Liquidity, term spreads and monetary policy

We propose a model that delivers endogenous variations in term spreads driven primarily by banks' portfolio decision and their appetite to bear the risk of maturity transformation. We first show that fluctuations of the future profitability of banks' portfolios affect their ability to cover for any liquidity shortage and hence influence the premium they require to carry maturity risk. During a boom, profitability is increasing and thus spreads are low, while during a recession profitability is decreasing and spreads are high, in accordance with the cyclical properties of term spreads in the data. Second, we use the model to look at monetary policy and show that allowing banks to sell long-term assets to the central bank after a liquidity shock leads to a sharp decrease in long-term rates and term spreads. Such interventions have significant impact on long-term investment, decreasing the amplitude of output responses after a liquidity shock. The short-term rate does not need to be decreased as much and inflation turns out to be much higher than if no QE interventions were implemented. Finally, we provide macro and micro-econometric evidence for the U.S. confirming the importance of expected financial business profitability in the determination of term spread fluctuations

Lending relationships and monetary policy

Financial intermediation and bank spreads are important elements in the analysis of business cycle transmission and monetary policy. We present a simple framework that introduces lending relationships, a relevant feature of financial intermediation that has been so far neglected in the monetary economics literature, into a dynamic stochastic general equilibrium model with staggered prices and cost channels. Our main findings are: (i) banking spreads move countercyclically generating amplified output responses, (ii) spread movements are important for monetary policy making even when a standard Taylor rule is employed (iii) modifying the policy rule to include a banking spread adjustment improves stabilization of shocks and increases welfare when compared to rules that only respond to output gap and inflation, and finally (iv) the presence of strong lending relationships in the banking sector can lead to indeterminacy of equilibrium forcing the central bank to react to spread movements

Investment cost channel and monetary transmission

We show that a standard DSGE model with investment cost channels has important model stability and policy implications. Our analysis suggests that in economies characterized by supply side well as demand side channels of monetary transmission, policymakers may have to resort to a much more aggressive stand against inflation to obtain locally unique equilibrium. In such an environment targeting output gap may cause model instability. We also show that it is difficult to distinguish between the New Keynesian model and labor cost channel only case, while with investment cost channel differences are more significant. This result is important as it suggests that if one does not take into account the investment cost channel, one is underestimating the importance of supply side effects

Liquidity effects and cost channels in monetary transmission

We study liquidity effects and cost channels within a model of nominal rigidities and imperfect competition that gives explicit role for money-credit markets and investment decisions. We find that cost channels matter for monetary transmission, amplifying the impact of supply shocks and dampening the effects of demand shocks. Liquidity effects only obtain when the policy is specified by an interest rate policy rule and money-credit conditions are determined endogenously. We also find that determinacy issues are particularly relevant when models include the cost channel and explicit money-credit markets

Phenomenology of the minimal B-L extension of the Standard Model

We present the Large Hadron Collider (LHC) discovery potential in the $Z'$ and heavy neutrino sectors of a $U(1)_{B-L}$ enlarged Standard Model also encompassing three heavy Majorana neutrinos. This model exhibits novel signatures at the LHC, the most interesting arising from a $Z'$ decay chain involving heavy neutrinos, eventually decaying into leptons and jets. In particular, this signature allows one to measure the $Z'$ and heavy neutrino masses involved. In addition, over a large region of parameter space, the heavy neutrinos are rather long-lived particles producing distinctive displaced vertices that can be seen in the detectors. Lastly, the simultaneous measurement of both the heavy neutrino mass and decay length enables an estimate of the absolute mass of the parent light neutrino. For completeness, we will also compare the LHC and a future Linear Collider (LC) discovery potentials.Comment: 4 pages, no figures. LaTeX. Talk given at "The 2009 Europhysics Conference on High Energy Physics", Krakow, Poland, July 16-22, 200

Holocene palaeoceanographic evolution of the Iskenderun bay, South-Eastern Turkey, as a response to river mouth diversions and human impact

