The Dutch disease and its neutralization: a Ricardian approach

The Dutch disease is a major market failure originated in the existence of cheap and abundant natural or human resources that keep overvalued the currency of a country for an undetermined period of time, thus turning non profitable the production of tradable goods using technology in the state-of-the-art. It is an obstacle to growth on the demand side, because it limits investment opportunities. The severity of the Dutch disease varies according to the extent of the Ricardian rents involved, i.e., according to the difference between two exchange rate equilibriums: the ‘current’ or market rate and the ‘industrial’ rate - the one that make viable efficient tradable industries. Its main symptoms, besides overvalued currency, are low rates of growth of the manufacturing industry, artificially high real wages, and unemployment. Its neutralization requires managing the exchange rate. The principal instrument for that is a sales or export tax on the commodities that give origin to the Dutch disease. In order to neutralize it policymakers face major political obstacles since it involves taxing exports and reducing wages. Finally, this papers argues that there is an extended concept of Dutch disease: besides having its origin in natural resources, it may arise from cheap labor provided that the ‘wage spread’ in the developing country is considerably larger than in the developed one - a condition that is usually present.

A graphic explanation on how a tax on exports neutralizes the Dutch disease without costs to exporters

The adequate way of neutralizing the Dutch disease is the imposition of a variable tax on the export of the commodity that originates the disease. If such tax is equivalent to the "size" of the Dutch disease, it will shifts to the right its supply curve of the commodity in relation to the exchange rate, giving the existing domestic supply and the international demand, the exchange rate will depreciate at the value of the tax, and the equilibrium exchange rate will move from the "current" to the "industrial" equilibrium.

The value of the exchange rate and the Dutch disease

This paper revisits the original (2008) paper on the Dutch disease, which defined it by the existence of two exchange rate equilibriums (the current and the industrial exchange rate equilibriums). Its novelty is in claiming that, as we have a value and a market price for each good or service, we also have a value and a market price for foreign money. The value is the cost plus reasonable profit corresponding to the exchange rate that makes competitive the country's competent business enterprises; the nominal exchange rates floats around the value according to the demand and supply of foreign money. This basic distinction of the exchange rate in terms of value and in terms of price allows us to understand that the two equilibriums are defined in value terms, and opens room for a clear distinction of the policies that affect the value from the ones that affect the market price of the exchange rate.

The effects of commodity dependence on the brazilian economy: a test of the dutch disease hypothesis

A doença holandesa tornou-se amplamente conhecida na década de 1960, quando a descoberta repentina de reservatórios de gás natural em território holandês, na região do mar do norte, transformou o país em uma economia rica em recursos. A desagradável consequência que proveio da recém-adquirida abundância de commodities foi o declínio da próspera indústria holandesa, que perdeu sua competitividade devido à valorização do florim holandês, como consequência do aumento do influxo de capital estrangeiro no país. Desde então este fenômeno tem sido observado em diversos países que possuem abundância de commodities. O objetivo desta tese é aplicar o modelo da doença holandesa ao Brasil, já que a maior economia da América latina poderá também ter de encarar a ameaça de se tornar prisioneira da “armadilha das commodities”, devido à sua abundância de recursos naturais. O autor revisa a bibliografia básica abordando o tema geral da doença holandesa e dá enfoque a estudos realizados anteriormente no Brasil. Além disso, os quatro maiores sintomas que caracterizam a doença holandesa são testados: (1) valorização das taxas de câmbio do real, (2) declínio do setor industrial, (3) crescimento do setor de serviços, e (4) aumento dos salários. Todos estes sintomas foram observados e podem ser comprovados através das abordagens de cointegração ou de correlação, com exceção do sintoma número dois. Ainda que estes resultados sejam significativos, há muito outros fatores determinantes que influenciam o desenvolvimento dos sintomas examinados, motivo pelo qual futuros estudos serão necessários para se obtiver conclusões definitivas sobre como o Brasil é afetado pela doença holandesa.

How to neutralize the adverse developmental effects of the Dutch disease?

This paper addresses the subject of the adverse developmental effects of the Dutch disease: the theory, the experience of Latin America over the last decade, and the economic policy management issues on what to do about it.

A bibliography of the Dutch elm disease,

"A revised and expanded edition of a similar list mimeographed in February 1935."

A list of references to literature on the Dutch elm disease.

Mode of access: Internet.

