Financial distortions and the distribution of global volatility

Why are emerging economies excessively vulnerable to shocks to external funding? What was the role of financial flows from emerging to developed economies in setting the stage for the subprime crisis? This paper addresses these questions in a simple general equilibrium framework that emphasizes the aggregate implications of the misallocation of funds on the micro level. The analysis shows that the misallocation of funds amplifies volatility even in a closed economy. Financial integration between relatively distorted emerging economies and relatively undistorted developed economies leads to a further divergence in volatility, thereby providing a new and simple explanation for the divergent trends in output volatility up to the recent crisis. In the integrated environment, cheap funding leads to an endogenous deterioration of the financial system in developed economies. These predictions are consistent with a wide variety of microfoundations, in which distortions cause productive projects to be relatively more sensitive to aggregate shocks. The paper provides some empirical evidence for these microfoundations.Banks&Banking Reform,Emerging Markets,Debt Markets,Economic Theory&Research,Markets and Market Access

Financial distortions and the distribution of global volatility

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2011.Cataloged from PDF version of thesis.Includes bibliographical references.In this thesis, I study the interactions between various aspects of the financial system and macroeconomic volatility in a globally integrated environment. In Chapter 1, I illustrate that an efficient allocation of liquidity across projects mitigates the economy's responsiveness to global liquidity supply shocks. Emerging economies in which the allocation of liquidity is distorted serve as a buffer zone that insulates developed economies from shocks to global liquidity supply. This suggests that, when functioning properly, the financial system in the developed world increases its stability by facilitating the efficient allocation of liquidity. However, I illustrate that in a global environment in which funding is cheap, the financial system will endogenously deteriorate and cease to carryout this role effectively. The conclusion is twofold: first, an efficient allocation of liquidity has a stabilizing effect on macroeconomic fluctuations. Second, in a low interest rate environment, the economy cannot rely on the financial system to maintain the capacity to implement an efficient allocation. In Chapter 2, I suggest that intermediation need not be necessary in order to achieve an efficient allocation of liquidity; by setting an appropriately high tax on production or subsidy on unproductive savings, the government can manipulate the equilibrium prices of production inputs such that an efficient allocation of resources is achieved. Compared to the optimal policy benchmark, the equilibrium financial system absorbs too many productive resources. Further, the mere existence of a financial system induces unnecessary macroeconomic volatility in the form of liquidity shortages and surges in unemployment. I conclude that while the efficient allocation of liquidity is important both for the level of output and for output stability. financial intermediation is an inferior way to achieve it. In Chapter 3, I study the distributional implications of allowing for the intermediation of liquidity from developed to emerging economies. Liquidity suppliers from developed economies extract rents from supplying liquidity to constrained entrepreneurs in emerging markets. Financial integration is therefore associated with a regressive transfer of surplus from emerging to developed economies. Further, as input prices in emerging economies appreciate following the inflow of liquidity, producers in emerging economies become increasingly reliant on foreign liquidity; a sudden reluctance of foreigners to supply liquidity results in a drop in output and consumption. Financial integration therefore not only decreases equilibrium consumption in emerging economies., but also increases the volatility of consumption due to shocks to external funding.by Maya Rachel Eden.Ph.D

Transitoriness in cancer patients: a cross-sectional survey of lung and gastrointestinal cancer patients

Objective: Despite earlier diagnosis and advancements in treatment, cancer remains a leading cause of death in the world (13% of all deaths according to the World Health Organization) among men and women. Cancer accounts for approximately 20% of the deaths in the USA every year. Here, we report the findings from a cross-sectional survey of psychosocial factors in lung and gastrointestinal cancer patients. The aim of the study was to explore the associations among transitoriness, uncertainty, and locus of control (LOC) with quality of life. Transitoriness is defined as a person's confrontation with life's finitude due to a cancer diagnosis. Methods: A total of 126 patients with lung or gastrointestinal cancer completed eight self-reporting questionnaires addressing demographics, spiritual perspective, symptom burden, transitoriness, uncertainty, LOC, and quality of life. Results: Transitoriness, uncertainty, and LOC were significantly associated with one another (r = 0.3267, p = 0.0002/r = 0.1994, p = 0.0252, respectively). LOC/belief in chance has a significant inverse relationship with patients' quality of life (r = −0.2505, p = 0.0047). Transitoriness, uncertainty, and LOC were found to have a significant inverse relationship with patients' quality of life (transitoriness state: r = −0.5363, p = 0.0000/trait: r = −0.4629, p = 0.0000/uncertainty: r = −0.4929, p = 0.0000/internal LOC: r = 0.1759, p = 0.0489/chance LOC: r = −0.2505, p = 0.0047). Conclusion: Transitoriness, uncertainty, and LOC are important concepts as they adversely influence patients' quality of life. Incorporating this finding into the care of cancer patients may provide them with the support they need to cope with treatment and maintenance of a positive quality of lif

New Trade Models, Same Old Gains?

