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.

Indexed versus nominal government debt under inflation and price-level targeting

This paper presents a DSGE model in which long run inflation risk matters for social welfare. Optimal indexation of long-term government debt is studied under two monetary policy regimes: inflation targeting (IT) and price-level targeting (PT). Under IT, full indexation is optimal because long run inflation risk is substantial due to base-level drift, making indexed bonds a much better store of value than nominal bonds. Under PT, where long run inflation risk is largely eliminated, optimal indexation is substantially lower because nominal bonds become a better store of value relative to indexed bonds. These results are robust to the PT target horizon, imperfect credibility of PT and model calibration, but the assumption that indexation is lagged is crucial. From a policy perspective, a key finding is that accounting for optimal indexation has important welfare implications for comparisons of IT and PT.

The Inflation Risk Premium on Government Debt in an Overlapping Generations Model

This paper presents a general equilibrium model in which nominal government debt pays an inflation risk premium. The model predicts that the inflation risk premium will be higher in economies which are exposed to unanticipated inflation through nominal asset holdings. In particular, the inflation risk premium is higher when government debt is primarily nominal, steady-state inflation is low, and when cash and nominal debt account for a large fraction of consumers' retirement portfolios. These channels do not appear to have been highlighted in previous models or tested empirically. Numerical results suggest that the inflation risk premium is comparable in magnitude to standard representative agent models. These findings have implications for management of government debt, since the inflation risk premium makes it more costly for governments to borrow using nominal rather than indexed debt. Simulations of an extended model with Epstein-Zin preferences suggest that increasing the share of indexed debt would enable governments to permanently lower taxes by an amount that is quantitatively non-trivial.

Arch and Structural Breaks in United States Inflation

United States Phillips curves are routinely estimated without accounting for the shifts in mean inflation. As a result we may expect the standard estimates of Phillips curves to be biased and suffer from ARCH. We demonstrate this is indeed the case. We also demonstrate that once the shifts in mean inflation are accounted for the ARCH is largely eliminated in the estimated model and the model defining expected rate of inflation in the New Keynesian model plays no significant role in the dynamics of inflation.

The Inflation Bias under Calvo and Rotemberg Pricing.

New Keynesian models rely heavily on two workhorse models of nominal inertia - price contracts of random duration (Calvo, 1983) and price adjustment costs (Rotemberg, 1982) - to generate a meaningful role for monetary policy. These alternative descriptions of price stickiness are often used interchangeably since, to a first order of approximation they imply an isomorphic Phillips curve and, if the steady-state is efficient, identical objectives for the policy maker and as a result in an LQ framework, the same policy conclusions. In this paper we compute time-consistent optimal monetary policy in bench-mark New Keynesian models containing each form of price stickiness. Using global solution techniques we find that the inflation bias problem under Calvo contracts is significantly greater than under Rotemberg pricing, despite the fact that the former typically significant exhibits far greater welfare costs of inflation. The rates of inflation observed under this policy are non-trivial and suggest that the model can comfortably generate the rates of inflation at which the problematic issues highlighted in the trend inflation literature emerge, as well as the movements in trend inflation emphasized in empirical studies of the evolution of inflation. Finally, we consider the response to cost push shocks across both models and find these can also be significantly different. The choice of which form of nominal inertia to adopt is not innocuous.

The Monetary policy rules and the inflation process in open emerging

This paper has three objectives. First, it aims at revealing the logic of interest rate setting pursued by monetary authorities of 12 new EU members. Using estimation of an augmented Taylor rule, we find that this setting was not always consistent with the official monetary policy. Second, we seek to shed light on the inflation process of these countries. To this end, we carry out an estimation of an open economy Philips curve (PC). Our main finding is that inflation rates were not only driven by backward persistency but also held a forward-looking component. Finally, we assess the viability of existing monetary arrangements for price stability. The analysis of the conditional inflation variance obtained from GARCH estimation of PC is used for this purpose. We conclude that inflation targeting is preferable to an exchange rate peg because it allowed decreasing the inflation rate and anchored its volatility.