Vitamin E but not 17B-estradiol protect against vascular toxicity induced by B-amyloid wild type and the Dutch amyploid variant

Amyloid β-peptide (Aβ) fibril deposition on cerebral vessels produces cerebral amyloid angiopathy that appears in the majority of Alzheimer's disease patients. An early onset of a cerebral amyloid angiopathy variant called hereditary cerebral hemorrhage with amyloidosis of the Dutch type is caused by a point mutation in Aβ yielding AβGlu22→Gln. The present study addresses the effect of amyloid fibrils from both wild-type and mutated Aβ on vascular cells, as well as the putative protective role of antioxidants on amyloid angiopathy. For this purpose, we studied the cytotoxicity induced by Aβ1–40 Glu22→Gln and Aβ1–40 wild-type fibrils on human venule endothelial cells and rat aorta smooth muscle cells. We observed that AβGlu22→Gln fibrils are more toxic for vascular cells than the wild-type fibrils. We also evaluated the cytotoxicity of Aβ fibrils bound with acetylcholinesterase (AChE), a common component of amyloid deposits. Aβ1–40 wild-type–AChE fibrillar complexes, similar to neuronal cells, resulted in an increased toxicity on vascular cells. Previous reports showing that antioxidants are able to reduce the toxicity of Aβ fibrils on neuronal cells prompted us to test the effect of vitamin E, vitamin C, and 17β-estradiol on vascular damage induced by Aβwild-type and AβGlu22→Gln. Our data indicate that vitamin E attenuated significantly the Aβ-mediated cytotoxicity on vascular cells, although 17β-estradiol and vitamin C failed to inhibit the cytotoxicity induced by Aβ fibrils.

Mining and Energy Boom, Dutch Disease and Informality in Colombia: a DSGE Approach

The paper develops a Dynamic Stochastic General Equilibrium (DSGE) model, which assesses the macroeconomic and labor market effects derived from simulating a positive shock to the stochastic component of the mining-energy sector productivity. Calibrating the model for the Colombian economy, this shock generates a whole increase in formal wages and a raise in tax revenues, expanding total consumption of the household members. These facts increase non-tradable goods prices relative to tradable goods prices, then real exchange rate decreases (appreciation) and occurs a displacement of productive resources from the tradable (manufacturing) sector to the non-tradable sector, followed by an increase in formal GDP and formal job gains. This situation makes the formal sector to absorb workers from the informal sector through the non-tradable formal subsector, which causes informal GDP to go down. As a consequence, in the net consumption falls for informal workers, which leads some members of the household not to offer their labor force in the informal sector but instead they prefer to keep unemployed. Therefore, the final result on the labor market is a decrease in the number of informal workers, of which a part are in the formal sector and the rest are unemployed.

Elemental composition changes in citrus affected by the CVC disease

The citrus variegated chlorosis (CVC) disease results in serious economical losses for the Brazilian citriculture. The influence of CVC disease on the elemental composition of citrus plants was investigated. Leaves of sweet orange varieties Hamlin, Pera Rio and Valencia were collected from healthy and CVC-affected trees for chemical characterization by instrumental neutron activation analysis (INAA). Significant differences between healthy and CVC-affected leaves were identified for Ca, Ce, Co, Eu, Fe, K, La, Na, Nd, Rb, Sc and Sm. Rare earth elements presented consistently higher mass fractions in the healthy leaves.

A transgenic mouse model that recapitulates the clinical features of both neonatal and adult forms of the skin disease epidermolytic hyperkeratosis

Keratins are the major structural proteins of keratinocytes, which are the most abundant cell type in the mammalian epidermis. Mutations in epidermal keratin genes have been shown to cause severe blistering skin abnormalities. One such disease, epidermolytic hyperkeratosis (EHK), also known as bullous congenital ichthyosiform erythroderma, occurs as a result of mutations in highly conserved regions of keratins K1 and K10. Patients with EHK first exhibit erythroderma with severe blistering, which later is replaced by thick patches of scaly skin. To assess the effect of a mutated K1 gene on skin biology and to produce an animal model for EHK, we removed 60 residues from the 2B segment of HK1 and observed the effects of its expression in the epidermis of transgenic mice. Phenotypes of the resultant mice closely resembled those observed in the human disease, first with epidermal blisters, then later with hyperkeratotic lesions. In neonatal mice homozygous for the transgene, the skin was thicker, with an increased labeling index, and the spinous cells showed a collapse of the keratin filament network around the nuclei, suggesting that a critical concentration of the mutant HK1, over the endogenous MK1, was required to disrupt the structural integrity of the spinous cells. Additionally, footpad epithelium, which is devoid of hair follicles, showed blistering in the spinous layer, suggesting that hair follicles can stabilize or protect the epidermis from trauma. Blisters were not evident in adult mice, but instead they showed a thick, scaly hyperkeratotic skin with increased mitosis, resulting in an increased number of corneocytes and granular cells. Irregularly shaped keratohyalin granules were also observed. To date, this is the only transgenic model to show the typical morphology found in the adult form of EHK.

