Memory of Recessions

This paper reviews the evidence on the effects of recessions on potential output. In contrast to the assumption in mainstream macroeconomic models that economic fluctuations do not change potential output paths, the evidence is that they do in the case of recessions. A model is proposed to explain this phenomenon, based on an analogy with water flows in porous media. Because of the discrete adjustments made by heterogeneous economic agents in such a world, potential output displays hysteresis with regard to aggregate demand shocks, and thus retains a memory of the shocks associated with recessions.

International Evidence on the New Keynesian Phillips Curve Using Aggregate and Disaggregate Data

We present a unique empirical analysis of the properties of the New Keynesian Phillips Curve using an international dataset of aggregate and disaggregate sectoral in ation. Our results from panel time-series estimation clearly indicate that sectoral heterogeneity has important consequences for aggregate in ation behaviour. Heterogeneity helps to explain the overestimation of in ation persistence and underestimation of the role of marginal costs in empirical investigations of the NKPC that use aggregate data. We nd that combining disaggregate information with heterogeneous-consistent estimation techniques helps to reconcile, to a large extent, the NKPC with the data.

Minu, Startu and all that:- Pitfalls in estimating the sensitivity of a worker’s wage to aggregate unemployment

In this paper we show that the inclusion of unemployment-tenure interaction variates in Mincer wage equations is subject to serious pitfalls. These variates were designed to test whether or not the sensitivity to the business cycle of a worker’s wage varies according to her tenure. We show that three canonical variates used in the literature - the minimum unemployment rate during a worker’s time at the firm(min u), the unemployment rate at the start of her tenure(Su) and the current unemployment rate interacted with a new hire dummy(δu) - can all be significant and "correctly" signed even when each worker in the firm receives the same wage, regardless of tenure (equal treatment). In matched data the problem can be resolved by the inclusion in the panel of firm-year interaction dummies. In unmatched data where this is not possible, we propose a solution for min u and Su based on Solon, Barsky and Parker’s(1994) two step method. This method is sub-optimal because it ignores a large amount of cross tenure variation in average wages and is only valid when the scaled covariances of firm wages and firm employment are acyclical. Unfortunately δu cannot be identified in unmatched data because a differential wage response to unemployment of new hires and incumbents will appear under both equal treatment and unequal treatment.

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.

Unemployment and Endogenous Reallocation over the Business Cycle

This paper studies unemployed workers’ decisions to change occupations, and their impact on fluctuations in aggregate unemployment and its underlying duration distribution. We develop an analytically and computationally tractable stochastic equilibrium model with heterogenous labor markets. In this model three different types of unemployment arise: search, rest and reallocation unemployment. We document new evidence on unemployed workers’ gross occupational mobility and use it to calibrate the model. We show that rest unemployment is the main driver of unemployment fluctuations over the business cycle and causes cyclical unemployment to be highly volatile. The resulting unemployment duration distribution generated by the model responds realistically to the business cycle, creating substantial longer-term unemployment in downturns. Finally, rest unemployment also makes our model simultaneously consistent with procyclical occupational mobility of the unemployed, countercyclical job separations into unemployment and a negatively-sloped Beveridge curve.

The Causal effect of education on aggregate income

Empirical studies assume that the macro Mincer return on schooling is con- stant across countries. Using a large sample of countries this paper shows that countries with a better quality of education have on average relatively higher macro Mincer coeficients. As rich countries have on average better educational quality, differences in human capital between countries are larger than has been typically assumed in the development accounting literature. Consequently, factor accumulation explains a considerably larger share of income differences across countries than what is usually found.

