Exchange rate volatility and noise traders: Currency Transaction Tax as an eviction device

The aim of the paper is to identify the impact of the currency transaction tax on the foreign exchange structure and thus its impact on exchange rate volatility. In a noise trading framework a la Jeanne and Rose (2002), we explain that the exchange rate volatility depends on fundamentals volatility and extra volatility due to the behaviour of noise traders. The exchange rate volatility is lower after introducing a Currency Transaction Tax as it increases the entry cost of noise traders and influences the range of possible equilibria. While there are multiple equilibria of exchange rate volatility without Currency Tax, there are only two aggregate exchange rate volatility corner equilibria after introducing a CTT. One of them is a low exchange rate volatility equilibrium. Moreover, we prove analytically the existence of an optimal tax rate for which the exchange rate volatility depends solely on fundamentals variance. In this case, few noise traders enter the market and there is consequently a low excess volatility.

The environmental resource curse hypothesis: the forest case

The resource curse hypothesis relies on the resource-rich countries tendency to grow slower than resource-poor countries. Focusing on forest issues, this paper extends the resource curse hypothesis to environmental degradation: how do forest endowment and forest harvesting affect deforestation? Our empirical results show that countries with important forest cover and forestry sectors seem to deforest more than others, which supports the hypothesis of an environmental resource curse. Moreover, countries implied in important timber certification processes have lower deforestation levels.resource curse, tropical forest, deforestation

Misalignments and Dynamics of Real Exchange Rates in the CFA Franc Zone

In this paper, we analyse currencies' misalignments of the CFA zone countries and the adjustment process of their real effective exchange rates towards their equilibrium level over the period 1985-2007. To this end, we firstly estimate, using panel cointegration techniques, a long term relationship between the real effective exchange rate and economic fundamentals. Secondly, we estimate a panel smooth transition error correction model in order to take into account non linearities in the convergence process of real exchange rates towards their equilibrium level. Two main results emerge from our analysis. Firstly, the real appreciation of effective exchange rates in the CFA zone countries from the 2000s did not translate, in 2007, into a real overvaluation comparable to that occurring before the devaluation of the CFA franc in 1994. However, some countries are exceptions, indicating a strong heterogeneity within the CFA zone. Finally, the convergence process of real effective exchange rates towards their equilibrium level also differs substantially between country groups. These results tend to show the difficulty to apply a single exchange rate policy in the CFA zone and rather call for further coordination and policy harmonization between the countries.CFA zone, misalignments, panel smooth transition model

What does it take to grow out of recession? An error-correction approach towards growth convergence of European and transition countries

URL des Documents de travail : http://ces.univ-paris1.fr/cesdp/cesdp2016.htmlDocuments de travail du Centre d'Economie de la Sorbonne 2016.41 - ISSN : 1955-611XConsequences from the subsiding 2008 financial crisis on long-run economic growth are widely debated. Existing literature on previous recessions, such as Cerra and Saxena (2008), emphasizes the long-term loss inflicted on per capita GDP levels. This paper concentrates on typical business cycles in advanced European and transition countries and assumes that lower than normal growth during recessions is followed by a recovery period with above normal growth until the economy reaches its pre-crisis level. The objective is to assess the capacity to rebound, the speed of convergence towards a normal growth path as well as potential nonlinearities. Through exploiting the cointegration relationships among variables in long-run growth regressions and by employing a variety of panel error-correction models, results show a strong evidence of error-correction and different linear speed in the convergence process with the transition economies outpacing Western European countries. Our analysis is further extended into a Panel Smooth Transition Error-Correction Model (PSTR-ECM) to account for different regimes in convergence patterns according to a selection of transition variables. Whereas the velocity of convergence for European core countries exhibits a nonlinear pattern and differs with respect to price and flexibility, transition countries remain linear in their return to the growth trend. Ultimately, our results suggest that internal adjustments remain the key factors for both European and transition countries to recover from negative economic growth shocks

Natural resource curse: a non linear approach in a panel of oil exporting countries

This paper explores the idea of regime switching as a new methodological approach to bring new insights into the natural resource curse hypothesis in the case of oil exporting countries. The basic idea is that when a threshold of oil dependence is passed, the relationship between economic growth and its determinants could move smoothly from a regime to another. Relying upon the estimation of a PSTR model, our findings offer strong evidence that oil revenues non-linearly impacts economic growth and that resource curse only exists under the condition of high oil dependence. More precisely, below the level of 51% of oil dependence, oil revenues have a positive impact on economic growth, whereas above this level, it have serious drawbacks on economic growth through inefficiencies into the quality and the quantity of government expenditures

Natural resource curse: a non linear approach in a panel of oil exporting countries

This paper explores the idea of regime switching as a new methodological approach to bring new insights into the natural resource curse hypothesis in the case of oil exporting countries. The basic idea is that when a threshold of oil dependence is passed, the relationship between economic growth and its determinants could move smoothly from a regime to another. Relying upon the estimation of a PSTR model, our findings offer strong evidence that oil revenues non-linearly impacts economic growth and that resource curse only exists under the condition of high oil dependence. More precisely, below the level of 51% of oil dependence, oil revenues have a positive impact on economic growth, whereas above this level, it have serious drawbacks on economic growth through inefficiencies into the quality and the quantity of government expenditures

