Azithromycin inhibits expression of the GacA-dependent small RNAs RsmY and RsmZ in Pseudomonas aeruginosa.

Azithromycin at clinically relevant doses does not inhibit planktonic growth of the opportunistic pathogen Pseudomonas aeruginosa but causes markedly reduced formation of biofilms and quorum-sensing-regulated extracellular virulence factors. In the Gac/Rsm signal transduction pathway, which acts upstream of the quorum-sensing machinery in P. aeruginosa, the GacA-dependent untranslated small RNAs RsmY and RsmZ are key regulatory elements. As azithromycin treatment and mutational inactivation of gacA have strikingly similar phenotypic consequences, the effect of azithromycin on rsmY and rsmZ expression was investigated. In planktonically growing cells, the antibiotic strongly inhibited the expression of both small RNA genes but did not affect the expression of the housekeeping gene proC. The azithromycin treatment resulted in reduced expression of gacA and rsmA, which are known positive regulators of rsmY and rsmZ, and of the PA0588-PA0584 gene cluster, which was discovered as a novel positive regulatory element involved in rsmY and rsmZ expression. Deletion of this cluster resulted in diminished ability of P. aeruginosa to produce pyocyanin and to swarm. The results of this study indicate that azithromycin inhibits rsmY and rsmZ transcription indirectly by lowering the expression of positive regulators of these small RNA genes.

Enhanced production of indole-3-acetic acid by a genetically modified strain of Pseudomonas fluorescens CHA0 affects root growth of cucumber but does not improve protection of the plant against Pythium root rot

The biocontrol strain CHA0 of Pseudomonas fluorescens produces small amounts of indole-3-acetic acid via the tryptophan side chain oxidase and the tryptophan transaminase pathways. A recombinant plasmid (pME3468) expressing the tryptophan monooxygenase pathway was introduced into strain CHA0; this resulted in elevated synthesis of indole-3-acetic acid in vitro, especially after addition of -tryptophan. In natural soil, strain CHA0/pME3468 increased fresh root weight of cucumber by 17-36%, compared to the effect of strain CHA0; root colonization was about 106 cells per g of root. However, both strains gave similar protection of cucumber against Pythium ultimum. In autoclaved soil, at 6×107 cells per g of root, strain CHA0 stimulated growth of roots and shoots, whereas strain CHA0/pME3468 caused root stunting and strong reduction of plant weight. These results are in agreement with the known effects of exogenous indole-3-acetic acid on plant roots and suggest that in the system examined, indole-3-acetic acid does not contribute to the biocontrol properties of strain CHA0.

Distinct chitinases are expressed during various growth phases of the human pathogen Paracoccidioides brasiliensis

The aim of this work was the partial purification and subsequent evaluation of chitinase expression during the various growth phases of Paracoccidioides brasiliensis. Initially, PbCTS1r was expressed as a recombinant protein and displayed enzymatic activity against 4-MU-[N-acetylglucosamine (GlcNAc)]3 and 4-MU-(GlcNAc)2. Two proteins, 45 kDa and 39 kDa in size, were partially purified from P. brasiliensis yeast crude extract using cation-exchange chromatography coupled with HPLC and were characterised as PbCTS1 and PbCTS2, respectively. Anti-PbCTS1r antibody recognised two proteins in the crude extracts of yeast and the transitional stage between mycelial and yeast phases. In crude extracts of mycelium, only the 45 kDa protein was detected. However, quantitative real-time polymerase chain reaction led to the detection of small quantities of Pbcts2 transcript in the mycelial phase. In the yeast cell wall extract, only the 39 kDa protein was detected. Moreover, both proteins were secreted by the yeast parasitic phase, suggesting that these proteins participate in the modulation of the fungal environment. Phylogenetic analysis of the predicted PbCTS1 and PbCTS2 proteins indicated that they code for distinct chitinases in P. brasiliensis. During evolution, P. brasiliensis could have acquired the paralogues Pbcts1 and Pbcts2 for growth and survival in diverse environments in both saprophytic and parasitic phases.

Automated quantitative histology reveals vascular morphodynamics during Arabidopsis hypocotyl secondary growth.

