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The Effect of Inequality on the Transmission of Monetary and Fiscal Policy

Monetary policy can have a meaningful impact on inequality, as recent theoretical and empirical studies suggest. In light of this, how should policy be conducted? And how does inequality affect the transmission of monetary policy? These are the topics…



Monetary policy can have a meaningful impact on inequality, as recent theoretical and empirical studies suggest. In light of this, how should policy be conducted? And how does inequality affect the transmission of monetary policy? These are the topics covered in the second part of the recent symposium on “Heterogeneity in Macroeconomics: Implications for Policy,” hosted by the new Applied Macroeconomics and Econometrics Center (AMEC) of the New York Fed on November 12.

Inequality and the Transmission of Monetary and Fiscal Policy

The first session in the afternoon (the agenda includes links to all of the presentations) asked what we have learned from the new literature on Heterogeneous Agent New Keynesian (HANK) models about the transmission and the efficacy of monetary policy. It also asked what we learned from the COVID-19 recession and the associated policy response on the impact of redistributive policy on aggregate demand and supply.

Greg Kaplan from the University of Chicago discussed lessons from the HANK literature regarding monetary policy and its ability to stabilize economic activity. One lesson is that stabilization policy may be harder than envisaged in models with a representative agent. In representative agent models monetary policy can rely on the intertemporal substitution channel—lowering interest rates induces households to consume. This channel is much weaker in HANK models, partly because these models recognize that a number of households have a hard time shifting consumption over time either because they have little wealth or because their wealth is illiquid. Instead, the main transmission channel of monetary policy in HANK models involves changing household disposable income—and in particular affecting income for households with higher marginal propensities to consume. But this often involves redistributing resources among individuals, where some win and others loose (for example, debtors versus creditors) from policy actions.  

This finding points to two further lessons for monetary policy. One is that the redistributive effects of policy can no longer be swept under the rug as is the case in representative agent models. The other is that the connection with fiscal policy is also front and center, since many of the consequences of monetary policy in these models involve public debt and the reaction of the fiscal authorities. A final lesson from HANK models, which ties in with the discussion in the first part of the symposium, is that the benefits from aggregate stabilization largely derive from alleviating the hardship of the most vulnerable households during recessions. From Kaplan’s perspective these four lessons suggest that monetary policy should focus less on fine-tuning aggregate demand and more on stabilizing inflation and enhancing the stability of the financial system.

Veronica Guerrieri from the Chicago Booth School of Business discussed monetary and fiscal policy in the context of the COVID-19 pandemic. She first highlighted the striking distributional impact of the pandemic recession, which hit some sectors (for example, leisure and hospitality) and some workers (for example, low-income workers) harder than others. As she shows in her recent paper with Lorenzoni, Straub, and Werning, the pandemic shock can be seen as a supply shock which propagated through the economy via demand channels. In particular, the income losses of workers with high marginal propensity to consume resulted in aggregate demand shortages for a while. Moreover, shocks in some sectors spread to other sectors because of complementarities and supply chains. This demand shortfall called for policy stimulus, and at the same time the asymmetric nature of the shock called for social insurance. To some extent, targeted fiscal transfers accomplished both goals.

Guerrieri then asked whether fiscal (and monetary) stimulus in the United States has been excessive, and whether the inflation that the U.S. is currently experiencing is the outcome of such stimulus. Again, she stressed that differences across households, and specifically the heterogenous savings behavior by income in response to the transfers, are key for understanding the effect of the stimulus on demand, both on impact and over time. She also emphasized the heterogeneity across sectors, with some sectors that have recovered well beyond their pre-pandemic levels and others that are still struggling. In another recent paper with Lorenzoni, Straub, and Werning, Guerrieri and coauthors argued that some of the inflation the U.S. is currently experiencing may be desirable as it helps adjust relative prices across sectors, thereby cooling some of the demand in the booming sectors and directing it toward the weaker ones. In fact, the stimulus may also help the reallocation of labor across sectors as it leads to more sustained wage increases in the strong sectors, which in turn attract workers, thereby lessening supply shortages.

In the discussion that followed the presentations, New York Fed President John Williams said that while he appreciated the insights from the HANK literature on the trade-offs faced by monetary policy, in the end the objective of monetary policymakers remains achieving the dual mandate of price stability and full employment with the tools at their disposal. Does the HANK literature have lessons in terms of which monetary tools (conventional interest rate policy, forward guidance, QE) are best suited to achieve the mandate? Both Kaplan and Guerrieri emphasized that an implication of heterogeneity is that fiscal policy is in many ways better suited than monetary policy to stabilize the economy, because it can be more precisely targeted toward different households.