Quantile forecasts of inflation under model uncertainty

Bayesian model averaging (BMA) methods are regularly used to deal with model uncertainty in regression models. This paper shows how to introduce Bayesian model averaging methods in quantile regressions, and allow for different predictors to affect different quantiles of the dependent variable. I show that quantile regression BMA methods can help reduce uncertainty regarding outcomes of future inflation by providing superior predictive densities compared to mean regression models with and without BMA.

'Modern' Phillips Curves and the Implications For The Statistical Process of Inflation

'Modern' theories of the Phillips curve imply that inflation is an integrated, or near integrated process. This paper explains this implication and why these 'modern' theories are logically inconsistent with what is commonly known about the statistical process of inflation.

Arenavirus Nucleoprotein Targets Interferon Regulatory Factor-Activating Kinase IKKε.

Arenaviruses perturb innate antiviral defense by blocking induction of type I interferon (IFN) production. Accordingly, the arenavirus nucleoprotein (NP) was shown to block activation and nuclear translocation of interferon regulatory factor 3 (IRF3) in response to virus infection. Here, we sought to identify cellular factors involved in innate antiviral signaling targeted by arenavirus NP. Consistent with previous studies, infection with the prototypic arenavirus lymphocytic choriomeningitis virus (LCMV) prevented phosphorylation of IRF3 in response to infection with Sendai virus, a strong inducer of the retinoic acid-inducible gene I (RIG-I)/mitochondrial antiviral signaling (MAVS) pathway of innate antiviral signaling. Using a combination of coimmunoprecipitation and confocal microscopy, we found that LCMV NP associates with the IκB kinase (IKK)-related kinase IKKε but that, rather unexpectedly, LCMV NP did not bind to the closely related TANK-binding kinase 1 (TBK-1). The NP-IKKε interaction was highly conserved among arenaviruses from different clades. In LCMV-infected cells, IKKε colocalized with NP but not with MAVS located on the outer membrane of mitochondria. LCMV NP bound the kinase domain (KD) of IKKε (IKBKE) and blocked its autocatalytic activity and its ability to phosphorylate IRF3, without undergoing phosphorylation. Together, our data identify IKKε as a novel target of arenavirus NP. Engagement of NP seems to sequester IKKε in an inactive complex. Considering the important functions of IKKε in innate antiviral immunity and other cellular processes, the NP-IKKε interaction likely plays a crucial role in arenavirus-host interaction.

Inflation dynamics and the New Keynesian Phillips curve in EU-4

The paper seeks to shed light on inflation dynamics of four new EU member states: the Czech Republic, Hungary, Poland and Slovakia. To this end, the New Keynesian Phillips curve augmented for open economies is estimated and additional statistical tests applied. We find the following. (1) The claim of New Keynesians that the real marginal cost is the main inflation-forcing variable is fragile. (2) Inflation seems to be driven by external factors. (3) Although inflation holds a forward-looking component, the backward-looking component is substantial. An intuitive explanation for higher inflation persistence may be rather adaptive than rational price setting of local firms.

Transport pathways in the malaria-infected erythrocyte: characterization and their use as potential targets for chemotherapy

The intraerythrocytic malarial parasite is involved in an extremely intensive anabolic activity while it resides in its metabolically quiescent host cell. The necessary fast uptake of nutrients and the discharge of waste product, are guaranteed by parasite-induced alterations of the constitutive transporters of the host cell and the production of new parallel pathways. The membrane of the host cell thus becomes permeable to phospholipids, purine bases and nucleosides, small non-electrolytes, anions and cations. When the new pathways are quantitatively unimportant, classical inhibitors of native transporters can be used to inhibit parasite growth. Several compounds were found to effectively inhibit the new pathways and consequently, parasite growth. The pathways have also been used to introduce cytotoxic agents. The parasitophorous membrane consists of channels which are highly permeable to small solutes and display no ion selectivity. Transport of some cations and anions across the parasite membrane is rapid and insensitive to classical inhibitors, and in some cases it is mediated by specific antiporters which respond to their respective inhibitors. Macromolecules have been shown to reach the parasitophorous space through a duct contiguous with the host cell membrane, and subsequently to be endocytosed at the parasite membrane. The simultaneous presence of the parasitophorous membrane channels and the duct, however, is incompatible with experimental evidences. No specific inhibitors were found as yet that would efficiently inhibit transport through the channels or the duct.

