Sovereign default, domestic banks and exclusion from international capital markets

¿Por qué los gobiernos se endeudan internacionalmente, tanto como para arriesgarse a quebrar? ¿Por qué permanecen fuera de los mercados financieros durante un tiempo después del impago? Este documento desarrolla un modelo cuantitativo de impago soberano con costes de impago endógenos para proponer una respuesta nueva y unificada a estas preguntas. En el modelo, el gobierno tiene un incentivo para endeudarse en los mercados financieros internacionales debido a una diferencia entre la tasa de interés mundial y el rendimiento sobre el capital nacional, que surge de una fricción en el sector bancario interno. Dada la exposición de los bancos a la deuda soberana, el impago soberano les causa pérdidas, que se traducen en una crisis financiera. Al decidir sobre el reembolso de su deuda, el gobierno compara estos costes con la ventaja de no reembolsar a los inversores internacionales. Después del impago, el país solo vuelve a participar en los mercados financieros internacionales una vez que los bancos se han recuperado, porque solo entonces pueden de nuevo asignar eficientemente cada unidad marginal de inversión. La exclusión surge de manera endógena. El modelo puede generar niveles significativos de deuda interna y externa, spreads realistas, reducciones de crédito interno y PIB cuantitativamente plausibles en episodios de impago, y períodos de exclusión del mercado financiero internacional posterior al impago de una duración realistaWhy do governments borrow internationally, so much as to risk default? Why do they remain out of financial markets for a while after default? This paper develops a quantitative model of sovereign default with endogenous default costs to propose a novel and unified answer to these questions. In the model, the government has an incentive to borrow internationally due to a difference between the world interest rate and the domestic return on capital, which arises from a friction in the domestic banking sector. Since banks are exposed to sovereign debt, sovereign default causes losses for them, which translate into a financial crisis. When deciding upon repayment, the government trades off these costs against the advantage of not repaying international investors. After default, it only reaccesses international capital markets once banks have recovered, because only then are they able to efficiently allocate the marginal unit of investment again. Exclusion hence arises endogenously. The model is able to generate significant levels of domestic and foreign debt, realistic spreads, quantitatively plausible drops of lending and output in default episodes, and periods of postdefault international financial market exclusion of a realistic duratio

Optimal monetary policy with the risk-taking channel

La investigación empírica sugiere que los tipos de interés más bajos inducen a los bancos a asumir mayores riesgos. Analizamos lo que este canal de toma de riesgos implica para la política monetaria óptima en un modelo neokeynesiano manejable. Mostramos que este canal crea un motivo para que el planificador estabilice el tipo real. Este objetivo entra en conflicto con el objetivo estándar de estabilización de la inflación. Por tanto, la política óptima tolera una mayor volatilidad de la inflación. Una función de reacción inercial de tipo Taylor deviene óptima. También cuantificamos la importancia del canal de toma de riesgos para la política monetaria en una extensión estimada de mediana escala del modelo. Ignorar el canal a la hora de diseñar la política monetaria conlleva unos costes de bienestar no despreciables (equivalentes al 0,7 % del consumo de por vida).Empirical research suggests that lower interest rates induce banks to take higher risks. We assess analytically what this risk-taking channel implies for optimal monetary policy in a tractable New Keynesian model. We show that this channel creates a motive for the planner to stabilize the real rate. This objective conflicts with the standard inflation stabilization objective. Optimal policy thus tolerates more inflation volatility. An inertial Taylor-type reaction function becomes optimal. We then quantify the significance of the risk-taking channel for monetary policy in an estimated medium-scale extension of the model. Ignoring the channel when designing policy entails non-negligible welfare costs (0.7% lifetime consumption equivalent)

Prävalenz von Verhaltensauffälligkeiten bei Kindern in stationärer pädiatrischer Behandlung