Gianluca Violante of Princeton University agreed on this point and wondered why fiscal policy is seemingly conducted in a much less sophisticated and thoughtful way than monetary policy. He hinted that one reason may be political economy considerations—the need to achieve compromise—but another reason could be the moral hazard inherent with transfer-based policies. He argued that the willingness of fiscal authorities to act effectively during COVID may be due to the fact that moral hazard was largely absent in these circumstances. St. Louis Fed President Jim Bullard highlighted that if either fiscal or monetary policy are not doing their job in terms of stabilizing the economy, this may limit the effectiveness of the other.

Heterogeneity and Optimal Monetary Policy

The second afternoon session discussed how heterogeneity should affect the design of optimal policy. Adrien Auclert from Stanford began by noting that the normative HANK literature is still in its infancy, relative to the positive literature. He outlined two key outstanding issues. The first issue is that while the New Keynesian (NK) literature is organized around a single tractable “textbook” model and a set of agreed upon methods for solving and estimating quantitative models, no such consensus exists in the HANK literature. But progress has been made: we have a number of tractable HANK models that can be used to understand positive and normative aspects of HANK economies, and we are closer to having efficient tools for solving and estimating HANK models.

The second issue concerns what objective function policymakers should optimize in our normative models. In the canonical NK model, under certain conditions, maximizing household welfare is equivalent to minimizing an “ad hoc” loss function which penalizes deviations of the output gap and inflation from their targets. This equivalence was an important factor in the success of the NK literature, since policymakers already viewed their objective in terms of a simple ad hoc loss function. But when it comes to the HANK literature, there is generally no simple, microfounded loss function that plays the same role.

One approach is to continue to use an ad hoc loss function to analyze optimal policy in HANK. Although this approach is straightforward, it may miss out on important forces within the model and provides no guidance on which measures of inequality, if any, should be incorporated in the policymaker’s objective function. A more technically challenging approach is to solve for policy that maximizes household welfare within a HANK model. In Auclert’s view, the literature that does this has uncovered some findings that should generalize (for example, optimal policy tries to undo the redistributive effects of aggregate shocks), but it is less clear whether other specific findings from particular papers will generalize (some studies find that policy should put more weight on stabilizing the level of output to stabilize consumption inequality, while others find that price stability remains the dominant concern).

Michael Woodford from Columbia University discussed another dimension of heterogeneity, namely heterogeneity of expectations. He argued that while this dimension has been relatively less studied—presumably because it requires relaxing the conventional assumption of rational expectations—it is worth incorporating into our models, both because it is clearly present in survey data, and because algorithmic models of expectation formation can be more tractable than models with model-consistent expectations. Woodford outlined one approach to modelling heterogeneous beliefs based on his work with Yinxi Xie. This approach assumes that households and firms make decisions based on looking forward over a finite planning horizon, implying that heterogeneity of beliefs arises from differences in their planning horizons. In Woodford’s model, this nests fully rational expectations as a limiting special case (when all agents have infinite horizons). An important implication of belief heterogeneity for policymakers is that the same policy announcement will lead different decisionmakers to expect different paths of policy tools and other macroeconomic variables, since some of them put a lot of weight on far future outcomes while others have much shorter planning horizons. Another implication is that policy should depart from fully stabilizing output gaps and inflation in order to reduce distortions arising due to heterogeneity in beliefs.

In the following discussion, Williams emphasized that, while we know heterogeneity is important, and each heterogeneous-agent model has its own particular implications for optimal policy, it will be important to learn which conclusions are robust across these different models.  Woodford agreed with Williams (and with Kaplan’s earlier remarks) that it would be too early to follow the policy conclusions from any one paper, but argued that we can still say something about which conclusions are likely to be robust. We can learn which variables in our models have the properties that expectations about those variables have a particularly large effect on outcomes; we should then want to keep those variables stable, so that they are easy for agents to forecast, regardless of how precisely they do that. Kaplan noted that economists generally do not make their models more realistic simply for the sake of realism, but to match some feature of the data that existing models cannot; he wondered what empirical puzzle belief heterogeneity solves. Woodford suggested that finite planning horizons may offer one solution to the “forward guidance puzzle.”

Bullard emphasized the advantage of building on tractable models (for example, lifecycle models with within-cohort heterogeneity), which avoid some of the technical problems Auclert mentioned, but can still match important features of the data. Auclert agreed that simple models are useful to study particular forces (for example, countercyclical movements in the price level can provide insurance to households with nominal debt), but argued that richer models are useful to trade these off against other important forces (for example, in the presence of nominal wage rigidity, countercyclical inflation may have less favorable effects on the distribution of real resources).

