Class-size Reduction Policies and the Quality of Entering Teachers

State-wide class-size reduction (CSR) policies have typically failed to produce large achievement gains. One explanation is that the introduction of such policies forces schools to hire relatively low-quality teachers. This paper uses data from an anonymous state to explore whether teacher quality suff ered from the introduction of CSR. We find that it did, but not nearly enough to explain the small achievement effects of CSR. The combined fall in achievement due to hiring lower quality teachers and more inexperienced teachers is small relative to the unrealized gains. Furthermore, between-school diff erences in the quality of incoming teachers cannot explain the poor estimated CSR performance from previous quasi-experimental treatment-control comparisons.

Aggregate and welfare effects of long run inflation risk under inflation and price-level targeting

This paper presents a DSGE model in which long run inflation risk matters for social welfare. Aggregate and welfare effects of long run inflation risk are assessed under two monetary regimes: inflation targeting (IT) and price-level targeting (PT). These effects differ because IT implies base-level drift in the price level, while PT makes the price level stationary around a target price path. Under IT, the welfare cost of long run inflation risk is equal to 0.35 percent of aggregate consumption. Under PT, where long run inflation risk is largely eliminated, it is lowered to only 0.01 per cent. There are welfare gains from PT because it raises average consumption for the young and lowers consumption risk substantially for the old. These results are strongly robust to changes in the PT target horizon and fairly robust to imperfect credibility, fiscal policy, and model calibration. While the distributional effects of an unexpected transition to PT are sizeable, they are short-lived and not welfare-reducing.

How Optimal is US Monetary Policy?

Most of the literature estimating DSGE models for monetary policy analysis assume that policy follows a simple rule. In this paper we allow policy to be described by various forms of optimal policy - commitment, discretion and quasi-commitment. We find that, even after allowing for Markov switching in shock variances, the inflation target and/or rule parameters, the data preferred description of policy is that the US Fed operates under discretion with a marked increase in conservatism after the 1970s. Parameter estimates are similar to those obtained under simple rules, except that the degree of habits is significantly lower and the prevalence of cost-push shocks greater. Moreover, we find that the greatest welfare gains from the ‘Great Moderation’ arose from the reduction in the variances in shocks hitting the economy, rather than increased inflation aversion. However, much of the high inflation of the 1970s could have been avoided had policy makers been able to commit, even without adopting stronger anti-inflation objectives. More recently the Fed appears to have temporarily relaxed policy following the 1987 stock market crash, and has lost, without regaining, its post-Volcker conservatism following the bursting of the dot-com bubble in 2000.

Suppliers of Priors: A Theory of Retailing Inspired by the Market for Chinese Antiquities

Adverse selection may thwart trade between an informed seller, who knows the probability p that an item of antiquity is genuine, and an uninformed buyer, who does not know p. The buyer might not be wholly uninformed, however. Suppose he can perform a simple inspection, a test of his own: the probability that an item passes the test is g if the item is genuine, but only f < g if it is fake. Given that the buyer is no expert, his test may have little power: f may be close to g. Unfortunately, without much power, the buyer's test will not resolve the difficulty of adverse selection; gains from trade may remain unexploited. But now consider a "store", where the seller groups a number of items, perhaps all with the same quality, the same probability p of being genuine. (We show that in equilibrium the seller will choose to group items in this manner.) Now the buyer can conduct his test across a large sample, perhaps all, of a group of items in the seller's store. He can thereby assess the overall quality of these items; he can invert the aggregate of his test results to uncover the underlying p; he can form a "prior". There is thus no longer asymmetric information between seller and buyer: gains from trade can be exploited. This is our theory of retailing: by grouping items together - setting up a store - a seller is able to supply buyers with priors, as well as the items themselves. We show that the weaker the power of the buyer�s test (the closer f is to g), the greater the seller�s profit. So the seller has no incentive to assist the buyer � e.g., by performing her own tests on the items, or by cleaning them to reveal more about their true age. The paper ends with an analysis of which sellers should specialise in which qualities. We show that quality will be low in busy locations and high in expensive locations.

