Is the Basel III Leverage Ratio countercyclical? A study for Portuguese banks

This work analyses how the leverage ratio behaves through the cycle, vis-à-vis other capital ratios. For a sample of the largest Portuguese banks, the Basel III leverage ratio is indeed countercyclical. This result is relevant from a regulatory perspective, since the introduction of a limit on the leverage ratio will function as a restriction in the banks’ balance sheet size, reducing the economic costs associated with the excessive growth of leverage in periods of economic expansion followed by aggressive deleveraging in the downturn. However, one cannot exclude that restrictions on banks’ leverage incentivize its transference to less regulated intermediaries.

Macroeconomic challenges of fiscal decentralization in Latin America in the aftermath of the global financial crisis

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Essays in Macroeconomics

The dissertation consists of four papers that aim at providing new contributions in the field of macroeconomics, monetary policy and financial stability. The first paper proposes a new Dynamic Stochastic General Equilibrium (DSGE) model with credit frictions and a banking sector to study the pro-cyclicality of credit and the role of different prudential regulatory frameworks in affecting business cycle fluctuations and in restoring macroeconomic and financial stability. The second paper develops a simple DSGE model capable of evaluating the effects of large purchases of treasuries by central banks. This theoretical framework is employed to evaluate the impact on yields and the macroeconomy of large purchases of medium- and long-term government bonds recently implemented in the US and UK. The third paper studies the effects of ECB communications about unconventional monetary policy operations on the perceived sovereign risk of Italy over the last five years. The empirical results are derived from both an event-study analysis and a GARCH model, which uses Italian long-term bond futures to disentangle expected from unexpected policy actions. The fourth paper proposes a DSGE model with an endogenous term structure of interest rates, which is able to replicate the stylized facts regarding the yield curve and the term premium in the US over the period 1987:3-2011:3, without compromising its ability to match macro dynamics.

The Monetary Policy of the European Central Bank (2002-2015). CEPS Special Report No. 109/May 2015

This paper examines the policies pursued by the European Central Bank (ECB) since the inception of the euro. The ECB was originally set up to pursue price stability, with an eye also to economic growth and financial stability as subsidiary goals, once the primary goal was secured. The application of a single monetary policy to a diverse economic area has entailed a pronounced pro-cyclicality in its real economic effects on the eurozone periphery. Later, monetary policy became the main policy instrument to tackle financial instability elicited by the failure of Lehman Brothers and the sovereign debt crisis in the eurozone. In the process, the ECB emerged as the lender of last resort in the sovereign debt markets of participating countries. Persistent economic depression and deflation eventually brought the ECB into the uncharted waters of unconventional policies. That the ECB could legally perform all of these tasks bears witness to the flexibility of the TFEU and its Statute, but its tools and operating procedures were stretched to their limit. In the end, the place of the ECB amongst EU policy-making institutions has been greatly enhanced, but has entailed repeated intrusions into the broader domain of economic policies – not least because of its market intervention policies – whose consequences have yet to be ascertained.

The Monetary Policy of the European Central Bank (2002-2015). Bruges European Economic Policy Briefings (BEEP) 35/2015.

This paper examines the policies pursued by the European Central Bank (ECB) since the inception of the euro. The ECB was originally set up to pursue price stability, with an eye also to economic growth and financial stability as subsidiary goals, once the primary goal was secured. The application of a single monetary policy to a diverse economic area has entailed a pronounced pro-cyclicality in its real economic effects on the eurozone periphery. Later, monetary policy became the main policy instrument to tackle financial instability elicited by the failure of Lehman Brothers and the sovereign debt crisis in the eurozone. In the process, the ECB emerged as the lender of last resort in the sovereign debt markets of participating countries. Persistent economic depression and deflation eventually brought the ECB into the uncharted waters of unconventional policies. That the ECB could legally perform all of these tasks bears witness to the flexibility of the TFEU and its Statute, but its tools and operating procedures were stretched to their limit. In the end, the place of the ECB amongst EU policy-making institutions has been greatly enhanced, but has entailed repeated intrusions into the broader domain of economic policies – not least because of its market intervention policies – whose consequences have yet to be ascertained.

