The lessons from QE and other 'unconventional' monetary policies - evidence from the Bank of England

This paper investigates the effectiveness of the ‘quantitative easing’ policy, as implemented by the Bank of England in March 2009. Similar policies had been previously implemented in Japan, the U.S. and the Eurozone. The effectiveness is measured by the impact of Bank of England policies (including, but not limited to QE) on nominal GDP growth – the declared goal of the policy, according to the Bank of England. Unlike the majority of the literature on the topic, the general-to-specific econometric modeling methodology (a.k.a. the ‘Hendry’ or ‘LSE’ methodology) is employed for this purpose. The empirical analysis indicates that QE as defined and announced in March 2009 had no apparent effect on the UK economy. Meanwhile, it is found that a policy of ‘quantitative easing’ defined in the original sense of the term (Werner, 1994) is supported by empirical evidence: a stable relationship between a lending aggregate (disaggregated M4 lending, i.e. bank credit for GDP transactions) and nominal GDP is found. The findings imply that BoE policy should more directly target the growth of bank credit for GDP-transactions

Human OTULIN haploinsufficiency impairs cell-intrinsic immunity to staphylococcal alpha-toxin

The molecular basis of interindividual clinical variability upon infection with Staphylococcus aureus is unclear. We describe patients with haploinsufficiency for the linear deubiquitinase OTULIN, encoded by a gene on chromosome 5p. Patients suffer from episodes of life-threatening necrosis, typically triggered by S. aureus infection. The disorder is phenocopied in patients with the 5p- (Cri-du-Chat) chromosomal deletion syndrome. OTULIN haploinsufficiency causes an accumulation of linear ubiquitin in dermal fibroblasts, but tumor necrosis factor receptor-mediated nuclear factor kappa B signaling remains intact. Blood leukocyte subsets are unaffected. The OTULIN-dependent accumulation of caveolin-1 in dermal fibroblasts, but not leukocytes, facilitates the cytotoxic damage inflicted by the staphylococcal virulence factor alpha-toxin. Naturally elicited antibodies against alpha-toxin contribute to incomplete clinical penetrance. Human OTULIN haploinsufficiency underlies life-threatening staphylococcal disease by disrupting cell-intrinsic immunity to alpha-toxin in nonleukocytic cells.Peer reviewe

Essais en Economie Financière

Le premier chapitre propose une théorie d'intermédiation financière, qui explique les raisons de la coexistence entre banques traditionnelles et banques de l'ombre ("shadow banks"). L'argument développé est que ces deux types de banques sont complémentaires, ce qui est dû leur interaction mutuellement bénéfique en temps de crise. Cet argument est cohérent avec certains faits stylisés de la crise financière que nous documentons. Le deuxième chapitre de cette thèse est constitué d’une exposition détaillée ainsi que d’une quantification des transferts entre différentes générations d'épargnants en assurance vie. Ces transferts donnent lieu à un partage de risque intergénérationnel, rendu possible par l'existence d'une friction de marché. Nous montrons que cette friction consiste en une compétition imparfaite entre assureurs vie. Le troisième chapitre de cette thèse expose les risques de liquidité auxquels sont sujettes les compagnies d'assurance vie en France, et étudie les décisions d'investissement qui en découlent. L'approche empirique basée sur les spécificités institutionnelles de l'assurance vie - les modalités de taxation des épargnants - met en évidence la causalité du risque de liquidité sur les choix d'investissement des assureurs vie. Le quatrième chapitre étudie les conditions sous lesquelles les entreprises choisissent d’entrer sur un nouveau marché via l'acquisition d'une entreprise existante (entrée externe) plutôt qu'en utilisant leurs ressources existantes (entrée interne). Nous montrons que les entreprises qui entrent sur un nouveau marché via une acquisition sont plutôt celles dont le capital humain est a priori inadapté pour ce marché.The first chapter presents a theory of the coexistence of traditional and shadow banks. We propose that the two bank types are complementary, because in a crisis, they interact in a mutually beneficial way. Our model is consistent with several facts from the 2007 financial crisis that we document. Chapter two provides a detailed analysis and quantification of the transfers between different generations of life insurance investors. These transfers create intergenerational risk-sharing that is enabled by a market friction. We show that this friction consists in imperfect competition among life insurers. The first chapter presents a theory of the coexistence of traditional and shadow banks. We propose that the two bank types are complementary, because in a crisis, they interact in a mutually beneficial way. Our model is consistent with several facts from the 2007 financial crisis that we document. Chapter two provides a detailed analysis and quantification of the transfers between different generations of life insurance investors. These transfers create intergenerational risk-sharing that is enabled by a market friction. We show that this friction consists in imperfect competition among life insurers. The third chapter analyzes liquidity risks in the French life insurance sector. Using institutional details on life insurance taxation in France, our empirical approach establishes a causal link between liquidity risk on the liability side of life insurers and their investment choices on the asset side. Chapter four studies firms' entry in a new market and the conditions under which a firm enters a new market by building on its existing resources (internal entry) or by acquiring a company already operating in this market (external entry). We find that firms entering a new market externally tend to be those whose human capital is not adequate for the new market

