China's Capital Controls Through the Prism of Covered Interest Differentials

We study the renminbi (RMB) covered interest differential - an indicator of the effectiveness of capital controls. It is found that the differential is not shrinking over time and, in fact, appears larger after the global financial crisis than before. That is, capital controls in China are still substantial and effective. In addition to exchange rate changes and volatilities, the RMB covered interest differential is affected by credit market tightness indicators. The marginal explanatory power of these macroeconomic factors, however, is small relative to the autoregressive component and the dummy variables that capture changes in China's policy

Exchange Rate Risk and Convergence to the Euro

This paper proposes a new monetary policy framework for effectively navigating the path to adopting the euro. The proposed policy is based on relative inflation forecast targeting and incorporates an ancillary target of declining exchange rate risk, which is suggested as a key criterion for evaluating the currency stability. A model linking exchange rate volatility to differentials over the euro zone in both inflation (target variable) and interest rate (instrument variable) is proposed. The model is empirically tested for the Czech Republic, Poland and Hungary, the selected new Member States of the EU that use direct inflation targeting to guide their monetary policies. The empirical methodology is based on the TARCH(p,q,r)-M model

“Whatever it takes” to resolve the European sovereign debt crisis? Bond pricing regime switches and monetary policy effects

This paper investigates the role of unconventional monetary policy as a source of time-variation in the relationship between sovereign bond yield spreads and their fundamental determinants. We use a two-step empirical approach. First, we apply a time-varying parameter panel modelling framework to determine shifts in the pricing regime characterising sovereign bond markets in the euro area over the period January 1999 to July 2016. Second, we estimate the impact of ECB policy interventions on the time varying risk factor sensitivities of spreads. Our results provide evidence of a new bond-pricing regime following the announcement of the Outright Monetary Transactions (OMT) programme in August 2012. This regime is characterised by a weakened link between spreads and fundamentals, but with higher spreads relative to the pre-crisis period and residual redenomination risk. We also find that unconventional monetary policy measures affect the pricing of sovereign risk not only directly, but also indirectly through changes in banking risk. Overall, the actions of the ECB have operated as catalysts for reversing the dynamics of the European sovereign debt crisis

Keratan sulphate in the tumour environment

Keratan sulphate (KS) is a bioactive glycosaminoglycan (GAG) of some complexity composed of the repeat disaccharide D-galactose β1→4 glycosidically linked to N-acetyl glucosamine. During the biosynthesis of KS, a family of glycosyltransferase and sulphotransferase enzymes act sequentially and in a coordinated fashion to add D-galactose (D-Gal) then N-acetyl glucosamine (GlcNAc) to a GlcNAc acceptor residue at the reducing terminus of a nascent KS chain to effect chain elongation. D-Gal and GlcNAc can both undergo sulphation at C6 but this occurs more frequently on GlcNAc than D-Gal. Sulphation along the developing KS chain is not uniform and contains regions of variable length where no sulphation occurs, regions which are monosulphated mainly on GlcNAc and further regions of high sulphation where both of the repeat disaccharides are sulphated. Each of these respective regions in the KS chain can be of variable length leading to KS complexity in terms of chain length and charge localization along the KS chain. Like other GAGs, it is these variably sulphated regions in KS which define its interactive properties with ligands such as growth factors, morphogens and cytokines and which determine the functional properties of tissues containing KS. Further adding to KS complexity is the identification of three different linkage structures in KS to asparagine (N-linked) or to threonine or serine residues (O-linked) in proteoglycan core proteins which has allowed the categorization of KS into three types, namely KS-I (corneal KS, N-linked), KS-II (skeletal KS, O-linked) or KS-III (brain KS, O-linked). KS-I to -III are also subject to variable addition of L-fucose and sialic acid groups. Furthermore, the GlcNAc residues of some members of the mucin-like glycoprotein family can also act as acceptor molecules for the addition of D-Gal and GlcNAc residues which can also be sulphated leading to small low sulphation glycoforms of KS. These differ from the more heavily sulphated KS chains found on proteoglycans. Like other GAGs, KS has evolved molecular recognition and information transfer properties over hundreds of millions of years of vertebrate and invertebrate evolution which equips them with cell mediatory properties in normal cellular processes and in aberrant pathological situations such as in tumourogenesis. Two KS-proteoglycans in particular, podocalyxin and lumican, are cell membrane, intracellular or stromal tissue–associated components with roles in the promotion or regulation of tumour development, mucin-like KS glycoproteins may also contribute to tumourogenesis. A greater understanding of the biology of KS may allow better methodology to be developed to more effectively combat tumourogenic processes