A system approach for measuring the euro area NAIRU

This paper addresses the issue of measuring the NAIRU for the euro area and assessing the robustness and precision of the obtained estimates. The empirical framework adopted is based on systems combining an Okun-type relationship between cyclical unemployment and the output gap with a Phillips curve and stochastic laws of motion for the NAIRU and potential output. Such systems have been estimated using Kalman-filter techniques. The aim of this approach is double: on the one hand, recent advances in the mentioned techniques are exploited, also with the aim of assessing the degree of uncertainty around the derived measures; on the other hand, the robustness of the approach is tested by looking at alternative versions of the systems themselves. The results obtained point to an estimate of the area-wide NAIRU that is robust to changes in the underlying models. This robustness is shown to hold both in terms of the mean - i.e., the shape of the resulting NAIRU - and the variance of the process. The latter is derived through bootstrap exercises using the models alone or pooled together. The evidence found suggests that the increase in the aggregate NAIRU that took place in the early part of the sample period has come to a halt and may be about to be reversed. The estimated final level for the NAIRU is around 10 per cent. Furthermore, the bootstrap exercises point to confidence bands close to 1 per cent around the estimated value. JEL Classification: C11, C15, E31, E32Bootstrap, Kalman filter, NAIRU, Unobserved Components

Alzheimer’s Disease as a Membrane Disorder: Spatial Cross-Talk Among Beta-Amyloid Peptides, Nicotinic Acetylcholine Receptors and Lipid Rafts

Biological membranes show lateral and transverse asymmetric lipid distribution. Cholesterol (Chol) localizes in both hemilayers, but in the external one it is mostly condensed in lipid-ordered microdomains (raft domains), together with saturated phosphatidyl lipids and sphingolipids (including sphingomyelin and glycosphingolipids). Membrane asymmetries induce special membrane biophysical properties and behave as signals for several physiological and/or pathological processes. Alzheimer’s disease (AD) is associated with a perturbation in different membrane properties. Amyloid-β (Aβ) plaques and neurofibrillary tangles of tau protein together with neuroinflammation and neurodegeneration are the most characteristic cellular changes observed in this disease. The extracellular presence of Aβ peptides forming senile plaques, together with soluble oligomeric species of Aβ, are considered the major cause of the synaptic dysfunction of AD. The association between Aβ peptide and membrane lipids has been extensively studied. It has been postulated that Chol content and Chol distribution condition Aβ production and posterior accumulation in membranes and, hence, cell dysfunction. Several lines of evidence suggest that Aβ partitions in the cell membrane accumulate mostly in raft domains, the site where the cleavage of the precursor AβPP by β- and γ- secretase is also thought to occur. The main consequence of the pathogenesis of AD is the disruption of the cholinergic pathways in the cerebral cortex and in the basal forebrain. In parallel, the nicotinic acetylcholine receptor has been extensively linked to membrane properties. Since its transmembrane domain exhibits extensive contacts with the surrounding lipids, the acetylcholine receptor function is conditioned by its lipid microenvironment. The nicotinic acetylcholine receptor is present in high-density clusters in the cell membrane where it localizes mainly in lipid-ordered domains. Perturbations of sphingomyelin or cholesterol composition alter acetylcholine receptor location. Therefore, Aβ processing, Aβ partitioning, and acetylcholine receptor location and function can be manipulated by changes in membrane lipid biophysics. Understanding these mechanisms should provide insights into new therapeutic strategies for prevention and/or treatment of AD. Here, we discuss the implications of lipid-protein interactions at the cell membrane level in AD.Fil: Fabiani, Camila. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - Bahía Blanca. Instituto de Investigaciones Bioquímicas de Bahía Blanca. Universidad Nacional del Sur. Instituto de Investigaciones Bioquímicas de Bahía Blanca; Argentina. Universidad Nacional del Sur. Departamento de Biología, Bioquímica y Farmacia; ArgentinaFil: Antollini, Silvia Susana. Universidad Nacional del Sur. Departamento de Biología, Bioquímica y Farmacia; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - Bahía Blanca. Instituto de Investigaciones Bioquímicas de Bahía Blanca. Universidad Nacional del Sur. Instituto de Investigaciones Bioquímicas de Bahía Blanca; Argentin

Aggregation and euro area Phillips curves

This paper examines the issue of the impact of aggregation in the empirical analysis of euro area labour markets. A Phillips Curve describing the adjustment of unit labour costs is estimated at the national and aggregate level for the 5 largest euro area countries. Potential sources of aggregation bias are investigated ­ such as differences in parameter coefficients and a lack of correlation in the independent variables across countries ­ as well as the potentially offsetting statistical averaging effect. Finally the out-of-sample forecasting performance of both approaches is evaluated. The results point to some limited advantages of analysing wage developments at the national rather than at the area-wide level. The paper concludes that if major advantages in undertaking national analysis do exist, they are likely to arise from the ability to develop country-specific structures for the Phillips Curves and not from aggregation biases that emerge when a common structure is used. JEL Classification: C52, C53, E24, J30

Wage adjustment by Italian firms: any difference during the crisis? A survey-based analysis