An Empirical Assessment of Optimal Monetary Policy Delegation in the Euro Area

We estimate a New Keynesian DSGE model for the Euro area under alternative descriptions of monetary policy (discretion, commitment or a simple rule) after allowing for Markov switching in policy maker preferences and shock volatilities. This reveals that there have been several changes in Euro area policy making, with a strengthening of the anti-inflation stance in the early years of the ERM, which was then lost around the time of German reunification and only recovered following the turnoil in the ERM in 1992. The ECB does not appear to have been as conservative as aggregate Euro-area policy was under Bundesbank leadership, and its response to the financial crisis has been muted. The estimates also suggest that the most appropriate description of policy is that of discretion, with no evidence of commitment in the Euro-area. As a result although both ‘good luck’ and ‘good policy’ played a role in the moderation of inflation and output volatility in the Euro-area, the welfare gains would have been substantially higher had policy makers been able to commit. We consider a range of delegation schemes as devices to improve upon the discretionary outcome, and conclude that price level targeting would have achieved welfare levels close to those attained under commitment, even after accounting for the existence of the Zero Lower Bound on nominal interest rates.

Penalizing Cartels: The Case for Basing Penalties on Price Overcharge

In this paper we set out the welfare economics based case for imposing cartel penalties on the cartel overcharge rather than on the more conventional bases of revenue or profits (illegal gains). To do this we undertake a systematic comparison of a penalty based on the cartel overcharge with three other penalty regimes: fixed penalties; penalties based on revenue, and penalties based on profits. Our analysis is the first to compare these regimes in terms of their impact on both (i) the prices charged by those cartels that do form; and (ii) the number of stable cartels that form (deterrence). We show that the class of penalties based on profits is identical to the class of fixed penalties in all welfare-relevant respects. For the other three types of penalty we show that, for those cartels that do form, penalties based on the overcharge produce lower prices than those based on profit) while penalties based on revenue produce the highest prices. Further, in conjunction with the above result, our analysis of cartel stability (and thus deterrence), shows that penalties based on the overcharge out-perform those based on profits, which in turn out-perform those based on revenue in terms of their impact on each of the following welfare criteria: (a) average overcharge; (b) average consumer surplus; (c) average total welfare.

An Empirical Assessment of Optimal Monetary Policy Delegation in the Euro Area

We estimate a New Keynesian DSGE model for the Euro area under alternative descriptions of monetary policy (discretion, commitment or a simple rule) after allowing for Markov switching in policy maker preferences and shock volatilities. This reveals that there have been several changes in Euro area policy making, with a strengthening of the anti-inflation stance in the early years of the ERM, which was then lost around the time of German reunification and only recovered following the turnoil in the ERM in 1992. The ECB does not appear to have been as conservative as aggregate Euro-area policy was under Bundesbank leadership, and its response to the financial crisis has been muted. The estimates also suggest that the most appropriate description of policy is that of discretion, with no evidence of commitment in the Euro-area. As a result although both ‘good luck’ and ‘good policy’ played a role in the moderation of inflation and output volatility in the Euro-area, the welfare gains would have been substantially higher had policy makers been able to commit. We consider a range of delegation schemes as devices to improve upon the discretionary outcome, and conclude that price level targeting would have achieved welfare levels close to those attained under commitment, even after accounting for the existence of the Zero Lower Bound on nominal interest rates.

The Extent and Cyclicality of Career Changes: Evidence for the UK

Using quarterly data for the U.K. from 1993 through 2012, we document that in economic downturns a smaller fraction of unemployed workers change their career when starting a new job. Moreover, the proportion of total hires that involves a career change for the worker also drops in recessions. Together with a simultaneous drop in overall turnover, this implies that the number of career changes declines during recessions. These results indicate that recessions are times of subdued reallocation rather than of accelerated and involuntary structural transformation. We back this interpretation up with evidence on who changes careers, which industries and occupations they come from and go to, and at which wage gains.

Prior selection for panel vector autoregressions

There is a vast literature that specifies Bayesian shrinkage priors for vector autoregressions (VARs) of possibly large dimensions. In this paper I argue that many of these priors are not appropriate for multi-country settings, which motivates me to develop priors for panel VARs (PVARs). The parametric and semi-parametric priors I suggest not only perform valuable shrinkage in large dimensions, but also allow for soft clustering of variables or countries which are homogeneous. I discuss the implications of these new priors for modelling interdependencies and heterogeneities among different countries in a panel VAR setting. Monte Carlo evidence and an empirical forecasting exercise show clear and important gains of the new priors compared to existing popular priors for VARs and PVARs.

Is the coiled body involved in nucleolar functions?