Essays on Uncertainty, Imperfect Information, and Investment Dynamics

Understanding how imperfect information affects firms' investment decision helps answer important questions in economics, such as how we may better measure economic uncertainty; how firms' forecasts would affect their decision-making when their beliefs are not backed by economic fundamentals; and how important are the business cycle impacts of changes in firms' productivity uncertainty in an environment of incomplete information. This dissertation provides a synthetic answer to all these questions, both empirically and theoretically. The first chapter, provides empirical evidence to demonstrate that survey-based forecast dispersion identifies a distinctive type of second moment shocks different from the canonical volatility shocks to productivity, i.e. uncertainty shocks. Such forecast disagreement disturbances can affect the distribution of firm-level beliefs regardless of whether or not belief changes are backed by changes in economic fundamentals. At the aggregate level, innovations that increase the dispersion of firms' forecasts lead to persistent declines in aggregate investment and output, which are followed by a slow recovery. On the contrary, the larger dispersion of future firm-specific productivity innovations, the standard way to measure economic uncertainty, delivers the ``wait and see" effect, such that aggregate investment experiences a sharp decline, followed by a quick rebound, and then overshoots. At the firm level, data uncovers that more productive firms increase investments given rises in productivity dispersion for the future, whereas investments drop when firms disagree more about the well-being of their future business conditions. These findings challenge the view that the dispersion of the firms' heterogeneous beliefs captures the concept of economic uncertainty, defined by a model of uncertainty shocks. The second chapter presents a general equilibrium model of heterogeneous firms subject to the real productivity uncertainty shocks and informational disagreement shocks. As firms cannot perfectly disentangle aggregate from idiosyncratic productivity because of imperfect information, information quality thus drives the wedge of difference between the unobserved productivity fundamentals, and the firms' beliefs about how productive they are. Distribution of the firms' beliefs is no longer perfectly aligned with the distribution of firm-level productivity across firms. This model not only explains why, at the macro and micro level, disagreement shocks are different from uncertainty shocks, as documented in Chapter 1, but helps reconcile a key challenge faced by the standard framework to study economic uncertainty: a trade-off between sizable business cycle effects due to changes in uncertainty, and the right amount of pro-cyclicality of firm-level investment rate dispersion, as measured by its correlation with the output cycles.

Testosterone Therapy Differently Regulates The Anti- And Pro-inflammatory Cytokines In The Plasma And Prostate Of Rats Submitted To Chronic Ethanol Consumption (uchb).

Ethanol consumption damages the prostate, and testosterone is known by anti-inflammatory role. The cytokines were investigated in the plasma and ventral prostate of UChB rats submitted or not to testosterone therapy by ELISA and Western blot, respectively. Additionally, inflammatory foci and mast cells were identified in the ventral prostate slides stained by hematoxylin and eosin and toluidine blue, respectively. Inflammatory foci were found in the ethanol-treated animals and absent after testosterone therapy. Plasma levels of IL-6 and IL-10 were not changed while TNFα and TFG-β1 were increased in the animals submitted testosterone therapy. Regarding to ventral prostate, IL-6 did not alter, while IL-10, TNFα, and TFG-β1 were increased after testosterone therapy. Ethanol increases NFR2 in addition to high number of intact and degranulated mast cell which were reduced after testosterone therapy. So, ethanol and testosterone differentially modulates the cytokines in the plasma and prostate.

The Influence Of Altered Occlusion On Pro-inflammatory Cytokine Levels In The Tmj Synovial Tissues Of Rats.

The aim of this study was to evaluate whether altered occlusion affects both the condylar cartilage thickness and the cytokine levels of the TMJs of rats. Thirty adult-male rats (n=30) were randomly assigned to three experimental conditions: a control group that underwent sham operations with unaltered occlusion; an FPDM group that underwent functional posterior displacement of the mandible that was induced by an incisor guiding appliance; and an iOVD group in which the increased occlusal vertical dimension was induced in the molars. The rats were subjected to the FPDM or iOVD model for 14 days and then killed. Both the right and left TMJs were removed and randomly assigned to examination with staining or immunoassay techniques. Toluidine blue staining was used to measure the thicknesses of the four layers of the articular cartilage (i.e., the fibrous, proliferating, mature, and hypertrophic layers). ELISA assays were used to assess the concentrations of the pro-inflammatory cytokines IL-1α, IL-1β, IL-6, and tumour necrosis factor (TNF-α). The measurements of the articular cartilage layers and cytokine concentrations were analyzed with ANOVA and Tukey's tests and Kruskal-Wallis and Dunn tests, respectively (α=5%). The thickness of articular cartilage in the FPDM group (0.3±0.03mm) was significantly greater than those of the control (0.2±0.01mm) and iOVD (0.25±0.03mm) groups. No significant difference was observed between the control and iOVD groups. The four articular cartilage layers were thicker in the FPDM group than in the control and iOVD groups, and the latter two groups did not differ one from each other. Both the FPDM and iOVD groups exhibited higher cytokine levels than did the control (p<0.05) group. Compared to the FPDM group, the iOVD group exhibited significantly higher levels of IL-1β and TNF-α. Both models induced inflammation in the TMJ and caused significant structural changes in the TMJ and surrounding tissues.