Micro-level data have had a profound influence on research in international trade over the last ten years. In many regards, this research agenda has been very successful. New stylized facts have been uncovered and new trade models have been developed to explain these facts. In this paper we investigate to what extent answers to new micro-level questions have affected answers to an old and central question in the field: how large are the welfare gains from trade? A crude summary of our results is: "So far, not much." (JEL F11, F12)

Identification of seipin-linked factors that act as determinants of a lipid droplet subpopulation

Functional heterogeneity within the lipid droplet (LD) pool of a single cell has been observed, yet the underlying mechanisms remain enigmatic. Here, we report on identification of a specialized LD subpopulation characterized by a unique proteome and a defined geographical location at the nucleus-vacuole junction contact site. In search for factors determining identity of these LDs, we screened similar to 6,000 yeast mutants for loss of targeting of the subpopulation marker Pdr16 and identified Ldo45 (LD organization protein of 45 kD) as a crucial targeting determinant. Ldo45 is the product of a splicing event connecting two adjacent genes (YMR147W and YMR148W/OSW5/LDO16). We show that Ldo proteins cooperate with the LD biogenesis component seipin and establish LD identity by defining positioning and surface-protein composition. Our studies suggest a mechanism to establish functional differentiation of organelles, opening the door to better understanding of metabolic decisions in cells

Effect of angiotensin-converting enzyme inhibitor and angiotensin receptor blocker initiation on organ support-free days in patients hospitalized with COVID-19

IMPORTANCE Overactivation of the renin-angiotensin system (RAS) may contribute to poor clinical outcomes in patients with COVID-19. Objective To determine whether angiotensin-converting enzyme (ACE) inhibitor or angiotensin receptor blocker (ARB) initiation improves outcomes in patients hospitalized for COVID-19. DESIGN, SETTING, AND PARTICIPANTS In an ongoing, adaptive platform randomized clinical trial, 721 critically ill and 58 non–critically ill hospitalized adults were randomized to receive an RAS inhibitor or control between March 16, 2021, and February 25, 2022, at 69 sites in 7 countries (final follow-up on June 1, 2022). INTERVENTIONS Patients were randomized to receive open-label initiation of an ACE inhibitor (n = 257), ARB (n = 248), ARB in combination with DMX-200 (a chemokine receptor-2 inhibitor; n = 10), or no RAS inhibitor (control; n = 264) for up to 10 days. MAIN OUTCOMES AND MEASURES The primary outcome was organ support–free days, a composite of hospital survival and days alive without cardiovascular or respiratory organ support through 21 days. The primary analysis was a bayesian cumulative logistic model. Odds ratios (ORs) greater than 1 represent improved outcomes. RESULTS On February 25, 2022, enrollment was discontinued due to safety concerns. Among 679 critically ill patients with available primary outcome data, the median age was 56 years and 239 participants (35.2%) were women. Median (IQR) organ support–free days among critically ill patients was 10 (–1 to 16) in the ACE inhibitor group (n = 231), 8 (–1 to 17) in the ARB group (n = 217), and 12 (0 to 17) in the control group (n = 231) (median adjusted odds ratios of 0.77 [95% bayesian credible interval, 0.58-1.06] for improvement for ACE inhibitor and 0.76 [95% credible interval, 0.56-1.05] for ARB compared with control). The posterior probabilities that ACE inhibitors and ARBs worsened organ support–free days compared with control were 94.9% and 95.4%, respectively. Hospital survival occurred in 166 of 231 critically ill participants (71.9%) in the ACE inhibitor group, 152 of 217 (70.0%) in the ARB group, and 182 of 231 (78.8%) in the control group (posterior probabilities that ACE inhibitor and ARB worsened hospital survival compared with control were 95.3% and 98.1%, respectively). CONCLUSIONS AND RELEVANCE In this trial, among critically ill adults with COVID-19, initiation of an ACE inhibitor or ARB did not improve, and likely worsened, clinical outcomes. TRIAL REGISTRATION ClinicalTrials.gov Identifier: NCT0273570

Optimal Ties in Contests

I analyze a mechanism design of a tournament in which the principal can strategically enhance the probability of a tie. The principal decides on a ”tie distance” and announces a rule according to which a tie is declared if the difference between the two contestants’ performances is within the tie distance. I show that the contestants’ equilibrium efforts do not depend on the prizes awarded in case of a tie. I find that there are cases in which the optimal mechanism has a positive tie distance.Tournament; Strategic ties