Analyzing aggregate real exchange rate persistence through the lens of sectoral data

In this paper we analyze the persistence of aggregate real exchange rates (RERs) for a group of EU-15 countries by using sectoral data. The tight relation between aggregate and sectoral persistence recently investigated by Mayoral (2008) allows us to decompose aggregate RER persistence into the persistence of its different subcomponents. We show that the distribution of sectoral persistence is highly heterogeneous and very skewed to the right, and that a limited number of sectors are responsible for the high levels of persistence observed at the aggregate level. We use quantile regression to investigate whether the traditional theories proposed to account for the slow reversion to parity (lack of arbitrage due to nontradibilities or imperfect competition and price stickiness) are able to explain the behavior of the upper quantiles of sectoral persistence. We conclude that pricing to market in the intermediate goods sector together with price stickiness have more explanatory power than variables related to the tradability of the goods or their inputs.

Oil price shocks and labor market fluctuations

We examine the impact of real oil price shocks on labor market flows in the U.S. We first use smooth transition regression (STR) models to investigate to what extent oil prices can be considered as a driving force of labor market fluctuations. Then we develop and calibrate a modified version of Pissarides' (2000) model with energy costs, which we simulate in response to shocks mimicking the behavior of the actual oil price shocks. We find that (i) these shocks are an important driving force of job market flows; (ii) the job finding probability is the main transmission mechanism of such shocks; and (iii) they bring a new amplification mechanism for the volatility and should thus be seen as complementary of labor productivity shocks. Overall we conclude that shocks in oil prices cannot be neglected in explaining cyclical labor adjustments in the U.S.

Aggregate cultures of foetal rat liver cells: development and maintenance of liver gene expression.

Rotation-mediated aggregate cultures of foetal rat liver cells were prepared and grown in a chemically defined medium. Their capacity for cellular organisation and maturation was studied over a culture period of 3 wk by using both morphologic and biochemical criteria. It was found that within each aggregate, distinct liver cell types were present and attained their normal, differentiated phenotype. Parenchymal cells formed small acini with a central lumen. Within the first 2 wk in culture, albumin and ferritin mRNA levels were maintained, while the alpha-fetoprotein mRNA levels decreased, and tyrosine aminotransferase (TAT) gene expression increased. No significant response to glucocorticoids was observed in early cultures, whereas after 3 wk a marked increase in TAT mRNA levels was elicited by dexamethasone and glucagon (additive stimulatory effects). The results show that foetal rat liver cells cultured in a chemically defined medium are able to rearrange themselves into histotypic structures, and display a developmental pattern of gene expression comparable to that of perinatal rat liver in vivo. This culture system offers therefore a useful model to study the development and function of liver cells.

DETERMINATION OF CELL-SPECIFIC NEUROTOXICITY OF MALONATE, METHYLMALONATE AND PROPIONATE IN A 3D RAT BRAIN CELL AGGREGATE SYSTEM

Malonate, methylmalonate and propionate are potentially neurotoxic metabolites in branched-chain organic acidurias. Their effects were tested on cultured 3D rat brain cell aggregates, using dosages of 0.1, 1.0 and 10.0 mM with a short but intense (twice a day over 3 days) and a longer but less intense treatment (every 3 rdday over 9 days). CNS cell-specific immunohistochemical stainings allowed the follow-up of neurons (axons, phosphorylated medium-weight neurofilament), astrocytes (glial fibrillary acidic protein) and oligodendrocytes (myelin basic protein). Methylmalonate and malonate were quantified by tandem mass spectrometry. Tandem mass spectrometry analysis of harvested brain cell aggregates revealed clear intracellular accumulation of methylmalonate and malonate. In immunohistochemical stainings oligodendrocytes appeared the most affected brain cells. The MBP signal disappeared already at 0.1 mM treatment with each metabolite. Mature astrocytes were not affected by propionate, while immature astrocytes on intense treatment with propionate developed cell swelling. 1 mM methylmalonate induced cell swelling of both immature and mature astrocytes , while 1 mM malonate only affected mature astrocytes. Neurons were not affected by methylmalonate, but 10.0 mM malonate on less intense treatment and 0.1, 1.0 and 10.0 mM propionate on intense treatment affected axonal growth. Our study shows significant uptake and deleterious effects of these metabolites on brain cells, principally on astrocytes and oligodendrocytes. This may be explained by the absence of the pathway in glial cells, which thus are not able to degrade these metabolites. Further studies are ongoing to elucidate the underlying mechanisms of the observed neurotoxic effects.

