary body compared to the saline or scrambled ODN treated eyes. Nitrite production was also significantly reduced in the anti-NOSII applied eyes compared to those treated with saline. Using this system, intraocular delivery of ODNs can be significantly enhanced increasing the potential for successful gene therapy for human eye diseases.

Effect of biological surlie ageing on the sparkling wines’ quality and elaoration

Report for the scientific sojourn at the Université de Bourgogne, France, from July until October 2007..Surlie ageing after second fermentation is a fundamental operation in the production of quality sparkling wine like Cava and Champagne. Recently, the importance of the interaction between wine and lees cell surface has been reported. Cell surface properties depending on wall biochemical composition are major determinants in microbial interactions, having important repercussions in several technological aspects. Sorption and flocculation are especially important in sparkling wine production, and are governed by distinct cell surface properties. The aim of the present research carried out during the four months of the stage was to know the implication of lees surface modifications occurring during surlie ageing in sparkling wine quality and elaboration. The relationship between physico-chemical properties such as hydrophobicity, charge and electron-donor characteristics, and the yeast surface sorption capacities, we determined these factors in a model system. Then, real industrial lees samples were investigated. The surface properties of sparkling wine lees from the same strain of Saccharomyces cerevisiae were characterized according to the time of surlie ageing, and their possible influence on lees sorption and flocculation capacity was evaluated. Surlie ageing after second fermentation is a fundamental operation in the production of quality sparkling wine like Cava and Champagne. Recently, the importance of the interaction between wine and lees cell surface has been reported. Cell surface properties depending on wall biochemical composition are major determinants in microbial interactions, having important repercussions in several technological aspects. Sorption and flocculation are especially important in sparkling wine production, and are governed by distinct cell surface properties. The aim of the present research carried out during the four months of the stage was to know the implication of lees surface modifications occurring during surlie ageing in sparkling wine quality and elaboration. The relationship between physico-chemical properties such as hydrophobicity, charge and electron-donor characteristics, and the yeast surface sorption capacities, we determined these factors in a model system. Then, real industrial lees samples were investigated. The surface properties of sparkling wine lees from the same strain of Saccharomyces cerevisiae were characterized according to the time of surlie ageing, and their possible influence on lees sorption and flocculation capacity was evaluated.

The distribution of Biomphalaria spp. in different habitats in relation to physical, biological, water contact and cognitive factors in a rural area in Minas Gerais, Brazil

A total of 256 sites in 11 habitats were surveyed for Biomphalaria in Melquiades rural area (State of Minas Gerais) in August and November 1999 and in March 2000. Of the 1,780 Biomphalaria collected, 1,721 (96.7%) were B. glabrata and 59 (3.3%) B. straminea. Snails were found in all habitats except in wells, with the largest mean numbers in tanks, seepage ponds and canals, and the smallest numbers in springs, rice fields and fishponds. People's knowledge of the occurrence of Biomphalaria at the collection sites and the presence of Biomphalaria ova were strongly correlated with the occurrence of snails, and distance between houses and collection sites, as well as water velocity were inversely correlated with Biomphalaria occurrence (p < 0.001). The strongest predictor o f Biomphalaria occurrence was the presence of tilapia fish in fishponds. Fourteen Biomphalaria (0.8% of all snails) found at 6 sites were infected with Schistosoma mansoni. Suggestions are made for the utilization of local people's knowledge in snail surveys and further studies are recommended on the possible use of tilapia for biological control of Biomphalaria in fishponds, as well as modeling of S. mansoni transmission and reinfection.