Synergistic effect of simvastatin and ezetimibe on lipid and pro-inflammatory profiles in pre-diabetic subjects

Background: Ezetimibe specifically blocks the absorption of dietary and biliary cholesterol and plant sterols. Synergism of ezetimibe-statin therapy on LDL-cholesterol has been demonstrated, but data concerning the pleiotropic effects of this combination are controversial. Objective: This open-label trial evaluated whether the combination of simvastatin and ezetimibe also results in a synergistic effect that reduces the pro-inflammatory status of pre-diabetic subjects. Methods: Fifty pre-diabetic subjects were randomly assigned to one of 2 groups, one receiving ezetimibe (10 mg/day), the other, simvastatin (20 mg/d) for 12 weeks, followed by an additional 12-week period of combined therapy. Blood samples were collected at baseline, 12 and 24 weeks. RESULTS: Total cholesterol, LDL-cholesterol and apolipoprotein B levels decreased in all the periods analyzed (p < 0.01), but triglycerides declined significantly only after combined therapy. Both drugs induced reductions in C-reactive protein, reaching statistical significance after combining ezetimibe with the simvastatin therapy (baseline 0.59 +/- 0.14, simvastatin monotherapy 0.48 +/- 0.12 mg/dL and 0.35 +/- 0.12 mg/dL, p < 0.023). Such a reduction was independent of LDL-cholesterol change. However, mean levels of TNF-alpha and interleukin-6 and leukocyte count did not vary during the whole study. Conclusion: Expected synergistic lowering effects of a simvastatin and ezetimibe combination on LDL-cholesterol, apolipoprotein B and triglycerides levels were confirmed in subjects with early disturbances of glucose metabolism. We suggest an additive effect of this combination also on inflammatory status based on the reduction of C-reactive protein. Attenuation of pro-inflammatory conditions may be relevant in reducing cardiometabolic risk.

PKC beta II inhibition attenuates myocardial infarction induced heart failure and is associated with a reduction of fibrosis and pro-inflammatory responses

Protein kinase C beta II (PKC beta II) levels increase in the myocardium of patients with end-stage heart failure (HF). Also targeted overexpression of PKC beta II in the myocardium of mice leads to dilated cardiomyopathy associated with inflammation, fibrosis and myocardial dysfunction. These reports suggest a deleterious role of PKC beta II in HF development. Using a post-myocardial infarction (MI) model of HF in rats, we determined the benefit of chronic inhibition of PKC beta II on the progression of HF over a period of 6 weeks after the onset of symptoms and the cellular basis for these effects. Four weeks after MI, rats with HF signs that were treated for 6 weeks with the PKC beta II selective inhibitor (beta IIV5-3 conjugated to TAT(47-57) carrier peptide) (3 mg/kg/day) showed improved fractional shortening (from 21% to 35%) compared to control (TAT(47-57) carrier peptide alone). Formalin-fixed mid-ventricle tissue sections stained with picrosirius red, haematoxylin and eosin and toluidine blue dyes exhibited a 150% decrease in collagen deposition, a two-fold decrease in inflammation and a 30% reduction in mast cell degranulation, respectively, in rat hearts treated with the selective PKC beta II inhibitor. Further, a 90% decrease in active TGF beta 1 and a significant reduction in SMAD2/3 phosphorylation indicated that the selective inhibition of PKC beta II attenuates cardiac remodelling mediated by the TGF-SMAD signalling pathway. Therefore, sustained selective inhibition of PKC beta II in a post-MI HF rat model improves cardiac function and is associated with inhibition of pathological myocardial remodelling.

Effect of UV Radiation and Pro-Oxidant on PP Biodegradability

The effect of ultraviolet exposure on the biodegration of poly(propylene) without (PP) and with 0.3 (wt/wt) (PPOx) pro-oxidant additives, produced by extrusion was studied. After UV exposure the samples were submitted to biodegradation (weight loss) in prepared soils. The samples before and after UV exposure were analyzed using differential scanning calorimetry, Fourier transform infrared spectroscopy, size exclusion chromatography, and optical microscopy. The exposure to UV radiation lead to more intense degradation of PPOx than of PP; the amount of carbonyl groups was larger for the PPOx samples than for PP, as well as the decrease in the T(m) and in the molecular weight. The samples exposed to UV radiation showed some level of fragmentation after 56 days when placed in the prepared soil; the samples which were exposed to UV for 480 h presented just a small weight loss. POLYM. ENG. SCI., 49:123-128, 2009. (C) 2008 Society of Plastics Engineers

