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This paper examines the impact of retail e-commerce on pricing behavior and welfare. Using Japanese data, we find that e-commerce lowered relative inflation rates for goods sold intensively online. We use long time series and historical catalog sales as an instrument for e-commerce sales intensity. The entry of e-commerce firms raised the rate of intercity price convergence in physical stores for goods sold intensively online, but not for other goods, which suggests e-commerce enhances price arbitrage. We estimate that e-commerce lowered variety-adjusted prices on average by 0.9 percent between 1996 and 2014, and more in cities with highly educated populations.

We examine conventional approaches to evaluating the economic impact of protectionist trade policies. We illustrate these conventional approaches by applying them to the tariffs introduced by the Trump administration during 2018. In the wake of this increase in trade protection, the United States experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and the complete pass-through of the tariffs into domestic prices of imported goods. Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018. We see similar patterns for foreign countries that have retaliated with their own tariffs against the United States, which suggests that the trade war has also reduced the real income of these other countries.

We develop an approach to measuring the cost of living for CES preferences that treats demand shocks as taste shocks that are equivalent to price shocks. In the presence of relative taste shocks, the Sato-Vartia price index is upward biased because an increase in the relative consumer taste for a variety lowers its taste-adjusted price and raises its expenditure share. By failing to allow for this association, the Sato-Vartia index underweights drops in taste-adjusted prices and overweights increases in taste-adjusted prices, leading to what we call a “taste-shock bias.” We show that this bias generalizes to other invertible demand systems.

One of the most successful empirical relationships in international trade is the gravity equation, which relates bilateral trade flows between an origin and destination to bilateral trade frictions, origin characteristics, and destination characteristics. A key decision for researchers in estimating this relationship is the level of aggregation, since the gravity equation is log linear, whereas aggregation involves summing the level rather than the log level of trade flows. In this paper, we derive an exact Jensen’s inequality correction term for the gravity equation in a nested constant elasticity of substitution (CES) import demand system, such that a log-linear gravity equation holds exactly for each nest of this demand system. We use this result to decompose the effect of distance on bilateral trade in the aggregate gravity equation into the contribution of a number of different terms from sectoral gravity equations. We show that changes in sectoral composition make a quantitatively relevant contribution towards the aggregate effect of distance, particularly for more disaggregated definitions of sectors.

We show that the specific factors model can be used to derive a rigorous link between movements in stock prices and productivity, wages, employment, output, and welfare. We also prove that the commonly used measure of the effective rate of protection equals the dual measure of revenue TFP, providing a theoretical foundation for why many studies have found that trade liberalization significantly increases firm-level productivity. Our method enables us to trace a tariff announcement's effect on TFP through its impact on macro variables (e.g., exchange rates) and through its effect on the relative prices of imports. We apply this framework to understanding the implications of the U.S.-China trade war. Our results show that the trade-war announcements caused large declines in U.S. stock prices, expected TFP, and expected inflation largely by moving macro variables, but also by causing declines in the returns of firms trading with China. We find that markets expect the trade war to lower U.S. welfare by 7.8 percentage points, which is much larger than the predictions of static models but in line with those of dynamic models. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Gray hair is a visible sign of tissue degeneration during aging. Graying is attributed to dysfunction of melanocyte stem cells (McSCs) that results in depletion of their melanin-producing progeny. This non-lethal phenotype makes the hair follicle and its pigment system an attractive model for investigating mechanisms that contribute to tissue aging and therapeutic strategies to combat this process. One potential combination therapeutic is RT1640, which is comprised of two drugs that are known to stimulate hair growth (cyclosporine A [CsA] and minoxidil), along with RT175, a non-immunosuppressive immunophilin ligand that is implicated in tissue regeneration. Using the ionizing radiation-induced acute mouse model of hair graying, we demonstrate that RT1640, over CsA alone, promotes regeneration of the hair pigment system during and following treatment. In non-irradiated mice, RT1640 is also physiologically active and successfully speeds hair growth and expands the McSC pool. It appears that this effect relies on the combined activities of the three drugs within RT1640 to simultaneously activate hair growth and McSCs as RT175 alone was insufficient to induce hair cycling in vivo, yet sufficient to drive the upregulation of the melanogenic program in vitro. This study sets the stage for further investigation into RT1640 and its components in McSC biology and, ultimately, melanocyte hypopigmentary disorders associated with disease and aging.