Wir haben ein Fragebogenscreening zur Erfassung von Verhaltensauffälligkeiten im Dr. von Haunerschen Kinderspital in München mit Hilfe des von Goodman entwickelten SDQ-Fragebogens durchgeführt. Dabei haben wir bei Kindern in stationärer pädiatrischer Behandlung eine Verdoppelung des Risikos von Verhaltensauffälligkeiten im Vergleich zur Kontrollgruppe gefunden. Ferner wurde ein im deutschen Sprachraum erstmals eingesetzter Fragebogen zur Erfassung von Bindungsstörungen mitverteilt. Es zeigte sich, dass der SDQ-Fragebogen nicht dazu geeignet ist Bindungsstörungen mitzuerfassen. 12 stationäre Kinder fielen in beiden Fragebögen mit auffälligen Werten auf und könnten eine Hochrisikogruppe darstellen. Dieser erste Hinweis muss jedoch noch durch weitere Arbeiten evaluiert werden

Monetary policy effects on bank risk taking. National Bank of Belgium Working Paper No. 287

Motivated by VAR evidence on the risk-taking channel in the US, we develop a New Keynesian model where low levels of the risk-free rate induce banks to grant credit to riskier borrowers. In the model an agency problem between depositors and equity holders incentivizes banks to take excessive risk. As the real interest rate declines these incentives become stronger and risk taking increases. We estimate the model on US data using Bayesian techniques and assess optimal monetary policy conduct in the estimated model, assuming that the interest rate is the only available instrument. Our results suggest that in a risk taking channel environment, the monetary authority should seek to stabilize the path of the real interest rate, trading off more inflation volatility in exchange for less interest rate and output volatility

Robots as vectors for marine invasions: best practices for minimizing transmission of invasive species via observation-class ROVs.

Remotely operated vehicles (ROVs) present a potential risk for the transmission of invasive species. This is particularly the case for small, low-cost microROVs that can be easily transported among ecosystems and, if not properly cleaned and treated, may introduce novel species into new regions. Here we present a set of 5 best-practice guidelines to reduce the risk of marine invasive species introduction for microROV operators. These guidelines include: educating ROV users about the causes and potential harm of species invasion; visually inspecting ROVs prior to and at the conclusion of each dive; rinsing ROVs in sterile freshwater following each dive; washing ROVs in a mild bleach (or other sanitizing agent) solution before moving between discrete geographic regions or ecosystems; and minimizing transport between ecosystems. We also provide a checklist that microROV users can incorporate into their pre- and post-dive maintenance routine

Single cell immune profiling by mass cytometry of newly diagnosed chronic phase chronic myeloid leukemia treated with nilotinib

Monitoring of single cell signal transduction in leukemic cellular subsets has been proposed to provide deeper understanding of disease biology and prognosis, but has so far not been tested in a clinical trial of targeted therapy. We developed a complete mass cytometry analysis pipeline for characterization of intracellular signal transduction patterns in the major leukocyte subsets of chronic phase chronic myeloid leukemia. Changes in phosphorylated Bcr-Abl1 and the signaling pathways involved were readily identifiable in peripheral blood single cells already within three hours of the patient receiving oral nilotinib. The signal transduction profiles of healthy donors were clearly distinct from those of the patients at diagnosis. Furthermore, using principal component analysis, we could show that phosphorylated transcription factors STAT3 (Y705) and CREB (S133) within seven days reflected BCR-ABL1(IS) at three and six months. Analyses of peripheral blood cells longitudinally collected from patients in the ENEST1st clinical trial showed that single cell mass cytometry appears to be highly suitable for future investigations addressing tyrosine kinase inhibitor dosing and effect. (clinicaltrials. gov identifier: 01061177)Peer reviewe

Comprehensive characterization of the prostate tumor microenvironment identifies CXCR4/CXCL12 crosstalk as a novel antiangiogenic therapeutic target in prostate cancer