KISS1R Intracellular Trafficking and Degradation: Effect of the Arg386Pro Disease-Associated Mutation

The goal of this study was to investigate how the Arg386Pro mutation prolongs KiSS-1 receptor (KISS1R) responsiveness to kisspeptin, contributing to human central precocious puberty. Confocal imaging showed colocalization of wild-type (WT) KISS1R with a membrane marker, which persisted for up to 5 h of stimulation. Conversely, no colocalization with a lysosome marker was detected. Also, overnight treatment with a lysosome inhibitor did not affect WT KISS1R protein, whereas overnight treatment with a proteasome inhibitor increased protein levels by 24-fold. WT and Arg386Pro KISS1R showed time-dependent internalization upon stimulation. However, both receptors were recycled back to the membrane. The Arg386Pro mutation did not affect the relative distribution of KISS1R in membrane and internalized fractions when compared to WT KISS1R for up to 120 min of stimulation, demonstrating that this mutation does not affect KISS1R trafficking rate. Nonetheless, total Arg386Pro KISS1R was substantially increased compared with WT after 120 min of kisspeptin stimulation. This net increase was eliminated by blockade of detection of recycled receptors, demonstrating that recycled receptors account for the increased responsiveness of this mutant to kisspeptin. We therefore conclude the following: 1) WT KISS1R is degraded by proteasomes rather than lysosomes; 2) WT and Arg386Pro KISS1R are internalized upon stimulation, but most of the internalized receptors are recycled back to the membrane rather than degraded; 3) the Arg386Pro mutation does not affect the rate of KISS1R trafficking-instead, it prolongs responsiveness to kisspeptin by decreasing KISS1R degradation, resulting in the net increase on mutant receptor recycled back to the plasma membrane.(Endocrinology 152: 1616-1626,2011)

Development of disabled, replication-defective gene transfer vectors from the Jembrana disease virus, a new infectious agent of cattle

Jembrana disease virus (JDV) is a newly isolated and characterised bovine lentivirus. It causes an acute disease in Ball cattle (Bos javanicus). which can be readily transmitted to susceptible cattle with 17% mortality. There is as yet no treatment or preventive vaccine. We have developed a gene transfer vector system based on JDV that has three components. The first of the components is a bicistronic transfer vector plasmid that was constructed to contain cis-sequences from the JDV genome, including 5 '- and 3 ' -long terminal repeats (LTRs), 0.4 kb of truncated gag and 1.1 kb of 3 ' -env, a multiple cloning site to accommodate the gene(s) of interest for transfer, and an internal ribosome entry site plus the neomycin phosphotransferase (Neo) gene cassette for antibiotic selection. The second element is a packaging plasmid that contains trans-sequences. including gag, pol. vif, tar and rev: but without the env and packaging signals. The third is a plasmid encoding the G glycoprotein of vesicular stomatitis virus (VSV-G) to supply the vector an envelope for pseudotyping. Cotransfection of 293T cells with these three plasmid components produced VSV-G pseudotyped. disabled, replication defective, bicistronic JDV vectors encoding the green fluorescent protein (EGFP) and the Neo resistance selection maker simultaneously with a titre range of (0.4-1.2) x 10(6) CFU/ml. Transduction of several replicating primary and transformed cells from cattle, primate and human sources and importantly growth-arrested cells with the JDV vectors showed high efficiency of EGFP gene transfer at 35-75%, which was stable and the expression of EGFP was long term. Furthermore, these JDV vectors were designed to suit the inclusion and expression of genes corresponding to JDV specific proteins, such as gag or env, for the development of vaccines for Jembrana disease. This strategy should also be applicable to other bovine diseases as wall. The design and construction of the JDV vector system should facilitate the study of the lentivirology and pathogenesis of the diseases associated with JDV or other bovine virus infections. To our knowledge, this is the first such vector system developed from a cattle virus. (C) 2001 Elsevier Science B.V. All rights reserved.

Long-term memory in financial prices: evidence from the Dutch stock market returns

Prepared for presentation at the Portuguese Finance Network International Conference 2014, Vilamoura, Portugal, June 18-20