We develop a new method of quantifying the impact of policy announcements on investment rates that makes use of stock market data. By estimating the effect of U.S.-China tariff announcements on aggregate returns and the differential returns of firms exposed to China, we identify their effect on treated and untreated firms. We show theoretically and empirically that estimates of policy-induced stock-market declines imply lower returns to capital, which lowers investment rates. We estimate that the tariff actions through 2018 and 2019 will lower the investment growth rate of listed U.S. companies by 1.9 percentage points by the end of 2020.

What is the role for supply and demand forces in determining movements in international banking flows? And what role might a common factor—the global financial cycle highlighted by Rey (Dilemma not trilemma: the global financial cycle and monetary policy independence, 2018) and others—play in movements in these flows? Answering these questions is crucial for understanding the international transmission of financial shocks and formulating policy. This paper addresses them by using the method developed in Amiti and Weinstein (J Polit Econ 126(2):525–587, 2018) to exactly decompose the growth in international bank credit into common shocks, idiosyncratic supply shocks and idiosyncratic demand shocks for the period 2000–2017. A striking feature of the global banking flows data can be characterized by what we term the “Anna Karenina Principle”: all healthy credit relationships are alike, and each unhealthy credit relationship is unhealthy in its own way. During non-crisis years, bank flows are well explained by a common global factor. But during times of crisis, flows are affected by idiosyncratic demand shocks to borrower countries and by supply shocks to their creditor banks. That is, the importance of the common component seems to vary over time. This has important implications for why standard econometric models break down during crises.

We show that supply-side financial shocks have a large impact on firms' investment. We develop a new methodology to separate firm-borrowing shocks from bank-supply shocks using a vast sample of matched bank-firm lending data. We decompose aggregate loan movements in Japan for the period 1990 to 2010 into bank, firm, industry, and common shocks. The high degree of financial institution concentration means that individual banks are large relative to the size of the economy, which creates a role for granular shocks as in Gabaix (2011). We show that idiosyncratic granular bank-supply shocks explain 30-40 percent of aggregate loan and investment fluctuations.

This paper examines the impact of e-commerce on pricing behavior and welfare. Using Japanese data, we find that the entry of e-commerce firms significantly raised the rate of intercity price convergence for goods sold intensively online, but not for other goods. E-commerce also lowered relative inflation rates for goods sold intensively online. We overcome data challenges using long data series and historical catalog sales as an instrument for e-commerce sales intensity. We estimate that reductions in price dispersion raised welfare by 0.3 percent. E-commerce also lowered variety-adjusted prices on average by 0.9 percent, and more in cities with highly educated populations.

Background: The epidemiology of pulmonary hypertension (PH) is changing with increasing numbers of patients diagnosed with non-group 1 pulmonary arterial hypertension (PAH). The average age of patients diagnosed with PAH is older, and patients are living longer. As a result, patients with PAH frequently have non-PH related comorbidities that make the diagnosis of group 1 PAH challenging. Many patients evaluated for PAH are ultimately diagnosed with non-group 1 PAH, and comorbidities may impact disease progression and treatment response. Understanding presenting clinical characteristics and comorbidities of patients referred to a Pulmonary Hypertension Comprehensive Care Center has the potential to offer insights into the evolving characteristics of patients with PH. Methods: In order to better understand the clinical differences between the patients presenting in different WHO groups, several functional assessments were analyzed from the period surrounding their baseline clinic visit. Using 280 newly diagnosed patients from the University of Michigan’s pulmonary hypertension databasethat were either group I, II, III, or multifactorial, the groups’ mean body mass index (BMI), WHO functional class (WHO FC), six-minute hall walk distance (6MW), diffusing capacity for carbon monoxide (DL CO ), and B-type natriuretic peptide (BNP) were compared. Additionally, the prevalence of ten comorbidities were collated to evaluate differences by etiology: chronic obstructive pulmonary disease, obstructive sleep apnea, interstitial lung disease, diabetes, arrhythmia, hypothyroidism, chronic kidney disease, hypertension, coronary artery disease, and obesity. Results: Two hundred and eighty newly diagnosed PH patients were analyzed (Group 1 = 67, Group 2 = 51, Group 3 = 35, multifactorial = 127). All of the comorbidities except for diabetes and thyroid disease yielded statistically significant differences among the WHO groups. Newly diagnosed Group I patients have the lowest mean BMI (27.97, p p p p CO (38.7, p p Conclusion: Patients with Group 1 PAH present with lower BMI and fewer comorbid conditions, whereas multifactorial PH patients present with the most comorbidities and highest BMI. The long-term effect of higher BMI and number of comorbidities in multifactorial PH is unknown. Group II and Group III PH patients did not demonstrate statistically significant differences in any of the baseline parameters. Further study including longitudinal follow up and response to treatment is warranted in each of the WHO Groups.