The Arabidopsis bHLH transcription factors MYC3 and MYC4 are targets of JAZ repressors and act additively with MYC2 in the activation of jasmonate responses.

Jasmonates (JAs) trigger an important transcriptional reprogramming of plant cells to modulate both basal development and stress responses. In spite of the importance of transcriptional regulation, only one transcription factor (TF), the Arabidopsis thaliana basic helix-loop-helix MYC2, has been described so far as a direct target of JAZ repressors. By means of yeast two-hybrid screening and tandem affinity purification strategies, we identified two previously unknown targets of JAZ repressors, the TFs MYC3 and MYC4, phylogenetically closely related to MYC2. We show that MYC3 and MYC4 interact in vitro and in vivo with JAZ repressors and also form homo- and heterodimers with MYC2 and among themselves. They both are nuclear proteins that bind DNA with sequence specificity similar to that of MYC2. Loss-of-function mutations in any of these two TFs impair full responsiveness to JA and enhance the JA insensitivity of myc2 mutants. Moreover, the triple mutant myc2 myc3 myc4 is as impaired as coi1-1 in the activation of several, but not all, JA-mediated responses such as the defense against bacterial pathogens and insect herbivory. Our results show that MYC3 and MYC4 are activators of JA-regulated programs that act additively with MYC2 to regulate specifically different subsets of the JA-dependent transcriptional response.

Endothelial cell integrins and COX-2: mediators and therapeutic targets of tumor angiogenesis.

Vascular integrins are essential regulators and mediators of physiological and pathological angiogenesis, including tumor angiogenesis. Integrins provide the physical interaction with the extracellular matrix (ECM) necessary for cell adhesion, migration and positioning, and induce signaling events essential for cell survival, proliferation and differentiation. Integrins preferentially expressed on neovascular endothelial cells, such as alphaVbeta3 and alpha5beta1, are considered as relevant targets for anti-angiogenic therapies. Anti-integrin antibodies and small molecular integrin inhibitors suppress angiogenesis and tumor progression in many animal models, and are currently tested in clinical trials as anti-angiogenic agents. Cyclooxygense-2 (COX-2), a key enzyme in the synthesis of prostaglandins and thromboxans, is highly up-regulated in tumor cells, stromal cells and angiogenic endothelial cells during tumor progression. Recent experiments have demonstrated that COX-2 promotes tumor angiogenesis. Chronic intake of nonsteroidal anti-inflammatory drugs and COX-2 inhibitors significantly reduces the risk of cancer development, and this effect may be due, at least in part, to the inhibition of tumor angiogenesis. Endothelial cell COX-2 promotes integrin alphaVbeta3-mediated endothelial cell adhesion, spreading, migration and angiogenesis through the prostaglandin-cAMP-PKA-dependent activation of the small GTPase Rac. In this article, we review the role of integrins and COX-2 in angiogenesis, their cross talk, and discuss implications relevant to their targeting to suppress tumor angiogenesis.

How does monetary policy change? evidence on inflation targeting countries

We examine the evolution of monetary policy rules in a group of inflation targeting countries (Australia, Canada, New Zealand, Sweden and the United Kingdom) applying moment- based estimator at time-varying parameter model with endogenous regressors. Using this novel flexible framework, our main findings are threefold. First, monetary policy rules change gradually pointing to the importance of applying time-varying estimation framework. Second, the interest rate smoothing parameter is much lower that what previous time-invariant estimates of policy rules typically report. External factors matter for all countries, albeit the importance of exchange rate diminishes after the adoption of inflation targeting. Third, the response of interest rates on inflation is particularly strong during the periods, when central bankers want to break the record of high inflation such as in the U.K. or in Australia at the beginning of 1980s. Contrary to common wisdom, the response becomes less aggressive after the adoption of inflation targeting suggesting the positive effect of this regime on anchoring inflation expectations. This result is supported by our finding that inflation persistence as well as policy neutral rate typically decreased after the adoption of inflation targeting.