A quantitative study of benthic foraminifera, sediment texture and composition from two cores was performed to unravel the environmental evolution of the Iskenderun Bay (eastern Turkey) in the Holocene. Core 29 (NE Iskenderun Bay) consists of clay and silt from the top of the core down to 35 cm with dominant bioclasts (coral Cladocora caespitosa) from 35 cm down to the bottom of the core. Core 92, located near an ancient Ceyhan River mouth (Yumurtalik), consists of sandy and silty sediment passing to homogeneous clay and silt at about 48 cm from the top. Several grab samples show very coarse biogenic detritus covered by a centimetric veneer of sandy silt and clay. Radiocarbon dating of corals, molluscs and algae from core 29 and five selected grab samples, the sediment and foraminiferal study indicate that at least three pulses of muddy sedimentation occurred in the bay. (1) An older pulse (about 3700 yrs BP) related to the large-scale forest clearing (Beysheir Occupation Phase). (2) Another pulse coincides with a major delta progradation of the Ceyhan River at about 2140 years BP. (3) A younger pulse follows the diversion of the Ceyhan River mouth toward Yumurtalik, from the Middle Age to 1935.Species interpreted as tolerant of low salinity indicate that the influence of the Ceyhan was minor when the river drained directly into the Mediterranean Sea (approximately 2000 years BP) and progressively increased when the river diverted towards Yumurtalik

Medium-run implications of changing demographic structures for the macro-economy

While there may be an important, but transitory, cyclical component in the poor performance of the past decade, we will emphasise the secular forces: the impact of demographic structure and innovation. We draw on the empirical and theoretical work reported in Aksoy, Basso, Smith and Grasl (2015), ABSG, about the impact of changes in demographic structure on macroeconomic outcomes. This suggests that changes in age profile not only have significant implications for savings, investment, real interest rates and growth but also for innovation. The size of the effects seems plausible. For instance, if in 2015 the UK had the 1970 age structure, it would have added 0.68 percentage points to the long-run annual growth rate. The model suggests that the population ageing predicted for the next decades will tend to reduce output growth and real interest rates across OECD countries

SMAD4 loss enables EGF, TGF\u3b21 and S100A8/A9 induced activation of critical pathways to invasion in human pancreatic adenocarcinoma cells

Epidermal Growth Factor (EGF) receptor overexpression, KRAS, TP53, CDKN2A and SMAD4 mutations characterize pancreatic ductal adenocarcinoma. This mutational landscape might influence cancer cells response to EGF, Transforming Growth Factor \u3b21 (TGF\u3b21) and stromal inflammatory calcium binding proteins S100A8/A9. We investigated whether chronic exposure to EGF modifies in a SMAD4-dependent manner pancreatic cancer cell signalling, proliferation and invasion in response to EGF, TGF\u3b21 and S100A8/A9. BxPC3, homozigously deleted (HD) for SMAD4, and BxPC3-SMAD4+ cells were or not stimulated with EGF (100 ng/mL) for three days. EGF pre-treated and non pretreated cells were stimulated with a single dose of EGF (100 ng/mL), TGF\u3b21 (0,02 ng/mL), S100A8/A9 (10 nM). Signalling pathways (Reverse Phase Protein Array and western blot), cell migration (Matrigel) and cell proliferation (XTT) were evaluated. SMAD4 HD constitutively activated ERK and Wnt/\u3b2-catenin, while inhibiting PI3K/AKT pathways. These effects were antagonized by chronic EGF, which increased p-BAD (anti-apoptotic) in response to combined TGF\u3b21 and S100A8/A9 stimulation. SMAD4 HD underlied the inhibition of NF-\u3baB and PI3K/AKT in response to TGF\u3b21 and S100A8/A9, which also induced cell migration. Chronic EGF exposure enhanced cell migration of both BxPC3 and BxPC3-SMAD4+, rendering the cells less sensitive to the other inflammatory stimuli. In conclusion, SMAD4 HD is associated with the constitutive activation of the ERK and Wnt/\u3b2-catenin signalling pathways, and favors the EGF-induced activation of multiple signalling pathways critical to cancer proliferation and invasion. TGF\u3b21 and S100A8/A9 mainly inhibit NF-\u3baB and PI3K/AKT pathways and, when combined, sinergize with EGF in enhancing anti-apoptotic p-BAD in a SMAD4-dependent manner