Currency Transaction Tax Elasticity: an Econometric Estimation

This article endeavours to measure the elasticity of the volume of the currency exchange transactions to a tax on them. The analysis is principally based on cointegration techniques. This paper is the first attempt to estimate the influence of a currency transaction tax on the foreign exchange market volume trading. The econometric estimations suggest that the forex trading volume could be significantly reduced by a Tobin tax. Nevertheless, elasticities are heterogeneous with respect to the currency pairs: the largest elasticities are the euro/dollar and sterling/dollar currency pairs that are also the most traded exchange parities. The values of the estimates are lower when the SURE (Seemingly Unrelated Regression Equations) estimator is used than when the panel estimation is implemented

Functional mechanisms underlying pleiotropic risk alleles at the 19p13.1 breast-ovarian cancer susceptibility locus

A locus at 19p13 is associated with breast cancer (BC) and ovarian cancer (OC) risk. Here we analyse 438 SNPs in this region in 46,451 BC and 15,438 OC cases, 15,252 BRCA1 mutation carriers and 73,444 controls and identify 13 candidate causal SNPs associated with serous OC (P=9.2 × 10-20), ER-negative BC (P=1.1 × 10-13), BRCA1-associated BC (P=7.7 × 10-16) and triple negative BC (P-diff=2 × 10-5). Genotype-gene expression associations are identified for candidate target genes ANKLE1 (P=2 × 10-3) and ABHD8 (P<2 × 10-3). Chromosome conformation capture identifies interactions between four candidate SNPs and ABHD8, and luciferase assays indicate six risk alleles increased transactivation of the ADHD8 promoter. Targeted deletion of a region containing risk SNP rs56069439 in a putative enhancer induces ANKLE1 downregulation; and mRNA stability assays indicate functional effects for an ANKLE1 3′-UTR SNP. Altogether, these data suggest that multiple SNPs at 19p13 regulate ABHD8 and perhaps ANKLE1 expression, and indicate common mechanisms underlying breast and ovarian cancer risk

The FANCM:p.Arg658* truncating variant is associated with risk of triple-negative breast cancer

Abstract: Breast cancer is a common disease partially caused by genetic risk factors. Germline pathogenic variants in DNA repair genes BRCA1, BRCA2, PALB2, ATM, and CHEK2 are associated with breast cancer risk. FANCM, which encodes for a DNA translocase, has been proposed as a breast cancer predisposition gene, with greater effects for the ER-negative and triple-negative breast cancer (TNBC) subtypes. We tested the three recurrent protein-truncating variants FANCM:p.Arg658*, p.Gln1701*, and p.Arg1931* for association with breast cancer risk in 67,112 cases, 53,766 controls, and 26,662 carriers of pathogenic variants of BRCA1 or BRCA2. These three variants were also studied functionally by measuring survival and chromosome fragility in FANCM−/− patient-derived immortalized fibroblasts treated with diepoxybutane or olaparib. We observed that FANCM:p.Arg658* was associated with increased risk of ER-negative disease and TNBC (OR = 2.44, P = 0.034 and OR = 3.79; P = 0.009, respectively). In a country-restricted analysis, we confirmed the associations detected for FANCM:p.Arg658* and found that also FANCM:p.Arg1931* was associated with ER-negative breast cancer risk (OR = 1.96; P = 0.006). The functional results indicated that all three variants were deleterious affecting cell survival and chromosome stability with FANCM:p.Arg658* causing more severe phenotypes. In conclusion, we confirmed that the two rare FANCM deleterious variants p.Arg658* and p.Arg1931* are risk factors for ER-negative and TNBC subtypes. Overall our data suggest that the effect of truncating variants on breast cancer risk may depend on their position in the gene. Cell sensitivity to olaparib exposure, identifies a possible therapeutic option to treat FANCM-associated tumors

An original phylogenetic approach identified mitochondrial haplogroup T1a1 as inversely associated with breast cancer risk in BRCA2 mutation carriers

Introduction: Individuals carrying pathogenic mutations in the BRCA1 and BRCA2 genes have a high lifetime risk of breast cancer. BRCA1 and BRCA2 are involved in DNA double-strand break repair, DNA alterations that can be caused by exposure to reactive oxygen species, a main source of which are mitochondria. Mitochondrial genome variations affect electron transport chain efficiency and reactive oxygen species production. Individuals with different mitochondrial haplogroups differ in their metabolism and sensitivity to oxidative stress. Variability in mitochondrial genetic background can alter reactive oxygen species production, leading to cancer risk. In the present study, we tested the hypothesis that mitochondrial haplogroups modify breast cancer risk in BRCA1/2 mutation carriers. Methods: We genotyped 22,214 (11,421 affected, 10,793 unaffected) mutation carriers belonging to the Consortium of Investigators of Modifiers of BRCA1/2 for 129 mitochondrial polymorphisms using the iCOGS array. Haplogroup inference and association detection were performed using a phylogenetic approach. ALTree was applied to explore the reference mitochondrial evolutionary tree and detect subclades enriched in affected or unaffected individuals. Results: We discovered that subclade T1a1 was depleted in affected BRCA2 mutation carriers compared with the rest of clade T (hazard ratio (HR) = 0.55; 95% confidence interval (CI), 0.34 to 0.88; P = 0.01). Compared with the most frequent haplogroup in the general population (that is, H and T clades), the T1a1 haplogroup has a HR of 0.62 (95% CI, 0.40 to 0.95; P = 0.03). We also identified three potential susceptibility loci, including G13708A/rs28359178, which has demonstrated an inverse association with familial breast cancer risk. Conclusions: This study illustrates how original approaches such as the phylogeny-based method we used can empower classical molecular epidemiological studies aimed at identifying association or risk modification effects.Peer reviewe