Currency Crisis Theories – Some Explanations for the Russian Case

The paper examines currency crisis theories and applies them in searching for the main causes of the Russian crisis. We first study the determination of the exchange rate and then the first and second generation theories on currency crisis and finally the recent theoretical discussions of the Asian crisis. The main reason for the Russian crisis was the long-standing federal budget deficit. During the last years the deficits were financed mainly via short-term domestic debt. This created expectations of government insolvency and central bank financing. Moreover, the Russian economy has its own basic weaknesses, which render the country incapable of growth and prone to crisis. The Asian crisis was a trigger for the Russian crisis. Lower prices for Russian export products, inadequate financial regulations and lack of information in emerging markets in general are factors explaining this contagion effect. But the main mistakes that led to the crisis were those of the Russians themselves - the federal budget deficits. Thus the repair work should also start from there.currency crisis; Russia; budget; contagion

Currency Crises in Emerging Markets: Capital Flows and Herding Behaviour

This study shows that due to herding behaviour and possible capital outflows, emerging market countries are vulnerable to multiple equilibria situations and currency crises. It uses a model by Jeanne (1997), where currency crises can be formed by multiple equilibria and self-fulfilling expectations. We determine the country fundamentals according to balance of payments approach. In this study we introduce capital flows, which depend from crisis probability, into the model. The capital flows are further assumed to follow herding behaviour, which produces a reason and mechanism for the large capital outflows witnessed during the recent crises. The range of country fundamentals, where self-fulfilling crises are possible, is now larger than without capital flows and herding behaviour. Consequently, the country fundamentals have to be better, if the country wants to stay totally out of crises. The model further points out lender interdependence as one shortcoming in the current structure of international capital markets. An empirical application of the model to the Mexican and Asian crises shows that when the possible capital outflows are included, the fundamentals of most emerging market countries were inside the range of multiple equilibria in 1994 and 1996, and so self-fulfilling crises were possible.

Fiscal Explanations for Inflation: Any Evidence from Transition Economies?

Recent arguments, motivated partly by the new fiscal theory of price level, suggest that fiscal deficits undermine price stability in transition economies. This paper addresses these claims by examining vector-autoregressive models of inflation for three crisis-hidden transition economies (Bulgaria, Romania and Russia). The results indicate that while fiscal deficits have increased inflation in Bulgaria to a certain extent, this has not been the case in Romania and Russia. Even in the Bulgarian case, the usual money aggregate has proven more influential to inflation than fiscal deficits. The analysis based on this method therefore suggests that monetary policy plays an influential role in inflation determination in these countries. In other words, inflationary financing of deficits, rather than deficits themselves, accounts for inflation.fiscal policy; inflation; vector autoregressive models; transition economies

What drives financial crises in emerging markets?

The study examines the reasons for financial crises in 31 emerging market countries during 1980-2001. It estimates a probit model using 23 macroeconomic and financial sector variables. Traditional variables such as unemployment and inflation, as well as several indicators of indebtedness such as private sector liabilities and the foreign liabilities of banks explain currency crises rather well, and it appears currency crises occur in tandem with banking crises. Indeed, in emerging market countries vulnerability to crisis is exacerbated by situations involving large liabilities that permit sudden capital outflows. Increases in indebtedness followed the liberalisation of capital flows and domestic financial sectors.currency crises; banking crises; emerging markets; liberalisation; probit model

Does State Street lead to Europe? The case of financial exchange innovations

We study whether and to what extent financial exchange innovations are in practice patentable in Europe. We find that exchange-related applications initially increased significantly after the State Street decision but subsequently decreased. The clear majority (65%) of applications come from the U.S. investment banks and exchanges themselves being among the most active innovators. But patents were not easly granted in response to these applications (only 3% of them led to valid patent). The high post-grant opposition rate (41%) for granted patents indicated that competitors tightly monitored each other’s patents. The evidence, as augmented with clinical case studies, supports the notion that, for an invention to pass the inventive step requirement for obtaining a European patent, it should have technical features for solving a sufficiently challenging technical problem. Our evidence suggests that patentability standards for financial methods have not weakened in Europe in the aftermath of the State Street decision and that the inventive step requirement constitutes a major obstacle for applicants to overcome in order to obtain a financial exchange patent in Europe.finance patents; financial innovation; business method patents; patent policy; management of intellectual property in financial services

What drives financial crises in emerging markets?

The study examines the reasons for financial crises in 31 emerging market countries during 1980-2001. It estimates a probit model using 23 macroeconomic and financial sector variables. Traditional variables such as unemployment and inflation, as well as several indicators of indebtedness such as private sector liabilities and the foreign liabilities of banks explain currency crises rather well, and it appears currency crises occur in tandem with banking crises. Indeed, in emerging market countries vulnerability to crisis is exacerbated by situations involving large liabilities that permit sudden capital outflows. Increases in indebtedness followed the liberalisation of capital flows and domestic financial sectors.currency crises, banking crises, emerging markets, liberalisation, probit model

Myofibroblasts reside in the middle dermis of the keloids but do not predict the response to injection therapies : a double-blinded, randomized, controlled trial