Coiled bodies (CBs) are structural constituents observed in nuclei of most eukaryotic cells. They usually occur in the nucleoplasm as well as in contact with the nucleolar surface. In this work we studied the hepatocyte nuclei of hibernating dormice in order to investigate possible modifications of CBs along the seasonal cycle. CBs were abundant during hibernation and rapidly disappeared upon arousal from hibernation. Moreover, CBs were frequently found to be integrated into the nucleolar body. Immunocytochemical analyses showed that CBs contain nucleoplasmic as well as nucleolar RNA-processing factors, suggesting an "ambiguous" role for this organelle in the nuclear functions.

Development of Ewing's sarcoma from primary bone marrow-derived mesenchymal stem cells

SUMMARY : Ewing's sarcoma is a member of Ewing's family tumors (ESPY) and the second most common solid bone and soft tissue malignancy of children and young adults. It is associated in 85% of cases with the t(11;22)(q24:q12) chromosomal translocation that generates fusion of the 5' segment of the EWSR1 gene with the 3' segment of the ETS family gene FLI-1. The EWSR1-FLI-1 fusion protein behaves as an aberrant transcriptional activator and is believed to contribute to ESFT development. However, EWSR1-FLI-1 induces growth arrest and apoptosis in normal fibroblasts, and primary cells that are pemissive for its putative oncogenic properties have not been discovered, hampering basic understanding of ESFT biology. Here, we show that EWSR1-FLI-1 alone can transform mouse primary bone marrow-derived mesenchymal progenitor cells and generate tumors that display hallmarks of Ewing's sarcoma, including a small round cell phenotype, expression of ESFT-associated markers, insulin like growth factor-I dependence, and induction or repression of numerous EWSR1-FLI-1 target genes. Consistent with this finding, we tested the possibility that human mesenchymal stem cells (hMSC) might also provide a permissive cellular environment for EWSR1-FLI-1, and could represent the first adequate primary human cellular background for the oncogenic properties of the fusion protein. Indeed, expression of EWSR1-FLI-1 in human mesenchymal stem cells (hMSC) was not only stably maintained without inhibiting proliferation, but induced a gene expression profile bearing striking similarity to that of ESFT, including genes that are among the highest ESFT discriminators. Expression of EWSR1-FLI-1 in hMSCs may recapitulate the initial steps of Ewing's sarcoma development, allowing identification of genes that play an important role early in its pathogenesis. Among relevant candidate transcripts induced by EWSR1-FL/-1 in hMSC we found the polycomb group gene EZH2 which we show to play a critical role in Ewing's sarcoma growth. These observations provide the first identification of candidate primary cells from which ESFTs originate and suggest that EWSR1-FLI-1 expression may constitute the initiating event in ESFT pathogenesis. Le sarcome d' Ewing est un membre de la famille des tumeurs Ewing (ESFT) et représente la deuxième tumeur maligne solide de l'os et des tissus mous chez les enfants et les jeunes adultes. Cette tumeur est associée dans 85% des cas avec la translocation chromosomique t(11;22)(g24:g12), qui génère la fusion entre le segment 5' du gène EWSR1 avec le segment 3' du gène FLI-1, appartenant à la famille des facteurs de transcription ETS. La protéine de fusion EWSR1-FLI-1 qui en dérive joue le rSle d'un facteur de transcription aberrant, et est supposée contribuer de manière décisive au processus de développement des ESFTs. Néanmoins, l'expression de EWSR1-FLI-1 dans des fibroblastes normaux induit un arrêt de croissance et leur apoptose, et les cellules primaires permissives pour les propriétés oncogéniques attribuées à la translocation n'ont pas encore été identifiées, empêchant la compréhension de la biologie de base du sarcome d'Ewing. Dans ce travail on montre que l'expression de EWSR1-FLI-1 uniquement est capable de transformer des cellules souches mésenchymateuses dérivées de la moelle osseuse de la souris, pour générer des tumeurs qui présentent les caractéristiques du sarcome d' Ewing humain, et notamment une morphologie de petites cellules bleues et rondes, l'expression de marqueurs associés aux ESFTs, une dépendance du facteur de croissance IGF-1, et l'induction ou la répression de nombreux gènes cibles connus de EWSR1-FLI-1. Sur la base de ces observations, on a testé la possibilité que les cellules souches mésenchymateuses humaines (hMSCs) puissent aussi fournir un environnement cellulaire permissif pour EWSR1-FLI-1 ; et représenter le premier background cellulaire humain adéquat pour la manifestation du pouvoir oncogénique de la protéine de fusion. En effet, l'expression de EWSR1-FLI-1 dans des cellules souches mésenchymateuses humaines s'est révélée non seulement maintenue, mais elle a induit un profil d'expression génétique étonnamment similaire à celui des ESFTs humains, incluant les gènes qui ont été rapportés comme étant les plus discriminatifs pour ces tumeurs. L'expression de EWSR1-FLI-1 dans les hMSCs pourrait récapituler les étapes initiales du développement du sarcome d' Ewing, et de ce fait consentir à identifier les gènes qui jouent un rôle crucial dans sa pathogenèse précoce. Parmi les transcrits relevant indults par EWSR1-FL/-9 dans les hMSCs nous avons découvert le gène du groupe des polycomb EZH2, que nous avons par la suite démontré jouer un rôle essentiel dans la croissance du sarcome de Ewing. Ces observations apportent pour la première fois l'identification d'une cellule primaire candidate pour représenter la cellule d'origine des ESFTs, et en même temps suggèrent que l'expression de EWSR1-FLI-1 peut constituer l'événement initial dans la pathogenèse du sarcome d' Ewing.