Background: Previous research has shown that socioeconomic status (SES) is a contributing factor toward a patient’s health. Lower SES has been associated with later presentation and worse outcomes in both chronic lung disease (CLD) patients and World Health Organization (WHO) group I pulmonary arterial hypertension patients. It is unknown if lower SES is associated with differing clinical characteristics at the time of diagnosis of group III pulmonary hypertension (secondary to CLD). Methods: Using WHO Group III pulmonary hypertension (PH) patients in our Michigan Medicine database (n=147), patients were divided into high (n=77) and low (n=70) SES groups by zip codes according to the 2012-2016 Michigan census data. Univariable analysis between cohorts was performed comparing demographic data, Pulmonary Arterial Pressure mean (PAPm), 6-minute walk (6MW), and Diffusion Capacity for Carbon Monoxide (DL CO ) at the time of diagnosis. Results: Patients were similar in regard to gender (55.8% v. 65.7% female; p= 0.221), average body mass index (33.35±9.42 v. 33.84±10.57; p =0.769), and average WHO functional class (2.87±0.56 v. 3.00±0.63; p =0.414). Lower SES patients presented at a significantly younger age than higher SES patients (63.79±13.35 v. 69.22±12.37; p =0.011). In regard to diagnostic testing, there were no significant differences between the low and high SES cohorts in average PAPm (42.31±10.76 v. 41.74±11.07; p=0.827) , 6MW (243.60±145.29 v. 296.00±179.83; p =0.310), and DL CO (13.00±12.71 v. 11.53±5.94; p =0.502). Conclusion: Lower SES patients were diagnosed with group III PH at a younger age than higher SES patients. It is reassuring that clinical characteristics associated with worse outcomes were similar. Further work is needed to understand reasons for the observed earlier age at the time of diagnosis.

This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries.

We develop and structurally estimate a model of heterogeneous multiproduct firms that can be used to decompose the firm-size distribution into the contributions of costs, “appeal” (quality or taste), markups, and product scope. Using Nielsen barcode data on prices and sales, we find that variation in firm appeal and product scope explains at least four fifths of the variation in firm sales. We show that the imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are highly dependent on implicit demand system assumptions and probably dramatically understate the relative productivity of the largest firms. Although most firms are well approximated by the monopolistic competition benchmark of constant markups, we find that the largest firms that account for most of aggregate sales depart substantially from this benchmark, and exhibit both variable markups and substantial cannibalization effects.

We develop a new framework for aggregating from micro to macro patterns of trade. We derive price indexes that determine comparative advantage across countries and sectors and the aggregate cost of living. If firms and products are imperfect substitutes, we show that these price indexes depend on variety, average demand/quality and the dispersion of demand/quality-adjusted prices, and are only weakly related to standard empirical measures of average prices, thereby providing insight for elasticity puzzles. Of the cross-section (time-series) variation in comparative advantage, 50 (90) percent is accounted for by variety and average demand/quality, with average prices contributing less than 10 percent

What is the role for supply and demand forces in determining movements in international banking flows? Answering this question is crucial for understanding the international transmission of financial shocks and formulating policy. This paper addresses the question by using the method developed in Amiti and Weinstein (forthcoming) to exactly decompose the growth in international bank credit into common shocks, idiosyncratic supply shocks and idiosyncratic demand shocks for the period 2000-2016. A striking feature of the global banking flows data can be characterized by what we term the "Anna Karenina Principle": all healthy credit relationships are alike, each unhealthy credit relationship is unhealthy in its own way. During non-crisis years, bank flows are well-explained by a common global factor and a local demand factor. But during times of crisis flows are affected by idiosyncratic supply shocks to a borrower country's creditor banks. This has important implications for why standard models break down during crises.

We develop an approach to measuring the cost of living for CES preferences that treats demand shocks as taste shocks that are equivalent to price shocks. In the presence of relative taste shocks, the Sato-Vartia price index is upward biased because an increase in the relative consumer taste for a variety lowers its taste-adjusted price and raises its expenditure share. By failing to allow for this association, the Sato-Vartia index underweights drops in taste-adjusted prices and overweights increases in taste-adjusted prices, leading to what we call a “taste-shock bias.” We show that this bias generalizes to other invertible demand systems.