Intergenerational Risk Sharing in Life Insurance: Evidence from France

We study intergenerational risk sharing taking place in one of the most common retail investment products in Europe---life insurance savings contracts---focusing on the 1.4 trillion euro French market. Using regulatory and survey data, we show that contract returns are an order of magnitude less volatile than the returns of assets backing the contracts. Contract return smoothing is achieved using reserves that absorb fluctuations in asset returns and that generate intertemporal transfers across generations of investors. We estimate the average annual amount of intergenerational transfer at 1.4% of contract value, i.e., 17 billion euros per year or 0.8% of GDP. While theory asserts that intergenerational risk sharing cannot take place in competitive markets because it relies on non-exploited return predictability, we show that: (a)~contracts returns are indeed predictable; (b)~investor flows barely react to predictable returns; (c)~observed fees offset the estimated gain from exploiting contract return predictability

Lessons from the Bank of England on 'quantitative easing' and other 'unconventional' monetary policies

This paper investigates the effectiveness of the ‘quantitative easing’ policy, as officially implemented by the Bank of England since March 2009. A policy of the same name had previously been implemented in Japan, which serves as a reference. While the majority of the previous literature has measured the effectiveness of QE by its impact on interest rates, in this paper the effectiveness of all Bank of England policies, including QE, is measured by their impact on the declared goal of the QE policy, namely nominal GDP growth. Further, unlike other works on policy evaluation, in this paper we use the general-to-specific econometric modelling methodology (a.k.a. the ‘Hendry’ or ‘LSE’ methodology) in order to determine the relative importance of Bank of England policies, including QE. The empirical analysis indicates that QE as defined and announced in March 2009 had no apparent effect on the UK economy. Meanwhile, it is found that a policy of ‘quantitative easing’ as defined in the original sense of the term (Werner, 1995c) is supported by empirical evidence: a stable relationship between a lending aggregate (disaggregated M4 lending, singling out bank credit for GDP transactions) and nominal GDP is found. The findings imply that the central bank should more directly target the growth of bank credit for GDP-transactions, which was still contracting in late 2011. A number of measures exist to boost it, but they have hitherto not been taken

Invoicing Currency and Financial Hedging

International audienceWe examine the link between exporters' currency choices and their use of financial hedging instruments. Large firms are more likely to use hedging instruments, especially those pricing in a foreign currency. We provide suggestive evidence that access to hedging instruments increases the probability of pricing in a foreign currency. A model of invoicing currency choice augmented with hedging can rationalize these facts. In the model, large firms that would have chosen to price in their own currency in the absence of hedging instruments can decide to set prices in a foreign currency if they have access to such instruments

Association of Genomic Domains in BRCA1 and BRCA2 with Prostate Cancer Risk and Aggressiveness

Pathogenic sequence variants (PSV) in BRCA1 or BRCA2 (BRCA1/2) are associated with increased risk and severity of prostate cancer. We evaluated whether PSVs in BRCA1/2 were associated with risk of overall prostate cancer or high grade (Gleason 8þ) prostate cancer using an international sample of 65 BRCA1 and 171 BRCA2 male PSV carriers with prostate cancer, and 3,388 BRCA1 and 2,880 BRCA2 male PSV carriers without prostate cancer. PSVs in the 3 0 region of BRCA2 (c.7914þ) were significantly associated with elevated risk of prostate cancer compared with reference bin c.1001c.7913 [HR ¼ 1.78; 95% confidence interval (CI), 1.25–2.52; P ¼ 0.001], as well as elevated risk of Gleason 8þ prostate cancer (HR ¼ 3.11; 95% CI, 1.63–5.95; P ¼ 0.001). c.756-c.1000 was also associated with elevated prostate cancer risk (HR ¼ 2.83; 95% CI, 1.71–4.68; P ¼ 0.00004) and elevated risk of Gleason 8þ prostate cancer (HR ¼ 4.95; 95% CI, 2.12–11.54; P ¼ 0.0002). No genotype–phenotype associations were detected for PSVs in BRCA1. These results demonstrate that specific BRCA2 PSVs may be associated with elevated risk of developing aggressive prostate cancer