In sum, the upshot from the symposium is that taking heterogeneity into account is crucial for policy, both because its effect differs across households—not only fiscal but also monetary policy can significantly affect inequality—and because heterogeneity changes the way we understand how fiscal and monetary policy are transmitted to the economy.

Marco Del Negro is a vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Keshav Dogra is a senior economist in the Bank’s Research and Statistics Group.

Laura Pilossoph is a senior economist in the Bank’s Research and Statistics Group.

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A Deeper Dive Into The CDC Reversal

A Deeper Dive Into The CDC Reversal

Authored by Jeffrey Tucker via The Brownstone Institute,

It was a good but bizarre day when the CDC finally…



A Deeper Dive Into The CDC Reversal

Authored by Jeffrey Tucker via The Brownstone Institute,

It was a good but bizarre day when the CDC finally reversed itself fundamentally on its messaging for two-and-a-half years.

The source is the MMWR report of August 11, 2022. The title alone shows just how deeply the about-face was buried: Summary of Guidance for Minimizing the Impact of COVID-19 on Individual Persons, Communities, and Health Care Systems — United States, August 2022

The authors: “the CDC Emergency Response Team” consisting of “Greta M. Massetti, PhD; Brendan R. Jackson, MD; John T. Brooks, MD; Cria G. Perrine, PhD; Erica Reott, MPH; Aron J. Hall, DVM; Debra Lubar, PhD;; Ian T. Williams, PhD; Matthew D. Ritchey, DPT; Pragna Patel, MD; Leandris C. Liburd, PhD; Barbara E. Mahon, MD.”

It would have been fascinating to be a fly on the wall in the brainstorming sessions that led to this little treatise. The wording was chosen very carefully, not to say anything false outright, much less admit any errors of the past, but to imply that it was only possible to say these things now. 

“As SARS-CoV-2, the virus that causes COVID-19, continues to circulate globally, high levels of vaccine- and infection-induced immunity and the availability of effective treatments and prevention tools have substantially reduced the risk for medically significant COVID-19 illness (severe acute illness and post–COVID-19 conditions) and associated hospitalization and death. These circumstances now allow public health efforts to minimize the individual and societal health impacts of COVID-19 by focusing on sustainable measures to further reduce medically significant illness as well as to minimize strain on the health care system, while reducing barriers to social, educational, and economic activity.

In English: 

everyone can pretty much go back to normal.

Focus on illness that is medically significant. Stop worrying about positive cases because nothing is going to stop them. Think about the bigger picture of overall social health. End the compulsion. Thank you. It’s only two and a half years late. 

What about mass testing?

Forget it:

“All persons should seek testing for active infection when they are symptomatic or if they have a known or suspected exposure to someone with COVID-19.”


What about the magic of track and trace?

“CDC now recommends case investigation and contact tracing only in health care settings and certain high-risk congregate settings.”


What about the unvaccinated who were so demonized throughout the last year? 

“CDC’s COVID-19 prevention recommendations no longer differentiate based on a person’s vaccination status because breakthrough infections occur, though they are generally mild, and persons who have had COVID-19 but are not vaccinated have some degree of protection against severe illness from their previous infection.”

Remember when 40% of the members of the black community in New York City who refused the jab were not allowed into restaurants, bars, libraries, museums, or theaters? Now, no one wants to talk about that. 

Also, universities, colleges, the military, and so on – which still have mandates in place – do you hear this? Everything you have done to hate on people, dehumanize people, segregate people, humiliate others as unclean, fire people and destroy lives, now stands in disrepute. 

Meanwhile, as of this writing, the blasted US government still will not allow unvaccinated travelers across its borders! 

Not one word of the CDC’s turgid treatise was untrue back in the Spring of 2020. There was always “infection-induced immunity,” though Fauci and Co. constantly pretended otherwise. It was always a terrible idea to introduce “barriers to social, educational, and economic activity.” The vaccines never promised in their authorization to stop infection and spread, even though all official statements of the CDC claimed otherwise, repeatedly and often. 

You might also wonder how the great reversal treats masking. On this subject, there is no backing off. After all, the Biden administration still has an appeal in process to reverse the court decision that the mask mandate was illegal all along.

“At the high COVID-19 Community Level,” the CDC adds, “additional recommendations focus on all persons wearing masks indoors in public and further increasing protection to populations at high risk.”