Stroke is the leading cause of disability in the industrialized world, and the development of pharmacologic strategies to promote poststroke recovery is of paramount importance. GM1485, a nonimmunosuppressive immunophilin ligand, promotes regeneration of multiple cell types following injury. In the present study, we evaluated the effect of GM1485 treatment on functional recovery and neurogenesis following rat stroke. Transient cerebral ischemia was induced in rats receiving daily GM1485 (5 mg/kg) beginning 24 hr postischemia and continuing for a total of 6 weeks. Neurological function was evaluated over this period using a battery of neurobehavioral tests, and immunostaining for stem-cell markers was performed following animal sacrifice. An in vitro model of oxidative stress was also employed to evaluate the ability of GM1485 to mediate stem-cell-like induction and plasticity. GM1485-treated rats demonstrated improved neurological function as well as increased Sox2(+) cells in the ipsilateral SVZ and striatum relative to vehicle-treated rats. Additionally, GM1485-treated fibroblasts subjected to oxidative stress were reprogrammed to a stem-cell-like phenotype and were able to differentiate down a neuronal lineage. These data demonstrate that GM1485 administration improves neurological function and is consistent with an upregulation of endogenous neurogenesis following stroke in rats. Further experiments are necessary to characterize the molecular pathways involved in these processes.

Economic models that do not incorporate financial frictions only explain about 70 to 80 percent of the decline in world trade that occurred in the 2008–2009 crisis. We review evidence that shows financial factors also contributed to the great trade collapse and uncover two new stylized facts in support of it. First, we show that the prices of manufactured exports rose relative to domestic prices during the crisis. Second, we show that US seaborne exports and imports, which are likely to be more sensitive to trade finance problems, saw their prices rise relative to goods shipped by air or land.

Fas ligand (FasL) is best known for its role in apoptosis. Membrane-bound FasL can signal in FasL-bearing cells, a process known as reverse signalling. The biological and functional consequences of FasL reverse signalling in Schwann cells were studied. FasL engagement induced the secretion of soluble mediator(s) that stimulated neurite growth in PC12 cells, NGF secretion, and NGF mRNA levels. ERK1/2 and Src phosphorylation was rapidly increased and inhibition of their activation affected NGF synthesis and release. FasL can therefore act as a signal-transducing molecule in Schwann cells, leading to the secretion of NGF, and may contribute to peripheral nerve regeneration.

A striking feature of many financial crises is the collapse of exports relative to output. In the 2008 financial crisis, real world exports plunged 17 percent while GDP fell 5 percent. This paper examines whether deteriorations in bank health can help explain the large drops in exports relative to output in the recent crisis. Our paper is the first to establish a causal link between the health of banks providing trade finance and growth in a firm's exports relative to its domestic sales. We overcome measurement and endogeneity issues by using a unique data set, covering the Japanese financial crises from 1990 through 2010, which enables us to match exporters with the main bank that provides them with trade finance. Our point estimates are economically and statistically significant, suggesting that the health of financial institutions is an important determinant of firm-level exports during crises.

This paper describes the extent and cyclicality of product creation and destruction in a large sector of the U.S. economy and quantifies its implications for the measurement of consumer prices. We find four times more entry and exit in product markets than is typically found in labor markets because most product turnover happens within the boundaries of the firm. Net product creation is strongly pro-cyclical, but contrary to the behavior of labor flows, it is primarily driven by creation rather than destruction. High rates of innovation are also accompanied by substantial price volatility of products. These facts suggest that the CPI deviates from a true cost-of-living index in three important dimensions. The quality bias that arises as new goods replace outdated ones causes the CPI to overstate inflation by 0.8 percent per year; the cyclicality of the bias implies that business cycles are more volatile than indicated by official statistics; and finally, sampling error is sufficiently large that over the last 10 years policymakers could not statistically distinguish whether quarterly inflation was accelerating or decelerating 65 percent of the time.

In this paper, we revisit two pieces of conventional wisdom in the current debate about poverty, paying close attention to the price data underlying these findings: that the poor pay more than households of higher income for the goods and services they purchase; and that poverty rates, at least as measured by the U.S. Census, have remained essentially flat since the late 1960s, raising questions about the success of the policies implemented to reduce poverty. By examining scanner data on thousands of household purchases, we find that the poor pay less—not more—for the goods they purchase. And by extending the advances on price measurement in the recent decade back to the 1970s, we find that current poverty rates are less than half of the official numbers.