The study analyses wage adjustment by Italian firms on the basis of information collected through a coordinated survey carried out in 17 European countries in two waves (at the beginning of 2008 and in the summer of 2009). The pre-crisis evidence indicates that the degree of wage rigidity is relatively high in Italy: wages remain unchanged on average for about two years, against an average of just over one year in the other countries. Italian firms hardly cut nominal wages, reflecting not only institutional constraints, but also an attempt to avoid a negative impact on their productivity. During the economic recession the firms most severely affected by the fall in demand reduced their costs mainly by adjusting the input of labour (in terms of both employment and hours worked). A higher incidence of skilled and white-collar workers was accompanied by greater recourse to strategies aimed at containing non-labour costs, presumably in order to preserve the human capital accumulated.survey, wage rigidity, economic recession

Model-based indicators of labour market rigidity

We derive indicators of labour market flexibility that are comparable across countries and time intervals. Our indicators build on a structural VAR model of real wages, output and unemployment dynamics. We compute our indicators for thirteen OECD countries and for two time periods, and we compare them with existing indicators of labour market flexibility in the literature . The main result of the paper is that we did not find evidence of a closing gap in terms of labour market flexibility between the United States and continental European countries, although our findings suggest that medium-sized and small countries have experienced greater improvements in this regard than the large countries since the mid-eighties. JEL Classification: J20, J21, J41

The pro-competitive effect of imports from China: an analysis of firm-level price data

The entry of China into world markets has been one of the strongest recent shocks to world trade and advanced countries. industrial sectors. This is particularly true for Italy where labour-intensive, low-technology production represents a large share of output. Using Italian manufacturing firm-level data on output prices over the period 1990-2006, we test whether increased import competition from China has affected firms’ pricing strategies causing a reduction in the dynamics of prices and markups. After controlling for other price determinants (demand and cost, domestic competition and import penetration), we find that this is indeed the case. Comparing China’s share of world exports to Italy with China’s total world export market share proves the causal nature of the relationship we find. Inspired by and in line with recent advances in the literature on international trade, we also show that the price effects of Chinese competitive pressures are stronger in less technologically advanced sectors and, within these sectors, on smaller firms.import competition, China, firms' prices and productivity

The pricing behaviour of Italian firms: new survey evidence on price stickiness

This study examines price setting behaviour of Italian firms on the basis of the results of a survey conducted by Banca d’Italia in early 2003 on a sample of around 350 firms belonging to all economic sectors. Prices are mostly fixed following standard mark-up rules, although customer-specific characteristics have a role, in particular in manufacturing and services where price discrimination across customers matters. Rival prices mostly affect price-setting strategies in industrial firms. In reviewing their prices, firms follow either statedependent rules or a combination of time and state-dependent ones. Concerning the frequency of price adjustments, a considerable degree of stickiness emerges both at the stage in which firms evaluate their pricing strategies and the stage in which they actually implement the price change. In 2002 most firms changed their price only once. Three alternative explanations of nominal rigidity are ranked highest by the firms interviewed: explicit contracts, tacit collusive behaviour and the perception of the temporary nature of the shock. Prices respond asymmetrically to shocks, depending on the direction of the adjustment (positive vs negative) and the source of the shock (demand vs supply). Real rigidities – captured by the degree of market competition, customers’ search costs, the sensitivity of profits to changes in demand – play an important role in determining this asymmetry. Moreover, whereas cost shocks impact more when prices have to be raised than when they have to be reduced, demand decreases are more likely to induce a price change than demand increases.nominal rigidity, real rigidity, price-setting, inflation persistence, survey data.

The age of the dragon: Chinese competition and the pricing behavior of the Italian firms

In this paper we use a unique dataset of Italian manufacturing firms that includes firm-level price data to investigate whether increased penetration of Chinese products affects the competitive environment in an advanced country like Italy. Instrumenting import penetration from China to account for potential endogeneity biases, we find that the increase of the penetration of Chinese products has a negative and sizeable causal impact on Italian firms~ price dynamics: firms operating in a sector where such penetration is 10 per cent higher contain output price growth by about 0.35 percentage points per year. In line with the factor proportions hypothesis we show that this impact is stronger on less skill-intensive sectors. Finally, as predicted by the recent theoretical trade literature with heterogeneous firms, we find that, especially in low skill-intensive sectors, less productive firms are the ones that are forced to reduce prices more.import penetration, competition, China, prices and productivity

Convergences of prices and rates of inflation

We consider how unit root and stationarity tests can be used to study the convergence properties of prices and rates of inflation. Special attention is paid to the issue of whether a mean should be extracted in carrying out unit root and stationarity tests and whether there is an advantage to adopting a new (Dickey-Fuller) unit root test based on deviations from the last observation. The asymptotic distribution of the new test statistic is given and Monte Carlo simulation experiments show that the test yields considerable power gains for highly persistent autoregressive processes with relatively large initial conditions, the case of primary interest for analysing convergence. We argue that the joint use of unit root and stationarity tests in levels and first differences allows the researcher to distinguish between series that are converging and series that have already converged, and we set out a strategy to establish whether convergence occurs in relative prices or just in rates of inflation. The tests are applied to the monthly series of the Consumer Price Index in the Italian regional capitals over the period 1970-2003. It is found that all pairwise contrasts of inflation rates have converged or are in the process of converging. Only 24% of price level contrasts appear to be converging, but a multivariate test provides strong evidence of overall convergence.Dickey-Fuller test, initial condition, law of one price, stationarity test