Among various advantages, their small size makes model organisms preferred subjects of investigation. Yet, even in model systems detailed analysis of numerous developmental processes at cellular level is severely hampered by their scale. For instance, secondary growth of Arabidopsis hypocotyls creates a radial pattern of highly specialized tissues that comprises several thousand cells starting from a few dozen. This dynamic process is difficult to follow because of its scale and because it can only be investigated invasively, precluding comprehensive understanding of the cell proliferation, differentiation, and patterning events involved. To overcome such limitation, we established an automated quantitative histology approach. We acquired hypocotyl cross-sections from tiled high-resolution images and extracted their information content using custom high-throughput image processing and segmentation. Coupled with automated cell type recognition through machine learning, we could establish a cellular resolution atlas that reveals vascular morphodynamics during secondary growth, for example equidistant phloem pole formation. DOI: http://dx.doi.org/10.7554/eLife.01567.001.

Developmental effects of basic fibroblast growth factor and platelet-derived growth factor on glial cells in a three-dimensional cell culture system.

In order to study peptide growth factor action in a three-dimensional cellular environment, aggregating cell cultures prepared from 15-day fetal rat telencephalon were grown in a chemically defined medium and treated during an early developmental stage with either bovine fibroblast growth factor (bFGF) or platelet-derived growth factor (PDGF homodimers AA and BB). A single dose (5-50 ng/ml) of either growth factor given to the cultures on day 3 greatly enhanced the developmental increase of the two glia-specific enzyme activities, 2',3'-cyclic nucleotide 3'-phosphohydrolase (CNP) and glutamine synthetase (GS), whereas it had relatively little effect on total protein and DNA content. Distinct patterns of dose-dependency were found for CNP and GS stimulation. At low concentrations of bFGF (0.5-5 ng/ml) and at all PDGF concentrations applied, the oligodendroglial marker enzyme CNP was the most affected. A relatively small but significant mitogenic effect was observed after treatment with PDGF, particularly at higher concentrations or after repetitive stimulation. The two PDGF homodimers AA and BB were similar in their biological effects and potency. The present results show that under histotypic conditions both growth factors, bFGF and PDGF, promote the maturation rather than the proliferation of immature oligodendrocytes and astrocytes.

Energy-nitrogen balances and protein turnover in small and appropriate for gestational age low birthweight infants.

The aim of the present study was to compare, under the same nursing conditions, the energy-nitrogen balance and the protein turnover in small for gestational age (SGA) and appropriate for gestational age (AGA) low birthweight infants. We compared 8 SGA's (mean +/- s.d.: gestational age 35 +/- 2 weeks, birthweight 1520 +/- 330 g) to 11 AGA premature infants (32 +/- 2 weeks, birthweight 1560 +/- 240 g). When their rate of weight gain was above 15 g/kg/d (17.6 +/- 3.0 and 18.2 +/- 2.6 g/kg/d, mean postnatal age 18 +/- 10 and 20 +/- 9 d respectively) they were studied with respect to their metabolizable energy intake, their energy expenditure, their energy and protein gain and their protein turnover. Energy balance was assessed by the difference between metabolizable energy and energy expenditure as measured by indirect calorimetry. Protein gain was calculated from the amount of retained nitrogen. Protein turnover was estimated by a stable isotope enrichment technique using repeated nasogastric administration of 15N-glycine for 72 h. Although there was no difference in their metabolizable energy intakes (110 +/- 12 versus 108 +/- 11 kcal/kg/d), SGA's had a higher rate of resting energy expenditure (64 +/- 8 versus 57 +/- 8 kcal/kg/d, P less than 0.05). Protein gain and composition of weight gain was very similar in both groups (2.0 +/- 0.4 versus 2.1 +/- 0.4 g protein/kg/d; 3.5 +/- 1.1 versus 3.3 +/- 1.4 g fat/kg/d in SGA's and AGA's respectively). However, the rate of protein synthesis was significantly lower in SGA's (7.7 +/- 1.6 g/kg/d) as compared to AGA's (9.7 +/- 2.8 g/kg/d; P less than 0.05). It is concluded that SGA's have a more efficient protein gain/protein synthesis ratio since for the same weight and protein gains, SGA's show a 20 per cent slower protein turnover. They might therefore tolerate slightly higher protein intakes. Postconceptional age seems to be an important factor in the regulation of protein turnover.