Introduction: Keloids form as a pathological response to skin wound healing, and their etiopathology is poorly understood. Myofibroblasts, which are cells transformed from normal fibroblasts, are believed to contribute to pathological scar formation in wounds. Methods: We carried out a double-blinded randomized controlled trial (RCT) comparing the efficacy of intralesional 5-fluorouracil (5-FU) and triamcinolone (TAC) injections in treating keloids. A total of 43 patients with 50 keloids were treated with either intralesional TAC or 5-FU injections, and their clinical response was evaluated. Biopsies were collected before, during, and after injection therapy from the active border of a keloid. To understand the role of myofibroblasts in keloids, we conducted an immunohistochemical analysis to identify myofibroblasts [α-smooth muscle actin (αSMA)] from the biopsies. We first defined the three histologically distinct regions-superficial, middle, and deep dermis-in each keloid. Results: We then demonstrated that myofibroblasts almost exclusively exist in the middle dermis of the keloids as 80% of the cells in the middle dermis were αSMA positive. However, both the percentage of myofibroblasts as well as the area covered by them was substantially lower in the superficial and deep dermis than in the middle dermis of the keloids. Myofibroblasts do not predict the clinical response to intralesional injection therapies. There is no difference in the myofibroblast numbers in keloids or in the induced change in myofibroblasts between the responders and non-responders after treatment. Discussion: This study demonstrates that myofibroblasts reside almost exclusively in the middle dermis layer of the keloids, but their numbers do not predict the clinical response to intralesional injection therapies in the RCT.Peer reviewe

Cytokine expression in rhinovirus- vs. respiratory syncytial virus-induced first wheezing episode and its relation to clinical course

Rhinovirus (RV) and respiratory syncytial virus (RSV) are common causes of bronchiolitis. Unlike an RSV etiology, an RV etiology is associated with a markedly increased risk of asthma. We investigated the cytokine profiles of RV- and RSV-induced first wheezing episode and their correlation with prognosis. We recruited 52 sole RV- and 11 sole RSV-affected children with a severe first wheezing episode. Peripheral blood mononuclear cells (PBMCs) were isolated during acute illness and 2 weeks later and stimulated in vitro with anti-CD3/anti-CD28. Culture medium samples were analyzed for 56 different cytokines by multiplex ELISA. Recurrences were prospectively followed for 4 years. In adjusted analyses, the cytokine response from PBMCs in the RV group was characterized by decreased expression of interleukin 1 receptor antagonist (IL-1RA), interleukin 1 beta (IL-1 beta), and monocyte chemoattractant protein-1 (MCP-1) and increased expression of eosinophil chemotactic protein 2 (eotaxin-2), thymus- and activation-regulated chemokine (TARC), and epithelial-derived neutrophil-activating peptide 78 (ENA-78) in the acute phase and increased expression of fractalkine in the convalescent phase compared to those in the RSV group. An analysis of the change in cytokine expression between study points revealed an increased expression of fractalkine and IL-1 beta and decreased expression of I-309 (CCL1) and TARC in the RV group compared to those in the RSV group.. Considering hospitalization time, a significant non-adjusted group x cytokine interaction was observed in the levels of interferon gamma (IFN-gamma), macrophage-derived chemokine (MDC), IL-1RA, and vascular endothelial growth factor (VEGF), indicating that a higher expression of cytokine was associated with shorter hospitalization time in the RSV group but not in the RV group. A significant interaction was also found in interleukin 6 (IL-6), but the cytokine response was not associated with hospitalization time in the RSV or RV group. In the RV group, increased expression of I-309 (CCL1) and TARC was associated with fewer relapses within 2 months, and decreased expression of interleukin 13 (IL-13) and increased expression of I-309 (CCL1) were associated with less relapses within 12 months. Differences in cytokine response from PBMCs were observed between RV- and RSV-induced first severe wheezing episode. Our findings also reveal new biomarkers for short- and medium-term prognosis in first-time wheezing children infected with RV or RSV.Peer reviewe

Cytokine expression in rhinovirus- vs respiratory syncytial virus-induced first wheezing episode and its relation to clinical course

Rhinovirus (RV) and respiratory syncytial virus (RSV) are common causes of bronchiolitis. Unlike an RSV etiology, an RV etiology is associated with a markedly increased risk of asthma. We investigated the cytokine profiles of RV- and RSV-induced first wheezing episode and their correlation with prognosis. We recruited 52 sole RV- and 11 sole RSV-affected children with a severe first wheezing episode. Peripheral blood mononuclear cells (PBMCs) were isolated during acute illness and 2 weeks later and stimulated in vitro with anti-CD3/anti-CD28. Culture medium samples were analyzed for 56 different cytokines by multiplex ELISA. Recurrences were prospectively followed for 4 years. In adjusted analyses, the cytokine response from PBMCs in the RV group was characterized by decreased expression of interleukin 1 receptor antagonist (IL-1RA), interleukin 1 beta (IL-1β), and monocyte chemoattractant protein-1 (MCP-1) and increased expression of eosinophil chemotactic protein 2 (eotaxin-2), thymus- and activation-regulated chemokine (TARC), and epithelial-derived neutrophil-activating peptide 78 (ENA-78) in the acute phase and increased expression of fractalkine in the convalescent phase compared to those in the RSV group. An analysis of the change in cytokine expression between study points revealed an increased expression of fractalkine and IL-1β and decreased expression of I-309 (CCL1) and TARC in the RV group compared to those in the RSV group.. Considering hospitalization time, a significant non-adjusted group × cytokine interaction was observed in the levels of interferon gamma (IFN-γ), macrophage-derived chemokine (MDC), IL-1RA, and vascular endothelial growth factor (VEGF), indicating that a higher expression of cytokine was associated with shorter hospitalization time in the RSV group but not in the RV group. A significant interaction was also found in interleukin 6 (IL-6), but the cytokine response was not associated with hospitalization time in the RSV or RV group. In the RV group, increased expression of I-309 (CCL1) and TARC was associated with fewer relapses within 2 months, and decreased expression of interleukin 13 (IL-13) and increased expression of I-309 (CCL1) were associated with less relapses within 12 months. Differences in cytokine response from PBMCs were observed between RV- and RSV-induced first severe wheezing episode. Our findings also reveal new biomarkers for short- and medium-term prognosis in first-time wheezing children infected with RV or RSV