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In this paper we introduce identifying restrictions into a Markov-switching vector autoregression model. We define a separate set of impulse responses for each Markov regime to show how fundamental disturbances affect the variables in the model dependent on the regime. We go to illustrate the use of these regime-dependent impulse response functions in a model of the U.S. economy. The regimes we identify come close to the “old” and “new economy” regimes found in recent research. We provide evidence that oil price shocks are much less contractionary and inflationary than they used to be. We show furthermore that the decoupling of the US economic performance from oil price shocks cannot be explained by “good luck” alone, but that structural changes within the US economy have taken place.

The experimental problems associated with in vivo studies of essential proteins or integral membrane proteins have triggered geneticists to generate novel approaches that have often led to insights of general relevance (Shuman and Silhavy, 2003). In order to extend the experimental portfolio, we developed target-directed proteolysis (TDP), an in vivo method allowing structural and functional characterization of target proteins in living cells. TDP is based on the activity of the highly sequence-specific NIa protease from tobacco etch virus. When its recognition site of seven residues is engineered into target proteins and NIa protease is expressed under tight promoter control, substrates can be conditionally processed while other cellular proteins remain unaffected. Applications include conditional inactivation as well as functional characterization of target proteins.