We find that prior to World Trade Organization membership, countries set import tariffs 9 percentage points higher on inelastically supplied imports relative to those supplied elastically. The magnitude of this effect is similar to the size of average tariffs in these countries, and market power explains more of the tariff variation than a commonly used political economy variable. Moreover, US trade restrictions not covered by the WTO are significantly higher on goods where the United States has more market power. We find strong evidence that these importers have market power and use it in setting noncooperative trade policy. (JEL F12, F13)

Theories featuring multiple equilibria are now widespread across many fields of economics. Yet little empirical work has asked if such multiple equilibria are salient features of real economies. We examine this in the context of the Allied bombing of Japanese cities and industries in WWII. We develop a new empirical test for multiple equilibria and apply it to data for 114 Japanese cities in eight manufacturing industries. The data provide no support for the existence of multiple equilibria. In the aftermath even of immense shocks, a city typically recovers not only its population and its share of aggregate manufacturing, but even the specific industries it had before.

We develop and structurally estimate a model of heterogeneous multiproduct firms that can be used to decompose the firm-size distribution into the contributions of costs, “appeal” (quality or taste), markups, and product scope. Using Nielsen bar-code data on prices and sales, we find that variation in firm appeal and product scope explains at least four fifths of the variation in firm sales. We show that the imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are highly dependent on implicit demand system assumptions and probably dramatically understate the relative productivity of the largest firms. Although most firms are well approximated by the monopolistic competition benchmark of constant markups, we find that the largest firms that account for most of aggregate sales depart substantially from this benchmark, and exhibit both variable markups and substantial cannibalization effects.

Two theories dominate economic thinking on the causes of international exchange. Comparative advantage explains trade by inherent differences between countries. Increasing returns explains trade by the productivity and variety advantages from specialization and exchange even among like economies. But one-hundred-eighty years after the publication of Ricardo’s “Principles,” and two decades into the “new trade theory” revolution, we know little about their relative importance in giving rise to observed trade patterns.1 An assessment of their relative importance would require identifying features which distinguish the theories, and employing appropriate data to quantify the relative contributions. While the theories are quite distinct at the microeconomic level, it has proven very difficult to identify features of aggregate trade patterns which would help to distinguish the theories. In particular, two features of trade patterns which have in the past been advanced as distinguishing the theories—intra-industry and North–North trade—do not help to separate the theories (Chipman (1988), Davis (1995, 1997), Harrigan (1994)). Since the available data has most frequently concerned trade flows at a reasonably aggregated level, it was inherently difficult to formulate a test of the theories. Davis and Weinstein (1996, 1999, 2003), do place comparative advantage and increasing returns in direct contest, and quantifies their relative importance in contributing to production structure within the OECD, and across regions of Japan. Similar efforts have been made by Head and Ries (2001) and Trionfetti (2001). Two qualifications should be noted. First, that work provided an appropriate test of the two theories, but they quantified the contribution

Fas (also known as CD95), a member of the tumour-necrosis receptor factor family of 'death receptors', can induce apoptosis or, conversely, can deliver growth stimulatory signals. Here we report that crosslinking Fas on primary sensory neurons induces neurite growth through sustained activation of the extracellular-signal regulated kinase (ERK) pathway and the consequent upregulation of p35, a mediator of neurite outgrowth. In addition, functional recovery after sciatic nerve injury is delayed in Fas-deficient lpr mice and accelerated by local administration of antibodies against Fas, which indicates that Fas engagement may contribute to nerve regeneration in vivo. Our findings define a role for Fas as an inducer of both neurite growth in vitro and accelerated recovery after nerve injury in vivo.

Traditional neoclassical models of comparative advantage suggest that, all else equal, a country with idiosyncratically strong demand for a good will be an importer of that good. However, there is a contrary tradition that emphasizes the advantages of a large home market as a foundation for exports of a good. One recent formalization of this home market approach falls within what is termed the new economic geography. This paper integrates core models of Heckscher-Ohlin and Krugman (American Economic Review 70 (1980) 950) to investigate whether such home market effects matter empirically in manufacturing for a set of OECD countries. The evidence suggests that home market effects are important for a broad segment of OECD manufacturing.  2002 Elsevier Science B.V. All rights reserved.