The problem from the beginning was that there never was an exit strategy from the crazy lockdown/mandate idea. It was never the case that they would magically cause the bug to go away. The excuse that we would lock down in wait for a vaccine never made any sense. 

People surely knew early on of the social, economic, and cultural devastation that would ensue. If they did not, they never should have been anywhere near the control switches of public health. Badges and bureaucracies do not terrify a virus destined to spread to the whole planet. And not one person with even the most casual passing knowledge of coronaviruses could have sincerely believed that a vaccine would magically appear to achieve something never before achieved in the whole history of medicine. 

When the Great Barrington Declaration appeared on October 4, 2020, it caused a global frenzy of fury not because it said anything new. It was merely a pithy restatement of basic public-health principles, which pretty much instantly became verboten on March 16, 2020, when Fauci/Birx announced their grand scheme. 

The GBD generated mania because the existing praxis was based on preposterously unproven claims that demanded that billions of people buy into complete nonsense. Sadly many did simply because it seemed hard to believe that all world regimes but a handful would push such a damaging policy if it was utterly unworkable. When something like that happens – and there never was the hope that it could work – the regime imperative becomes censorship and shaming of dissent. It’s the only way to hold the great lie together. 

So finally, nearly two years later the CDC has embraced the Great Barrington Declaration rather than doing a “quick and devastating takedown” as Francis Collins and Anthony Fauci called for the day after its release. No, they had to try out their new theory on the rest of us. It did not work, obviously. For the authors of the GBD, they knew from the time they penned the document that it was a matter of time before they were vindicated. They never doubted it. 

Dr. Rajeev Venkayya is widely credited with coming up with the idea of lockdowns while he was working for the Bush administration back in 2005. He had no training at all in public health or epidemiology. He later marveled that it fell to him, a young desk-dwelling White House bureaucrat, to “invent pandemic planning.” Maybe he should have demurred that day that George W. Bush asked him to lead the charge to inaugurate a new war on pathogens. 

Somehow his views gained converts, among whom was Bill Gates, the foundation for whom he worked for years. The rest is history. 

In April 2020, Venkayya called me to explain why I needed to stop attacking lockdowns. He said that the planners need a chance to make their scheme work. 

On the phone, I asked the same question over and over: where does the virus go? The first two times, he did not respond. I pressed and pressed. Finally he said there will be a vaccine. 

It’s hard to appreciate just how preposterous that sounded at the time, and I said something along those lines: it would be a medical miracle never before seen to have a shot for a coronavirus that was sterilizing against wild type and all inevitable mutations, and to do it in a reasonable time so that society and economy had not completely fallen apart. 

The whole approach was clearly milliennarian at best and utter madness at worst. And here I was, in the thick of global lockdowns, on the phone with the architect of the whole idea, an idea that had reduced billions to servitude, wrecked schools and churches, and sent communities and countries into complete upheaval. I wondered at the time what it would be like to be Dr. Venkayya that day. After all this ended in disaster, would he take responsibility? His LinkedIn profile today says otherwise: he is prepared to “tackle current and future epidemic & pandemic threats as the CEO of Aerium Therapeutics.”

There never was an exit strategy from lockdowns and mandates but they eventually did find an exit nonetheless. It came in the form of a heavily footnoted and opaquely written reversal, published by the main bureaucracy responsible for the disaster. It amounts to a repudiation without saying so. And thus does the great experiment in mass compulsion come to an intellectual end. If only the carnage could be cleaned up by another posting on the CDC’s website. 

By the way, the Biden administration has extended the declaration of Covid emergency. And my unvaccinated friends in the UK still can’t board a plane to come for a visit. 

All of this gives rise to the great question: what was the point? Maybe it was all a mistake and now it is gone forever but that’s unlikely. The intellectuals who pushed this project on the world have a view of the world that is fundamentally ill-liberal. They differ among themselves on the details but the general approach is technocratic central planning rooted in deep suspicion of basic tenets of freedom. 

How many people on the planet have now been acculturated to top-down control, socialized to live in fear, accept whatever comes down from above, never to question an edict, and expect to live in a world of rolling man-made disasters? And was that the point after all, to cultivate low expectations for life on earth and relinquish the soul’s desire for a full and free life? 

Tyler Durden Thu, 08/18/2022 - 09:49

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Spread & Containment

A dog has caught monkeypox from one of its owners, highlighting risk of the virus infecting pets and wild animals

The monkeypox virus can easily spread between humans and animals. A veterinary virologist explains how the virus could go from people to wild animals in…



A dog in Paris has become the first case of a pet contracting monkeypox from its owners. Cavan Images via Getty Images

A dog in Paris has caught monkeypox from one of its owners, both of whom were infected with the virus, according to a scientific paper published on Aug. 10, 2022. This is the first case of a dog contracting the monkeypox virus through direct contact with skin lesions on a human.