The evolution of universities' relations with the business sector in Brazil: What national publications between 1980 and 2012 reveal

ABSTRACT This paper addresses the changes in university-industry relations in Brazil regarding innovation activities. It is based on a survey of articles published in major national journals or presented at the most relevant Brazilian and regional conferences, between 1980 and 2012. The year 1980 was chosen due to the creation of the Technological Innovation Offices (NITs), which was the first government initiative to encourage knowledge transfer from universities to companies; the second was the Innovation Act of 2004. Our assumption was that after the Act the number of academic papers on this subject would increase, bringing new ideas and propositions of models to enhance this relationship. The methodology employed a qualitative, exploratory approach, using bibliographical research and a bibliometric analysis of 247 papers. Literature review of international studies shows the discussion of problems and suggestions for improvements, while in Brazil there is still a debate on whether this collaboration should occur, and if this is a legitimate role for the university. Despite the numerical growth, the content analysis showed few papers on new configurations and procedures for partnership management. We conclude that university-industry relations are not a regular and totally accepted process in Brazilian public universities, which reflect an ideological bias against cooperation with firms.

Kinetics of crystal growth and equilibrium domains in eclogite of the Sesia Zone, Western Alps

Kinetics of crystal growth and equilibrium domains in eclogite of the Sesia Zone, Western Alps Darbellay Bastien Institut de Minéralogie et Géochimie Résumé grand public Comme toute matière, la roche est sensible à son environnement et cherche à s'adapter pour acquérir un état stable (état d'équilibre). Les changements des conditions physiques (température et pression) vont ainsi impliquer des modifications dans la roche. Le métamorphisme est l'étude de ces changements. Les minéraux qui constituent la roche peuvent modifier, leur structure, leur chimie ou être remplacer par d'autres minéraux plus stables. Il est ainsi crucial de déterminer les processus responsables et limitant de la croissance minérale. Trois processus permettent la croissance ; (1) la dissolution des éléments du réactant, (2) le transport de ces éléments vers le site de croissance, (3) l'incorporation de ces éléments dans la nouvelle structure. Cette thèse se focalise sur les structures des minéraux de haute pression (forme, zonation chimique, structure interne) pour essayer de déterminer les facteurs importants à l'origine de leur état final. Les zones d'étude se situent dans la zone de Sésia. La première partie traite de la problématique liée à l'incorporation d'un élément dans une structure minérale. A l'image de la croissance humaine, les irrégularités minéralogiques permettent de mettre en lumière un dysfonctionnement de la croissance due à un excès ou à une carence d'un élément. Bien dosé, cet élément est cependant essentiel à la croissance. Les zoisites (épidotes) des métabasites de la région de Cima di Bonze montrent une zonation chimique en sablier. Dans cette zonation la teneur en fer excède la capacité maximum que peut contenir la structure orthorhombique de la zoisite. Des défauts de structure permettent l'accommodation de cet excès. La zoisite peut ainsi adapter sa structure pour permettre l'incorporation d'une relativement grande quantité de fer. Les études précédentes montraient, pour des conditions similaires, la formation de deux épidotes distinctes. La deuxième partie se penche sur la compétition entre le minéral qui fait sa croissance et les minéraux (réactants) qui l'entourent. Les métapélites de la région du Monte Mucrone contiennent des grenats atollaires. Des études détaillées de la texture et de la zonation chimique du grenat ainsi qu'une modélisation thermodynamique ont permis de mieux cerner les facteurs importants responsables de la forme atollaire. Cette structure est obtenue par un changement du comportement de la croissance du grenat le long d'un chemin P-T hercynien. Dans un premier stade, le grenat croît rapidement et consume peu le quartz de la matrice. La croissance se fait ainsi le long des jointures des grains de quartz. Dans un second temps, les changements de conditions PT donnent une croissance lente du grenat et une forte consommation du quartz. Le grenat peut ainsi développer sa forme dodécaédrale classique. La troisième partie s'intéresse aux distances de transport par diffusion d'un élément (ici l'argon) durant la haute pression. Pour ce faire, un profile d'âges 40Ar/39Ar sur biotite a été mesuré depuis un veine de haute pression riche en argon jusque dans son encaissant (granitoïd du Monte Mucrone). Le profile montre une répartition des âges suivant une courbe de diffusion. Le transport se fait sur une longueur de deux centimètre avec l'aide d'un fluide. Il est réduit à une échelle millimétrique quand la phase fluide disparaît. Cette étude montre ainsi les difficultés de transport des éléments durant la haute pression ne permettant pas un rééquilibrage de la roche à grande échelle. Kinetics of crystal growth and equilibrium domains in eclogite of the Sesia Zone, Western Alps Darbellay Bastien Institut de Minéralogie et Géochimie Résumé de thèse Les processus de croissance (diffusion des éléments et les réactions d'interface) et les conditions dans lesquelles les minéraux grandissent (température, pression, fluide, composition chimique de la roche), déterminent la texture ainsi que la zonation des minéraux. Cette thèse se focalise, par le biais de textures peu communes, sur trois différents processus impliqués dans la croissance minérale à haute pression (Zone de Sésia, Alpes de l'Ouest, Italie). L'incorporation d'un élément dans une structure minérale ne peut se faire que dans des sites en accord avec la taille et la charge ionique de l'élément. De plus, la balance de charge doit être maintenue dans le minéral. La régularité de la structure cristalline fixe ainsi une limite maximum de concentration d'un élément donné. Les zoisites provenant des métabasites de la région de Cima di Bonze montrent des zonations en sablier