Bilateral trade deficits are a perennial policy issue. Former Deputy Assistant U.S. Trade Representative for Japan and China, Merit Janow (1994 p. 55), notes that during the first George Bush administration, “High deficits coupled with the continuing allegations from U.S. business interests about the closed nature of the Japanese market were resulting in serious domestic political pressures for improved access to the Japanese market.” Recently Robert C. Feenstra et al. (1998 p. 1) made similar comments vis-a-vis China: “Some analysts have interpreted the large U.S.–China bilateral trade deficit as prima facie evidence of unacceptably high levels of protectionism in China, and have advocated stringent entry conditions for China’s admission into WTO.” Given the policy salience of bilateral trade deficits, it is peculiar that no one has ever examined them empirically for a broad set of countries. One reason for the scant study is that economists are naturally (and sensibly) loath to accept the terms of the policy debate, which considers bilateral trade deficits ipso facto harmful. A second reason is that economists believe there may be very natural explanations for bilateral imbalances. One such explanation finds its origins in macroeconomic identities that equate current-account deficits to an excess of investment over saving. From this, it may be argued that bilateral imbalances will arise naturally in trade between countries in aggregate surplus and those in aggregate deficit. Indeed, this is the principal explanation that the profession has given policymakers, and it forms the foundation of many U.S. bilateral trade initiatives such as the Structural Impediments Initiative and the Framework talks. Janow (1994 p. 55) observes that “there was (and is) little disagreement among economists that the causes of large aggregate and bilateral deficits are largely attributable to macroeconomic factors” [italics added]. A second account may rely on what may be termed “triangular trade,” in which cross-country differences in the patterns of demand and supply mean that a country will run bilateral deficits with those countries that are unusually important suppliers of the goods for which the deficit country happens to be an unusually strong demander. In this paper, we use the canonical “gravity model” of bilateral trade to form predictions about bilateral trade balances. We develop two key variants of the model, in which bilateral trade imbalances arise due to aggregate macroeconomic imbalances or due to “triangular trade,” and we implement these empirically for a broad set of countries. Our results paint a dismal picture. The central explanations that economists provide to explain bilateral balances perform miserably. There are two key failures. First, actual bilateral trade imbalances are much larger than those predicted; there is a “mystery of excess trade balances.” Second, even after we allow for both macroeconomic imbalances and idiosyncrasies in the structure and levels of demand and production, the models perform poorly in explaining bilateral trade balances. These failures of economists’ standard explanations of bilateral trade imbalances require that we move beyond the simple gravity framework to consider alternative explanations: homogeneous goods, highly specialized intermediates, and the role of policy.

We estimate a structural model of heterogeneous multiproduct firms to examine the sources of firm heterogeneity emphasized in the recent trade and macro literatures. Using Nielsen barcode data on prices and sales, we estimate elasticities of substitution within and between firms, and use the estimated model to recover unobserved qualities, marginal costs and markups. We find that variation in firm quality and product scope explains at least four fifths of the variation in firm sales. Most firms are well approximated by the monopolistic competition benchmark of constant markups, but the largest firms that account for most of aggregate sales depart substantially from this benchmark. Although the output of multiproduct firms is differentiated, cannibalization is quantitatively important for the largest firms. This imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are not independent of demand system assumptions and probably dramatically understate the relative productivity of the largest firms.

We estimate a structural model of heterogeneous multiproduct firms to examine the sources of firm heterogeneity emphasized in the recent trade and macro literatures. Using Nielsen barcode data on prices and sales, we estimate elasticities of substitution within and between firms, and use the estimated model to recover unobserved qualities, marginal costs and markups. We find that variation in firm quality and product scope explains at least four fifths of the variation in firm sales. Most firms are well approximated by the monopolistic competition benchmark of constant markups, but the largest firms that account for most of aggregate sales depart substantially from this benchmark. Although the output of multiproduct firms is differentiated, cannibalization is quantitatively important for the largest firms. This imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are not independent of demand system assumptions and probably dramatically understate the relative productivity of the largest firms.

The POU family of transcription factors plays a vital role in controlling cell-fate determination and the timing of cellular events in a number of tissues, including the nervous system. One such POU protein, SCIP, is expressed by Schwann cells in a tightly delimited developmental window termed promyelination. In the PNS, promyelination is functionally defined as the period following Schwann cell exit from the cell-cycle, but prior to the onset of myelination. Previous transgenic and gene ablation studies have shown that SCIP is a myelin-competence factor in the Schwann cell, where it is required for entry into, and the subsequent maintenance of promyelination. To further understand the molecular biology of the promyelination-to-myelination transition in the Schwann cell, we have undertaken a series of DDRTPCR studies to identify genes that are expressed during this phenotypic flux. Through these studies we have identified another POU gene, Brn-5, the expression of which has not previously been appreciated in the Schwann cell. Here we show that the developmental expression patterns of Brn-5 and SCIP are inverse, with Brn-5 stably expressed in the adult myelinating Schwann cell, but virtually absent during promyelination. Further, we show that the induction of the two genes is independent, with SCIP induction requiring activation of adenyl cyclase, whereas Brn-5 induction requires only GGF2. In addition, the induction of Brn-5 is exquisitely sensitive to neuregulin concentration, with higher levels inhibiting its expression. Following nerve injury, when GGF2 levels are elevated in the distal nerve, Brn-5 expression disappears, and SCIP is reexpressed.