Migration and trade: Theory with an Application to the Eastern- Western European Integration

The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intraindustry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occured between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe. Key Words: Skilled Migration, Gains from Variety, Real Wages, Eastern-Western Europe. JEL Codes: F12, F22, J61.

Does Internationalization Alter the R&D-Productivity Relationship?

R&D investment is an important driver of productivity gains. However, firms differ in their ability to appropiate the returns to their R&D efforts. This paper analyses to what extent firm's internationalization influences the endogenous relation between R&D and productivity. In particular, we assess the contribution of R&D to productivity for a panel of UK firms that differ in their degree of internationalization. We find that, on average, multinationals obtain higher gains from their investment in R&D. However, the influence of internationalization on the contribution of R&D to productivity varies along the distribution of the returns to R&D. Keywords: R&D, Multinationals, Productivity. JEL Codes: C14, D24, F23.

DNA supercoiling and its role in DNA decatenation and unknotting.

Chromosomal and plasmid DNA molecules in bacterial cells are maintained under torsional tension and are therefore supercoiled. With the exception of extreme thermophiles, supercoiling has a negative sign, which means that the torsional tension diminishes the DNA helicity and facilitates strand separation. In consequence, negative supercoiling aids such processes as DNA replication or transcription that require global- or local-strand separation. In extreme thermophiles, DNA is positively supercoiled which protects it from thermal denaturation. While the role of DNA supercoiling connected to the control of DNA stability, is thoroughly researched and subject of many reviews, a less known role of DNA supercoiling emerges and consists of aiding DNA topoisomerases in DNA decatenation and unknotting. Although DNA catenanes are natural intermediates in the process of DNA replication of circular DNA molecules, it is necessary that they become very efficiently decatenated, as otherwise the segregation of freshly replicated DNA molecules would be blocked. DNA knots arise as by-products of topoisomerase-mediated intramolecular passages that are needed to facilitate general DNA metabolism, including DNA replication, transcription or recombination. The formed knots are, however, very harmful for cells if not removed efficiently. Here, we overview the role of DNA supercoiling in DNA unknotting and decatenation.

Molecular karyotype analysis and mapping of housekeeping genes to chromosomes of selected species complexes of Leishmania

The molecular karyotypes for 20 reference strais of species complexes of Leishmania were determined by contour-clamped homogeneous eletric field (CHEF) electrosphoresis. Determination of number/position of chromosome-sized bands and chromosomal DNA locations of house-keeping genes were the two criteria used for differentiating and classifying the Leishmania species. We have established two gel running conditions of optimal separation of chromosomes, wich resolved DNA molecules as large as 2,500 kilobase pairs (kb). Chromosomes were polymorphic in number (22-30) and size (200-2,500 kb) of bands among members of five complexes of Leishmania. Although each stock had a distinct karyotype, in general the differences found between strains and/or species within each complex were not clear enough for parasite identification. However, each group showed a specific number of size-concordant DNA molecules, wich allowed distinction among the Leishmania complex parasites. Clear differences between the Old and New world groups of parasites or among some New World Leishmania species were also apparent in relation to the chromosome locations of beta-tubulin genes. Based on these results as well as data from other published studies the potencial of using DNA karyotype for identifying and classifying leishmanial field isolates is discussed.