caractérisées par une concentration anormale en fer. La zonation se marque par une différente teinte de biréfringence et par un plus grand angle d'extinction que le reste de la zoisite. Une inter-croissance de clinozoisite à l'intérieur de la structure orthorhombique de la zoisite peut ainsi être suspectée. Les analyses XRD (diffraction des rayons x) ainsi que les analyses Raman ne confirment pas cette suspicion. Seules les analyses TEM (microscope à électrons transmis) montrent des défauts de structure pouvant être interprétés comme des modules de clinozoisite. Ils ne peuvent cependant pas être considérés comme une phase thermodynamique. Un nouveau trou d'immiscibilité entre deux zoisite (X ep= 0.1 and Xep = 0.15) a ainsi pu être établi. Dans les métapélites la région du Monte Mucrone, des grenats fortement zonés montrent une évolution texturale singulière. Ils présentent une forme initiale de `champignon' qui se développe pour former une structure atollaire finale. L'étude conjuguée de la structure 3D et des zonations, ainsi que l'établissement d'un model thermodynamique, indiquent que ces structures proviennent de deux épisodes de croissances : (1) La croissance du grenat durant un chemin prograde hercynien (de 525 °C et 6.2 kbar à 640 °C et 9 kbar) permet la formation des textures atollaires. Elles sont le résultat d'une croissance poecilitique initiale suivie d'une croissance idiomorphique du grenat. (2) La structure est rendue plus complexe par la cristallisation d'un grenat homogène tout autour ainsi qu'à l'intérieur du grenat hercynien durant la haute pression alpine (550 °C and 20 kbar). L'arrivée de l'eau durant la haute pression facilite le transport d'éléments et permet une cristallisation rapide du grenat. La diffusion peut être un facteur limitant de la croissance minéralogique. Elle a aussi une grande importance pour la géochronologie. Une veine de haute pression à l'intérieur du granitoïde du Monte Mucrone a été étudiée dans le but de déterminer la distance de diffusion de l'argon. Le profile d'âges 40Ar/39Ar sur biotites, établi de la veine vers le métagranitoïde, suit une courbe de diffusion. Les âges sont élevés proche de la veine (800 Ma) puis décroissent jusqu'à des âges homogènes (170-150 Ma) à deux centimètres de la veine. La présence de fluide, marqué par de hautes concentrations en chlore, permet une diffusion centimétrique. Cependant, la distance est réduite à une échelle millimétrique quand le fluide est absent. Les très faibles distances de diffusion préservent les âges pré-alpins et impliquent un événement géologique pour les âges de 170-150 Ma. Kinetics of crystal growth and equilibrium domains in eclogite of the Sesia Zone, Western Alps Darbellay Bastien Institut de Minéralogie et Géochimie Thesis abstract Rock textures and zonings are the consequence of growth processes (element diffusion and interface reaction) steered by the environment in which they grew (pressure, differential stress, temperature, fluid and rock composition). The thesis presented here focuses on three different topics, each of it dealing with aspects of mineral growth processes during subduction, in a high-pressure environment. All studies were conducted in the Sesia Zone of the Western European Alps, Italy. The first study addresses the crystallography and geochemistry of element incorporation in zoisite, one of the major hydrous minerals found in subduction zone rocks. Elements can be incorporated into a mineral structure only on crystallographic sites that offer enough space for the ion and the overall charge balance has to be maintained. Element concentrations are hence limited. Incorporation of some elements produces complex zoning, including hourglass like patterns, which are the focus of the first contribution. Zoisites from Cima di Bonze (Sesia Zone) show spectacular hourglass zoning defined by Fe-content variations. The hourglass zones have a distinct birefringence and a different extinction angle than the regular part of the zoisite. We show by detailed XRD (X-ray diffraction) and confocal Raman analyses that the high Fe-zones are nevertheless zoisite, and not clinozoisite as one might expect. High resolution TEM (transmission electron microscopy) analyses show planar defects on (100) that can be interpreted as small-scale clinozoisite modules. However, these clinozoisites cannot be interpreted as a distinctive thermodynamic phase and the entire mineral has to be considered as zoisite. The miscibility gap between two zoisites (Xep = 0.1 and Xep = 0.15) can be then definite at 550 ± 50°C and 14 to 20 Kbar. Strongly zoned garnets in quartz rich metapelite from the Monte Mucrone area (Sesia Zone) show evolution form 3D mushroom to atoll structure. The second contribution presents textural investigations, garnet zoning and thermodynamic modeling that demonstrate that atoll garnets are the result of two distinctive growth events. (1) Garnet atoll structure is already formed during a prograde Hercynian path from 525 °C and 6.2 kbar to 640 °C and 9 kbar. It results in an initial poikilitic growth followed by a final idiomorphic growth event. (2) Alpine HP garnet are homogenous (550 °C and 20 kbar) and grew around and also inside the Hercynian garnet. Lack of prograde Alpine garnet and fast growth of the HP garnet is explained by the absence of water during much of the prograde path. Water saturation was only observed towards the end, close towards the peak metamorphic conditions. Diffusion could be a limiting factor for crystal growth. It has also a great importance in geochronology. HP vein inside the metagranitoide of the Monte Mucrone (~300 Ma) was investigated to determine argon diffusion scales during high-pressure metamorphism. 40Ar/39Ar biotite ages profile from the vein toward the metagranodiorite show a diffusion curve: old ages (800 Ma) located close to the vein decrease until homogenous 170-150 Ma ages are obtained, two centimeter away from the vein. Centimeter-scale diffusion occurs with help of a fluid phase marked by high chlorine concentrations. Argon diffusion is reduced to a millimeter scale when free fluid is absent. Very short diffusion distance permits to preserve pre-Alpine ages. The 170-150 Ma ages are considered to be geologic meaningful, probably resulting from the extensional tectonics linked to opening of the Tethian ocean.