Astrocytes respond to contact with neurons by cell-cycle arrest and complex process formation. In our effort to discover the molecular mechanisms that underlie this phenomenon we have identified a known tetraspanin, CD81, as a critical component of astrocyte responses to neuronal differentiation signals. Here we show that CD81 is expressed on the surface of the astrocyte and that its expression level can be modulated by contact with neurons. Further, using three separate antibodies, 2F7, Eat1, and Eat2, which recognize unique epitopes in the extracellular domains of the CD81 protein, we show that there is a unique domain, recognized by Eat1, that is required for astrocyte cell-cycle withdrawal in response to neurons. This is likely due to conformational changes in the CD81 molecule, as inclusion of 2F7 actually augments neuron-induced astrocyte growth arrest. The critical nature of CD81 in normal astrocyte–neuron biology was confirmed by using mice in which CD81 had been deleted by homologous recombination. Astrocytes null at the CD81 locus were blind to the proliferative arrest encoded on the neuronal cell surface. Taken together, these data strongly suggest that CD81 is a critical regulator of neuron-induced astrocytic differentiation.

Peripheral nerve regeneration is a complex series of events, involving bi-directional interactions between regenerating axons and Schwann cells. These authors have demonstrated in their laboratory that nerves will regenerate through a 3-cm autogenous venous nerve conduit (AVNC) in an animal model and, with Dr. David Chiu, a similar distance in the human. They have shown that the upper limit of nerve regeneration in an empty AVNC was 3 cm, with no evidence of nerve growth at the 6-cm mark (no-growth model). Most recently, they have demonstrated rapid growth at 1 month in a 3-cm AVNC filled with Schwann cells, compared to poor-to-no-regrowth at 1 month in controls. While, in theory, Schwann-cell-derived growth factor should be sufficient to supplant the requirement for Schwann cells, in practice, therapies with growth factors have failed in clinical trials, with some resulting in severe morbidity and mortality for the subjects. The present study showed excellent nerve regeneration through a 6-cm AVNC with the addition of autologous Schwann cells, breaking the barrier in the previous no-growth model. In the first stage, autologous Schwann cells were harvested from the contralateral peroneal nerve of the rabbit and expanded in culture. The Schwann cells were purified to >99 percent homogeneity using differential adhesion and antibody-compliment-mediated cytolysis. In the second stage, 6 cm of gluteal vein were harvested and used as a conduit that was filled with either Matrigel or a slurry of Matrigel and 10(6)/ml autologous Schwann cells (n=6 control and 6 experimental animals). The non-donor side peroneal was exposed and transected, leaving a gap of 6 cm. The filled gluteal vein graft (AVNC) was then anastomosed to the proximal and distal peroneal nerve stumps, and the rabbits were allowed to recover. Four months postoperatively, the animals were subjected to transcardiac perfusion with EM grade fixative. The grafts were analyzed at the light and electronmicroscopic levels, and showed excellent growth of nerve at 6 cm, the distal end of the AVNC.

Caveolin-1 is a principal component of caveolae membranes. In NIH 3T3 cells, caveolin-1 expression is dramatically up-regulated in confluent cells and localizes at areas of cell-cell contact. However, it remains unknown whether caveolin-1 is involved in cell-cell signaling. Here, we examine the potential role of caveolin-1 in regulating beta-catenin signaling. beta-Catenin plays a dual role in the cell, linking E-cadherin to the actin cytoskeleton and in Wnt signaling by forming a complex with members of the lymphoid enhancing factor (Lef-1) family of transcription factors. We show that E-cadherin, beta-catenin, and gamma-catenin (plakoglobin) are all concentrated in caveolae membranes. Moreover, we demonstrate that activation of beta-catenin/Lef-1 signaling by Wnt-1 or by overexpression of beta-catenin itself is inhibited by caveolin-1 expression. We also show that recombinant expression of caveolin-1 in caveolin-1 negative cells is sufficient to recruit beta-catenin to caveolae membranes, thereby blocking beta-catenin-mediated transactivation. These results suggest that caveolin-1 expression can modulate Wnt/beta-catenin/Lef-1 signaling by regulating the intracellular localization of beta-catenin.