Ruthenium-nitrite complex as pro-drug releases NO in a tissue and enzyme-dependent way

Nitric oxide (NO) plays an important role in the control of the vascular tone and the most often employed NO donors have limitations due to their harmful side-effects. In this context, new NO donors have been prepared, in order to minimize such undesirable effects. cis-[Ru(bpy)(2)(py)NO(2)](PF(6)) (RuBPY) is a new nitrite complex synthesized in our laboratory that releases NO in the presence of the vascular tissue only. In this work the vasorelaxation induced by this NO donor has been studied and compared to that obtained with the well known NO donor SNP. The relaxation induced by RuBPY is concentration-dependent in denuded rat aortas pre-contracted with phenylephrine (EC(50)). This new compound induced relaxation with efficacy similar to that of SNP, although its potency is lower. The time elapsed until maximum relaxation is achieved (E(max) = 240 s) is similar to measured for SNP (210 s). Vascular reactivity experiments demonstrated that aortic relaxation by RuBPY is inhibited by the soluble guanylyl-cyclase inhibitor 1H-[1,2,4] oxadiozolo[4,3-a]quinoxaline-1-one (ODQ 1 mu M). In a similar way, 1 mu M ODQ also reduces NO release from the complex as measured with DAF-2 DA by confocal microscopy. These findings suggest that this new complex RuBPY that has nitrite in its structure releases NO inside the vascular smooth muscle cell. This ruthenium complex releases significant amounts of NO only in the presence of the aortic tissue. Reduction of nitrite to NO is most probably dependent on the soluble guanylyl-cyclase enzyme, since NO release is inhibited by ODQ. (C) 2011 Elsevier Inc. All rights reserved.

Melatonin enhances pro-inflammatory cytokine levels and protects against Chagas disease

Pro-inflammatory and modulatory cytokines have an essential role in host defense against human and murine Trypanosoma cruzi infection. Control of T. cruzi parasitism during the acute phase of infection is considered to be critically dependent on direct macrophage activation by cytokines. Melatonin has been proposed to regulate the immune system by affecting cytokine production in immunocompetent cells, enhancing the production of several T helper (Th)1 cytokines. The aims of this work were to evaluate in rats, the influences of exogenous melatonin treatment on T. cruzi-infected host`s immune responses. With this in mind, several immunological parameters were analyzed, including tumor necrosis factor-alpha, gamma-interferon, interleukin-12, nitric oxide (NO) and macrophage count. The melatonin therapy was provided in one of two different treatment regimens, that is, either beginning 7 days prior to infection or concomitant with the infection. Both treatments triggered an up-regulation of the immune response, with the concomitant treatment being more effective; in this case all cytokines studied, with exception of NO, displayed enhanced concentrations and there was a higher number of peritoneal macrophages, which displayed reduced concentrations under melatonin therapy. We conclude that melatonin plays a pivotal role in up-regulating the Th1 immune response thus controlling parasite replication.

Pentoxifylline reduces pro-inflammatory and increases anti-inflammatory activity in patients with coronary artery disease - A randomized placebo-controlled study

The balance between different immunological stimuli is essential in the progression and stabilization of atherosclerotic plaques. Immune regulation has been suggested as potential target for the treatment of atherosclerotic disease. We sought to determine whether treatment with pentoxifylline, a phosphodiesterase inhibitor with immunomodulating properties, could reduce the pro-inflammatory response observed in patients with acute coronary syndromes (ACS) and increase anti-inflammatory activity. In a double-blind, prospective, placebo-controlled study, 64 patients with ACS were randomized to receive pentoxifylline 400 mg TID or placebo for 6 months. Analysis of the pro-inflammatory markers, Greactive protein (CRP), interleukin (IL)-6, IL-12, interferon-gamma and tumor necrosis factor (TNF)-alpha and the anti-inflammatory cytokines, transforming growth factor (TGF)-beta 1 and IL-10 were done at baseline, 1 and 6 months. Pentoxifylline treatment significantly reduced the adjusted levels of CRP and TNF-alpha compared to placebo after 6 months (P=0.04 and P < 0.01, respectively). IL-12 increase was significantly less pronounced with pentoxifylline (P=0.04). The levels of the anti-inflammatory cytokine, IL-10, also declined significantly less in the pentoxifylline group compared to placebo (P < 0.01) with a trend towards a higher increase of TGF-beta 1 in the former group (P=0.16). Pentoxifylline reduces pro-inflammatory and increases anti-inflammatory response in patients with ACS and may have beneficial clinical effects on cardiovascular events. (c) 2006 Elsevier Ireland Ltd. All rights reserved.