Background: Crosstalk between neoplastic and stromal cells fosters prostate cancer (PCa) progression and dissemination. Insight in cell-to-cell communication networks provides new therapeutic avenues to mold processes that contribute to PCa tumor microenvironment (TME) alterations. Here we performed a detailed characterization of PCa tumor endothelial cells (TEC) to delineate intercellular crosstalk between TEC and the PCa TME. Methods: TEC isolated from 67 fresh radical prostatectomy (RP) specimens underwent multi-omic ex vivo characterization as well as orthogonal validation of both TEC functions and key markers by immunohistochemistry (IHC) and immunofluorescence (IF). To identify cell-cell interaction targets in TEC, we performed single-cell RNA sequencing (scRNA-seq) in four PCa patients who underwent a RP to catalogue cellular TME composition. Targets were cross-validated using IHC, publicly available datasets, cell culture expriments as well as a PCa xenograft mouse model. Results: Compared to adjacent normal endothelial cells (NEC) bulk RNA-seq analysis revealed upregulation of genes associated with tumor vasculature, collagen modification and extracellular matrix remodeling in TEC. PTGIR, PLAC9, CXCL12 and VDR were identified as TEC markers and confirmed by IF and IHC in an independent patient cohort. By scRNA-seq we identified 27 cell (sub)types, including endothelial cells (EC) with arterial, venous and immature signatures, as well as angiogenic tip EC. A focused molecular analysis revealed that arterial TEC displayed highest CXCL12 mRNA expression levels when compared to all other TME cell (sub)populations and showed a negative prognostic role. Receptor-ligand interaction analysis predicted interactions between arterial TEC derived CXCL12 and its cognate receptor CXCR4 on angiogenic tip EC. CXCL12 was in vitro and in vivo validated as actionable TEC target by highlighting the vessel number- and density- reducing activity of the CXCR4-inhibitor AMD3100 in murine PCa as well as by inhibition of TEC proliferation and migration in vitro. Conclusions: Overall, our comprehensive analysis identified novel PCa TEC targets and highlights CXCR4/CXCL12 interaction as a potential novel target to interfere with tumor angiogenesis in PCa

BDNF Methylation and Maternal Brain Activity in a Violence-Related Sample

It is known that increased circulating glucocorticoids in the wake of excessive, chronic, repetitive stress increases anxiety and impairs Brain-Derived Neurotrophic Factor (BDNF) signaling. Recent studies of BDNF gene methylation in relation to maternal care have linked high BDNF methylation levels in the blood of adults to lower quality of received maternal care measured via self-report. Yet the specific mechanisms by which these phenomena occur remain to be established. The present study examines the link between methylation of the BDNF gene promoter region and patterns of neural activity that are associated with maternal response to stressful versus non-stressful child stimuli within a sample that includes mothers with interpersonal violence-related PTSD (IPV-PTSD). 46 mothers underwent fMRI. The contrast of neural activity when watching children-including their own-was then correlated to BDNF methylation. Consistent with the existing literature, the present study found that maternal BDNF methylation was associated with higher levels of maternal anxiety and greater childhood exposure to domestic violence. fMRI results showed a positive correlation of BDNF methylation with maternal brain activity in the anterior cingulate (ACC), and ventromedial prefrontal cortex (vmPFC), regions generally credited with a regulatory function toward brain areas that are generating emotions. Furthermore we found a negative correlation of BDNF methylation with the activity of the right hippocampus. Since our stimuli focus on stressful parenting conditions, these data suggest that the correlation between vmPFC/ACC activity and BDNF methylation may be linked to mothers who are at a disadvantage with respect to emotion regulation when facing stressful parenting situations. Overall, this study provides evidence that epigenetic signatures of stress-related genes can be linked to functional brain regions regulating parenting stress, thus advancing our understanding of mothers at risk for stress-related psychopathology

Monetary policy effects on bank risk taking

The contribution of this paper is twofold. First, we provide empirical evidence on the existence of a risk- taking channel in the US economy. By identifying a Bayesian VAR through sign restrictions, we find that an expansionary monetary policy shock causes a persistent increase in proxies for bank risk-taking behaviour. We then develop a New Keynesian model with a risk-taking channel, where low levels of the risk free rates induce banks to extend credit to riskier borrowers. Conditional on calibration values, the simulated responses of key banking sector variables is compatible with the transmission mechanism observed in the data