RATIONAL IGNORANCE IN LONG-RUN RISK MODELS

We document an unpleasant feature of Epstein-Zin preferences in a stylized model economy of the long-run risk type now widespread in Asset Pricing: Agents with preference parameters commonly described as indicating a "preference for early resolution of uncertainty" achieve higher utility levels if they can commit to ignoring information on the state of the business cycle. For parameter choices similar to those used to explain asset prices, an agent can achieve utility gains equivalent to a more than 40 % increase in life-time consumption by committing to ignore information on the trend growth rate of the endowment good. We show that opting for such a coarser information set can be implemented and supported as an equilibrium strategy.Recursive preferences; Epstein-Zin preferences; Uncertainty aversion; Information processing; Time inconsistency

Can tax evasion tame Leviathan governments?

This paper looks at how income tax rates, consumption and public spending respond as venues for tax evasion open or close. The analysis draws on a 16-generation OLG model in which tax rates are determined in a repeated game between voters and a rent-seeking Leviathan government. Key insights are: (1) Effects on any generation alive when change takes place may differ substantially from steady state effects that accrue for generations yet to be born. (2) There is considerable intergenerational diversity in these effects that is not monotonous as we move from young to old. Combined, these results suggest that the political economy of pertinent institutional change may be quite complex.Leviathan government, income tax, tax evasion, public spending, rent seeking

Information processing with recursive utility: some intriguing results

We study information processing in a simple endowment economy where the mean consumption growth rate are governed by a hidden state variable and agents have recursive preferences. We show that for typical parameter values, there is a strong incentive to commit to ignoring future information on the state of the economy, but that such commitment raises time-inconsistency problems. We estimate the model on postwar US data and find that the representative consumer can achieve a utility gain equivalent to a 20% increase in lifetime consumption simply by not paying attention to the state of the economy.Recursive preferences, Epstein-Zin preferences, Uncertainty aversion,Information processing, Time inconsistency

Information Quality and Stock Returns Revisited

Building on the seminal work of Veronesi (2000), we investigate the relationship between the quality of information on the state of the economy and equity risk premium. In this, we use a setup where investors have Epstein-Zin preferences and the economy switches between booms and recessions at random intervals (Hamilton, 1989). Calibrating the model to fit the business cycle patterns in the US postwar data, we are able to establish two key results: First, as conjectured in the existing literature, we demonstrate that investors with high intertemporal elasticity of substitution will require lower excess returns for holding stocks if they are provided with better information on the state of the economy. Second, and even more interesting (since not predicted in the literature), we find that this will also hold for investors with a moderate elasticity of intertemporal substitution if they are moderately risk averse.

Teaching Real Business Cycles to Undergraduates

We start by reviewing the graphical approach to teaching the real business cycle model introduced in Barro (1984). We then look at where this approach cuts corners and suggest refinements. Finally, graphical and exact models are compared by means of impulse response functions. The graphical models yield reliable qualitative results. Sizable quantitative differences exist, but these can partly be remedied by adding appropriate refinements. Used by experienced instructors the graphical analysis of the real business cycle equips students with a first understanding of the economy‘s supply side and generates results that will survive closer scrutiny later in the curriculum.Undergraduate teaching, macroeconomics, real business cycles, fluctuations

Can tax evasion tame Leviathan governments?

This paper asks to what extent institutional features that facilitate tax evasion may keep Leviathan governments at bay. The specific feature we look at is banking secrecy abroad. The analysis draws on a 16-generation OLG model in which tax rates are determined in a repeated game between voters and a rent-seeking Leviathan government. Key insights are: (1)Effects on any generation alive when change takes place may differ substantially from steady-state effects that accrue for generations yet to be born. (2)There is considerable intergenerational diversity in these effects that is not monotonic as we move from young to old. Combined, these results suggest that the political economy of pertinent institutional change may be quite comple

TWENTY-FIVE YEARS OF NOKOBIT – A BIBLIOMETRIC STUDY OF IMPACT

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Effects of the Autophagy-Inhibiting Agent Chloroquine on Acute Myeloid Leukemia Cells; Characterization of Patient Heterogeneity

Autophagy is a highly conserved cellular degradation process that prevents cell damage and promotes cell survival, and clinical efforts have exploited autophagy inhibition as a therapeutic strategy in cancer. Chloroquine is a well-known antimalarial agent that inhibits late-stage autophagy. We evaluated the effects of chloroquine on cell viability and proliferation of acute myeloid leukemia acute myeloid leukemia (AML) cells derived from 81 AML patients. Our results show that chloroquine decreased AML cell viability and proliferation for the majority of patients. Furthermore, a subgroup of AML patients showed a greater susceptibility to chloroquine, and using hierarchical cluster analysis, we identified 99 genes upregulated in this patient subgroup, including several genes related to leukemogenesis. The combination of chloroquine with low-dose cytarabine had an additive inhibitory effect on AML cell proliferation. Finally, a minority of patients showed increased extracellular constitutive mediator release in the presence of chloroquine, which was associated with strong antiproliferative effects of chloroquine as well as cytarabine. We conclude that chloroquine has antileukemic activity and should be further explored as a therapeutic drug against AML in combination with other cytotoxic or metabolic drugs; however, due to the patient heterogeneity, chloroquine therapy will probably be effective only for selected patients.publishedVersio

Vacuolar ATPase Is a Possible Therapeutic Target in Acute Myeloid Leukemia: Focus on Patient Heterogeneity and Treatment Toxicity

Vacuolar ATPase (V-ATPase) is regarded as a possible target in cancer treatment. It is expressed in primary acute myeloid leukemia cells (AML), but the expression varies between patients and is highest for patients with a favorable prognosis after intensive chemotherapy. We therefore investigated the functional effects of two V-ATPase inhibitors (bafilomycin A1, concanamycin A) for primary AML cells derived from 80 consecutive patients. The V-ATPase inhibitors showed dose-dependent antiproliferative and proapoptotic effects that varied considerably between patients. A proteomic comparison of primary AML cells showing weak versus strong antiproliferative effects of V-ATPase inhibition showed a differential expression of proteins involved in intracellular transport/cytoskeleton functions, and an equivalent phosphoproteomic comparison showed a differential expression of proteins that regulate RNA processing/function together with increased activity of casein kinase 2. Patients with secondary AML, i.e., a heterogeneous subset with generally adverse prognosis and previous cytotoxic therapy, myeloproliferative neoplasia or myelodysplastic syndrome, were characterized by a strong antiproliferative effect of V-ATPase inhibition and also by a specific mRNA expression profile of V-ATPase interactome proteins. Furthermore, the V-ATPase inhibition altered the constitutive extracellular release of several soluble mediators (e.g., chemokines, interleukins, proteases, protease inhibitors), and increased mediator levels in the presence of AML-supporting bone marrow mesenchymal stem cells was then observed, especially for patients with secondary AML. Finally, animal studies suggested that the V-ATPase inhibitor bafilomycin had limited toxicity, even when combined with cytarabine. To conclude, V-ATPase inhibition has antileukemic effects in AML, but this effect varies between patients.publishedVersio