Early investigational drugs that target epidermal growth factor receptors for the treatment of head and neck cancer.

INTRODUCTION: Squamous-cell carcinoma of the head and neck (SCCHN) remains a challenging clinical problem, due to the persistent high rate of local and distant failures and the occurrence of secondary primaries. For locally advanced SCCHN, a combination of chemotherapy (CT), radiation or surgery is often used, but there are limitations, which may reduce compliance. Molecular targeted therapies, namely anti-EGFR treatments, are in development with the aim of improving clinical outcomes and mitigating treatment-related toxicities. AREAS COVERED: This review provides an overview of early investigational drugs that target EGFR for the treatment of SCCHN and discusses the ongoing trials in this domain. EXPERT OPINION: Targeted therapies are increasingly used in oncology, especially in SCCHN. Cetuximab has demonstrated a significant improvement in the treatment outcome, both as a curative treatment in combination with radiation therapy and as a palliative treatment in combination with CT; however, it failed to show any benefit in combination with concomitant chemoradiotherapy. Presently, there are many new agents, including monoclonal antibodies and small-molecule tyrosine kinase inhibitors, which are either currently under investigation for or which warrant further investigation for treating SCCHN. The discovery of predictive factors that help to identify patients most likely to respond to EGFR inhibitors as well as patient-customized therapies would help to improve patient outcomes in the future.

