Department of Economics, UCSD

Abstract: We find strong empirical evidence that the liquidity yield on government bonds in combination with standard economic fundamentals can well account for nominal exchange rate movements. We find impressive evidence that changes in the liquidity yield are significant in explaining exchange rate changes for all the G10 countries, and we stress that the US dollar is not special in this relationship. We show how these relationships arise out of a canonical two-country New Keynesian model with liquidity returns. Additionally, we find a role for sovereign default risk and currency swap market frictions.

Abstract: We study the finite sample behavior of Lasso-based inference methods such as post–double Lasso and debiased Lasso. We show that these methods can exhibit substantial omitted variable biases (OVBs) due to Lasso's not selecting relevant controls. This phenomenon can occur even when the coefficients are sparse and the sample size is large and larger than the number of controls. Therefore, relying on the existing asymptotic inference theory can be problematic in empirical applications. We compare the Lasso-based inference methods to modern high-dimensional OLS-based methods and provide practical guidance.

We study the joint process of urbanization and industrialization in the US economy between 1880 and 1940. We show that only a small share of aggregate industrialization is accounted for by the relocation of workers from remote rural areas to industrial hubs like Chicago or New York City. Instead, most sectoral shifts occurred within rural counties, dramatically transforming their sectoral structure. Most within-county industrialization occurred through the emergence of new “factory” cities with notably higher manufacturing shares rather than the expansion of incumbent cities. In contrast, today's shift toward services seems to benefit large incumbent cities the most.

A thick market external e ect is applied to a trading post model of N 3 commodities with transaction costs and distinct bid and ask prices. An existence theorem for general equilibrium with external e ects in the trading post model is stated and proved. Media of exchange occur endogenously as liquid commodities, characterized by a narrow bid/ask price spread. The thick market externality can lead to concentration of the endogenously determined media of exchange towards an equilibrium with a single medium. In a class of examples, we show that if the households have su ciently heterogeneous tastes relative to the size of the economy, the monetary equilibrium leads to higher consumption than the barter equilibrium.

Although climate change poses a threat to health and well-being globally, a regional approach to addressing climate-related health equity may be more suitable, appropriate, and appealing to under-resourced communities and countries. In support of this argument, this commentary describes an approach by a network of researchers, practitioners, and policymakers dedicated to promoting climate-related health equity in Small Island Developing States and low- and middle-income countries in the Pacific. We identify three primary sets of needs related to developing a regional capacity to address physical and mental health disparities through research, training, and assistance in policy and practice implementation: (1) limited healthcare facilities and qualified medical and mental health providers; (2) addressing the social impacts related to the cooccurrence of natural hazards, disease outbreaks, and complex emergencies; and (3) building the response capacity and resilience to climate-related extreme weather events and natural hazards.

VEGF inhibitor drugs are part of standard care in oncology and ophthalmology, but not all patients respond to them. Combinations of drugs are likely to be needed for more effective therapies of angiogenesis-related diseases. In this paper we describe naturally occurring combinations of receptors in endothelial cells that might help to understand how cells communicate and to identify targets for drug combinations. We also develop and share a new software tool called DECNEO to identify them. Single-cell gene expression data are used to identify a set of co-expressed endothelial cell receptors, conserved among species (mice and humans) and enriched, within a network, of connections to up-regulated genes. This set includes several receptors previously shown to play a role in angiogenesis. Multiple statistical tests from large datasets, including an independent validation set, support the reproducibility, evolutionary conservation and role in angiogenesis of these naturally occurring combinations of receptors. We also show tissue-specific combinations and, in the case of choroid endothelial cells, consistency with both well-established and recent experimental findings, presented in a separate paper. The results and methods presented here advance the understanding of signaling to endothelial cells. The methods are generally applicable to the decoding of intercellular combinations of signals.

This paper proposes an extension of the unconditional quantile regression analysis to (i) location-scale shifts, and (ii) compensated shifts. The first case is intended to study a counterfactual policy analysis aimed at increasing not only the mean or location of a covariate but also its dispersion or scale. The compensated shift refers to a situation where a shift in a covariate is compensated at a certain rate by another covariate. Not accounting for these possible scale or compensated effects will result in an incorrect assessment of the potential policy effects on the quantiles of an outcome variable. More general interventions and compensated shifts are also considered. The unconditional policy parameters are estimated with simple semiparametric estimators, for which asymptotic properties are studied. Monte Carlo simulations are implemented to study their finite sample performances, and the proposed approach is applied to a Mincer equation to study the effects of a location scale shift in education on the unconditional quantiles of wages.