A simple model of aggregate pension expenditure

This paper develops a simple model that can be used to analyze the long-term sustainability of the contributive pension system and the steady-state response of pension expenditure to changes in some key demographic and economic variables, in the characteristics of the average pensioner and in the parameters that describe how pensions are calculated in Spain as a function of workers' Social Security contribution histories.

Influence of epidermal growth factor on the maturation of fetal rat brain cells in aggregate culture. An immunocytochemical study.

Maturation of astrocytes, neurons, and oligodendrocytes was studied in serum-free aggregating cell cultures of fetal rat telencephalon by an immunocytochemical approach. Cell type-specific immunofluorescence staining was examined by using antibodies directed against glial fibrillary acidic protein (GFAP) and vimentin, two astroglial markers; neuron-specific enolase (NSE) and neurofilament (NF), two neuronal markers, and galactocerebroside (GC), an oligodendroglial marker. It was found that the cellular maturation in aggregates is characterized by distinct developmental increases in immunoreactivity for GFAP, vimentin, NSE, NF, and GC, and by a subsequent decrease of vimentin-positive structures in more differentiated cultures. These findings are in agreement with observations in vivo, and they corroborate previous biochemical studies of this histotypic culture system. Treatment of very immature cultures with a low dose of epidermal growth factor (EGF, 5 ng/ml) enhanced the developmental increase in GFAP, NSE, NF and GC immunoreactivity, suggesting an acceleration of neuronal and glial maturation. In addition, EGF was found to alter the cellular organization within the aggregates, presumably by influencing cell migration.

Monitoring temporal fluctuations of Culex quinquefasciatus using oviposition traps containing attractant and larvicide in an urban environment in Recife, Brazil

The use of attractants and larvicides in oviposition traps is of practical interest for the surveillance and control of urban mosquitoes. In addition to increasing the safety of the traps, this combination is essential for an attract-and-kill control strategy based on trapping mosquito eggs. The combination of Bacillus thuringiensis var. israelensis (Bti) and grass infusion (GI) vs. GI alone were tested for their ability to attract in paired BR-OVT traps in the backyards of 10 houses in Recife, Brazil, for a period of 45 days. Results show that females prefer to oviposit in traps containing Bti (363 compared with 251 egg rafts over 45 days). Results from a one-year trial on the efficacy of BR-OVT traps loaded with GI and Bti as a sampling tool to monitor temporal fluctuations in the population densities of Culex quinquefasciatus in an urban environment are also reported. From December 2006-January 2007, one trap per home was installed and maintained for 348 consecutive days in 134-151 houses located in three urban blocks. Throughout the one-year field trial a total of 43,151 Culex egg rafts were collected in the traps. The data show that BR-OVT loaded with GI and Bti is sensitive enough to demonstrate continuous reproductive activity of Cux. quinquefasciatus in the study area throughout the year and to monitor temporal fluctuations in population density.

Personality profiles of cultures: Aggregate personality traits

Personality profiles of cultures can be operationalized as the mean trait levels of culture members. College students from 51 cultures rated an individual from their country whom they knew well (N 12,156). Aggregate scores on Revised NEO Personality Inventory (NEO-PI-R) scales generalized across age and sex groups, approximated the individual-level 5-factor model, and correlated with aggregate self-report personality scores and other culture-level variables. Results were not attributable to national differences in economic development or to acquiescence. Geographical differences in scale variances and mean levels were replicated, with Europeans and Americans generally scoring higher in Extraversion than Asians and Africans. Findings support the rough scalar equivalence of NEO-PI-R factors and facets across cultures and suggest that aggregate personality profiles provide insight into cultural differences.