The peroxiredoxin Tpx1 is essential as a H202-scavenger during aerobic growth in fission yeast

Peroxiredoxins are known to interact with hydrogen peroxide (H2O2) and to participate in oxidant scavenging, redox signal transduction, and heat-shock responses. The two-cysteine peroxiredoxin Tpx1 of Schizosaccharomyces pombe has been characterized as the H2O2 sensor that transduces the redox signal to the transcription factor Pap1. Here, we show that Tpx1 is essential for aerobic, but not anaerobic, growth. We demonstrate that Tpx1 has an exquisite sensitivity for its substrate, which explains its participation in maintaining low steady-state levels of H2O2. We also show in vitro and in vivo that inactivation of Tpx1 by oxidation of its catalytic cysteine to a sulfinic acid is always preceded by a sulfinic acid form in a covalently linked dimer, which may be important for understanding the kinetics of Tpx1 inactivation. Furthermore, we provide evidence that a strain expressing Tpx1.C169S, lacking the resolving cysteine, can sustain aerobic growth, and we show that small reductants can modulate the activity of the mutant protein in vitro, probably by supplying a thiol group to substitute for cysteine 169.

The Rapid Rise of China’s Dairy Sector: Factors Behind the Growth in Demand and Supply, May 2005

With the rapid growth in China’s dairy industry, a number of recent papers have addressed either the supply or the demand trends for dairy products in China. None, however, presents a systematic explanation for the recent growth in both the supply and demand for dairy products. The goal of this paper is to sketch a more comprehensive picture of China’s dairy sector and to assess the nature of the sector’s development in the coming decades. Drawing upon several empirical studies, we examine the trends in dairy product consumption to create a composite picture of the factors underlying the recent growth. We also empirically investigate the sources of production gains in milk supply and assess the relative importance of expanding herd size, changes in the nature of production, technological change, and improvements in efficiency to the overall growth of milk production.

Tumor necrosis factor and transforming growth factor β regulate clock genes by controlling the expression of the cold inducible RNA-binding protein (CIRBP).

The circadian clock drives the rhythmic expression of a broad array of genes that orchestrate metabolism, sleep wake behavior, and the immune response. Clock genes are transcriptional regulators engaged in the generation of circadian rhythms. The cold inducible RNA-binding protein (CIRBP) guarantees high amplitude expression of clock. The cytokines TNF and TGFβ impair the expression of clock genes, namely the period genes and the proline- and acidic amino acid-rich basic leucine zipper (PAR-bZip) clock-controlled genes. Here, we show that TNF and TGFβ impair the expression of Cirbp in fibroblasts and neuronal cells. IL-1β, IL-6, IFNα, and IFNγ do not exert such effects. Depletion of Cirbp is found to increase the susceptibility of cells to the TNF-mediated inhibition of high amplitude expression of clock genes and modulates the TNF-induced cytokine response. Our findings reveal a new mechanism of cytokine-regulated expression of clock genes.

Measurement with Some Theory: a New Approach to Evaluate Business Cycle Models

We propose a method to evaluate cyclical models which does not require knowledge of the DGP and the exact empirical specification of the aggregate decision rules. We derive robust restrictions in a class of models; use some to identify structural shocks and others to evaluate the model or contrast sub-models. The approach has good size and excellent power properties, even in small samples. We show how to examine the validity of a class of models, sort out the relevance of certain frictions, evaluate the importance of an added feature, and indirectly estimate structural parameters.

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.

Business Cycles, Unemployment Insurance, and the Calibration of Matching Models

This paper points out an empirical puzzle that arises when an RBC economy with a job matching function is used to model unemployment. The standard model can generate sufficiently large cyclical fluctuations in unemployment, or a sufficiently small response of unemployment to labor market policies, but it cannot do both. Variable search and separation, finite UI benefit duration, efficiency wages, and capital all fail to resolve this puzzle. However, both sticky wages and match-specific productivity shocks help the model reproduce the stylized facts: both make the firm's flow of surplus more procyclical, thus making hiring more procyclical too.