The integrated equilibrium is a paradigm that has played a central role in the field of international trade. The concept originated with Paul A. Samuelson (1949), was further developed by Avinash K. Dixit and Victor F. Norman (1980), and placed at the heart of international analysis by Elhanan Helpman and Paul R. Krugman (1985). The central idea is that a world with imperfect mobility of productive factors across regions or countries may replicate the essential equilibrium of a fully integrated economy, provided that goods are perfectly mobile. The concept of the integrated equilibrium has proved to be exceptionally tractable and useful for analytic developments, as for example in the work of Gene M. Grossman and Helpman (1992). We have found using elements of integrated equilibrium analysis useful in our own work (e.g., Davis et al., 1997). The central figures in developing the theory of trade and growth within the integrated equilibrium framework have been quite aware of its limitations. Helpman and Krugman (1985) include a section on the cases in which factor-price equalization (FPE) breaks down. Grossman and Helpman (1992) make the distinction between national and international spillovers a key element of their theory of trade and growth. Moreover, the starting point of Krugman’s work in the past decade on economic geography has been precisely to deny that the world operates as if it were an integrated economy. This notwithstanding, we believe that the grip of integrated equilibrium analysis on the way that the economics profession conceives of world trade patterns remains very powerful and in important ways distorts one’s view of trade relations, particularly among the relatively rich countries of the OECD. We do not propose to banish integrated equilibrium analysis. We believe that it is useful in the proper context. However, we do propose that it is important to have a fuller appreciation of the limits of such analysis from an empirical standpoint and thus to have a richer view of the determinants of world trade patterns.

(2000). Advances in Neurofibromatosis 2 (NF2): A Workshop Report. Journal of Neurogenetics: Vol. 14, No. 2, pp. 63-106.

The difference in regenerative capacity between the PNS and the CNS is not due to an intrinsic inability of central neurons to extend fibers. Rather, it is probably related to the environment in the CNS that is either repulsive to axonal outgrowth and/or nonsupportive of axonal elongation. In contrast, the PNS both supports and allows for axonal elongation after injury. The Schwann cell, which is the glial cell of the PNS, is strictly required for peripheral regeneration. Here we discuss recent work describing the biology of Schwann cell- dependent regeneration, discuss what is known of the molecular basis of this phenomenon, and how it might apply to the damaged CNS. NEUROSCIENTIST 5:208-216, 1999

We examine the effects of bank-firm relationships on firm performance in Japan. When access to capital markets is limited, close bank-firm ties increase the availability of capital to borrowing firms, but do not lead to higher profitability or growth. The cost of capital of firms with close bank ties is higher than that of their peers. This indicates that most of the benefits from these relationships are appropriated by the banks. Finally, the slow growth rates of bank clients suggest that banks discourage firms from investing in risky, profitable projects. However, liberalization of financial markets reduces the banks' market power. THE CLOSE RELATIONSHIP BETWEEN manufacturing firms and financial institutions in Japan has recently been at the center of the debate on the appropriate financial system for the reforming economies of Eastern Europe. As opposed to the Anglo-Saxon separation of finance and industry, long-term ties between main banks and their client firms (involving bank loans, bank equity holding, and some bank-appointed personnel), which are common in Japan and Germany, have often been described as a growth-oriented financial system that could serve the needs of developing and reformed economiies better than anonymous capital markets modeled after the Arnerican and British financial systems. The claim that close ties between investmentoriented banks and industrial firms could help overcome the difficulties of "relative backwardness" dates back to Gerschenkron (1962) who investigates European development. Rosovsky (1961) applies Gerschenkron's framework to the analysis of Japanese growth. More recently, Aoki, Patrick, and Sheard (1994), Hoshi, Kashyap, and Loveman (1994), and Teranishi (1993), among others, portray the close ties between finance and industry in Japan as an important factor in the international competitiveness of modern Japanese

The formation of the myelin sheath requires the coordinated regulation of a number of gene products, both glial and axonal. These include the myelin structural genes, enzymes involved in lipid biosynthetic pathways, transcriptional regulators, trophic and recognition factors. Alterations in gene dosage or gene expression timing can have profoundly deleterious effects on either the establishment or maintenance of the myelin sheath. In this review, the major structural genes are described, as are the consequences of changes in gene dosage which occur as a result of either natural mutations or experimentally mediated events. While it is clear that our knowledge has expanded greatly with regard to these events, there continue to be large gaps, especially within the genetics of gene regulation and the mechanisms of glial axon interactions. MRDD Research Reviews 1998; 4:179–186 © 1998 Wiley-Liss, Inc.