Efficient Monetary Allocations and the Illiquidity of Bonds.

We construct a monetary economy with heterogeneity in discounting and consumption risk. Agents can insure against this risk with both money and nominal government bonds, but all trades must be monetized. We demonstrate that a deflationary policy a la Friedman cannot sustain the efficient allocation. The reason is that no-arbitrage imposes a stringent bound on the return money can pay. The efficient allocation can be sustained when bonds have positive yields and – under certain conditions – only if they are illiquid. Illiquidity – meaning bonds cannot be transformed into consumption as efficiently as cash – is necessary to eliminate arbitrage opportunities.Money ; Heterogeneity ; Friedman Rule ; Illiquid Assets

Financial Sophistication and the Distribution of the Welfare Cost of Inflation

The welfare cost of anticipated inflation is quantified in a calibrated model of the U.S. economy that exhibits tractable equilibrium dispersion in wealth and earnings. Inflation does not generate large losses in societal welfare, yet its impact varies noticeably across segments of society depending also on the financial sophistication of the economy. If money is the only asset, then inflation hurts mostly the wealthier and more productive agents, while those poorer and less productive may even benefit from inflation. The converse holds in a more sophisticated financial environment where agents can insure against consumption risk with assets other than money.money, heterogeneity, friedman rule, trade frictions, calibration

Monetary Equilibrium and the Cost of Banking Activity

We investigate the effects of banks’ operating costs on allocations and welfare in a low interest rate environment. We introduce an explicit production function for banks in a microfounded model where banks employ labor resources, hired on a competitive market, to run their operations. In equilibrium, this generates a spread between interest rates on loans and deposits, which naturally reflects the underlying monetary policy and the efficiency of financial intermediation. In a deflation or low inflation environment, equilibrium deposits yield zero returns. Hence, banks end up soaking up labor resources to offer deposits that do not outperform idle balances, thus reducing aggregate efficiency

An Efficient Strategy to Induce and Maintain In Vitro Human T Cells Specific for Autologous Non-Small Cell Lung Carcinoma

BACKGROUND: The efficient expansion in vitro of cytolytic CD8+ T cells (CTLs) specific for autologous tumors is crucial both for basic and translational aspects of tumor immunology. We investigated strategies to generate CTLs specific for autologous Non-Small Cell Lung Carcinoma (NSCLC), the most frequent tumor in mankind, using circulating lymphocytes. PRINCIPAL FINDINGS: Classic Mixed Lymphocyte Tumor Cultures with NSCLC cells consistently failed to induce tumor-specific CTLs. Cross-presentation in vitro of irradiated NSCLC cells by autologous dendritic cells, by contrast, induced specific CTL lines from which we obtained a high number of tumor-specific T cell clones (TCCs). The TCCs displayed a limited TCR diversity, suggesting an origin from few tumor-specific T cell precursors, while their TCR molecular fingerprints were detected in the patient's tumor infiltrating lymphocytes, implying a role in the spontaneous anti-tumor response. Grafting NSCLC-specific TCR into primary allogeneic T cells by lentiviral vectors expressing human V-mouse C chimeric TCRalpha/beta chains overcame the growth limits of these TCCs. The resulting, rapidly expanding CD4+ and CD8+ T cell lines stably expressed the grafted chimeric TCR and specifically recognized the original NSCLC. CONCLUSIONS: This study defines a strategy to efficiently induce and propagate in vitro T cells specific for NSCLC starting from autologous peripheral blood lymphocytes

Essays on monetary economies with heterogeneous agents

In Chapter 1 we construct a monetary economy with heterogeneity in discounting and consumption risk. Agents can insure against this risk with money and nominal government bonds, but all trades must be monetary. We demonstrate that a deflationary policy à la Friedman cannot sustain the constrained-efficient allocation as no-arbitrage imposes too stringent a bound on the return money can pay. The constrained-efficient allocation can be sustained when bonds have positive yields and, under certain conditions, only if they are illiquid. Illiquidity, meaning that bonds cannot be transformed into consumption as easily as cash; is necessary to eliminate arbitrage opportunities due to disparities in shadow interest rates. In Chapter 2 we present a monetary economy with an explicit role for fully divisible money, where agents hold cash to insure against consumption risk. We demonstrate that when agents differ in terms of preferences, productivity of labor or frequency of consumption shocks monetary policy can eliminate disparities in money holdings, and hence is capable to sustain efficiency. If instead agents are heterogeneous with respect to their time preferences, a deflationary policy fails to sustain the efficient allocation, although it is a second best. In Chapter 3 we construct a monetary economy where agents hold cash to insure against consumption risk. We calibrate the model to the U.S. economy and use it to quantify the welfare cost of inflation. At the aggregate level, we obtain estimates similar to previous representative agent models. However, when we look at the distributional effects of inflation, we find that positive inflation can in fact be welfare increasing for agents with low consumption risk

Financial sophistication and the distribution of the welfare cost of inflation

The welfare cost of anticipated inflation is quantified in a calibrated model of the U.S. economy that exhibits tractable equilibrium dispersion in wealth and earnings. Inflation does not generate large losses in societal welfare, yet its impact varies noticeably across segments of society depending also on the financial sophistication of the economy. If money is the only asset, then inflation mostly hurts the wealthier and more productive agents, while those poorer and less productive may even benefit from inflation. The converse holds in a more sophisticated financial environment where agents can insure against consumption risk with assets other than money

The welfare cost of inflation in OECD countries

The welfare cost of anticipated inflation is quantified in a matching model of money calibrated to 23 different OECD countries for several sample periods. In most economies, in the common period 1978-1998, a representative agent would give up only a fraction of 1% of consumption to avoid 10% inflation. The welfare cost of inflation varies across countries, from a fraction of 0.1% in Japan, to more than 2% in Australia, reaching 6% with bargaining. The model fits money demand data of several countries poorly, however. The fit generally improves with longer sample periods. The results are fairly robust to variations in choice of calibrated parameters and calibration targets