I am a veterinary pathologist and virologist who has been working with poxviruses for over 20 years. I study how these viruses evade the immune system and am working on modifying poxviruses to prevent infection as well as treat other diseases, including cancer.

With monkeypox spreading in humans throughout the world, my colleagues and I have begun to worry about the increased risk of monkeypox spreading from humans to animals. If monkeypox spreads to wildlife species in the U.S. and Europe, the virus could become endemic in these places – where it has historically been absent – resulting in more frequent outbreaks. The report of the infected dog shows that there is a decent chance these fears could become a reality.

A microscope image of a bunch blue circles in a brown-colored cell.
The monkeypox virus – the blue circles in this image of an infected cell – is a poxvirus similar to smallpox and cowpox and can easily infect many different species. NIAID/Wikimedia Commons, CC BY

A species-jumping virus

Monkeypox is a poxvirus in the same family as variola – the virus that causes smallpox – and cowpox viruses and likely evolved in animals before jumping to humans. Monkeypox causes painful lesions in both humans and animals and, in rare cases, can be deadly. Researchers have found the monkeypox virus in several species of wild rodents, squirrels and primates in Africa, where the virus is endemic. Monkeypox does not need to mutate or evolve at all to be able to infect many different species. It can easily spread from animals to people and back again.

Though there is a fair bit of research on monkeypox, a lot more work has been done on cowpox, a similar zoonotic poxvirus that is endemic in Europe. Over the years, there have been several reports of cowpox infection spreading from animals to humans in Europe.

From people to animals

Until recently, most monkeypox infections occurred in specific areas of Africa where some wildlife species act as reservoirs for the virus. These outbreaks are usually contained quickly through isolation of infected individuals and vaccinating people around the infected individual. The current situation is very different though.

With nearly 40,000 cases globally as of Aug. 17, 2022 – and more than 12,500 cases in the U.S. alone – monkeypox is now widespread within the human population. The risk of any one person transmitting the virus to an animal – particularly a wild one – is small, but the more people are infected, the greater the chances. It’s a numbers game.

There are a number of ways viruses can transfer from animals to people – called spillover – and from people back to animals – called spillback. Since monkeypox is most easily spread through direct skin-to-skin contact, it is a bit more difficult to transmit between species than COVID-19, but certainly possible.

The case of the dog in Paris provides a clear example of how cuddling or being close to a pet can spread the virus. Previous studies on poxviruses like monkeypox have shown that they can stay active in fecal matter. This means that there is a risk of wild animals, likely rodents, catching it from human waste.

A grey rat.
There are a number of species that host monkeypox in Africa – like this gambian rat. Monkeypox can spread from humans to many other animals, including dogs and likely cats and other species of rodents. Louisvarley/Wikimedia Commons, CC BY-SA

The monkeypox virus is also present in saliva. While more research needs to be done, it is potentially possible that an infected person could discard food that would then be eaten by a rodent.

The chances of any one of these events happening is extremely low. But I and other virologists worry that with more people becoming infected, there is a greater risk that rodents or other animals will come into contact with urine, feces or saliva that is contaminated with the virus.

Finally, there is the risk of people giving monkeypox to a pet, which then passes it on to other animals. One case study in Germany described an outbreak of cowpox that was caused when someone took an infected cat to a veterinary clinic and four other cats were subsequently infected. It is feasible that an infected household pet could spread the virus to wild animals somehow.

How to help

One of the key reasons that the World Health Organization was able to eradicate smallpox is that it only infects people, so there were no animal reservoirs that could re-introduce the virus to human populations.

Monkeypox is zoonotic and already has several animal reservoirs, though these are currently limited to Africa. But if monkeypox escapes into wild animal populations in the U.S., Europe or other locations, there will be always be potential for animals to spread it back to humans. With this in mind, there are a number of things people can do to reduce the risks with regard to animals.

As with any infectious disease, be informed about the signs and symptoms of monkeypox and how it is transmitted. If you suspect you have the virus, contact a doctor and isolate from other people.

As a veterinarian, I strongly encourage anyone with monkeypox to protect your pets. The case in Paris shows that dogs can get infected from contact with their owners, and it is likely that many other species, including cats, are susceptible, too. If you have monkeypox, try to have other people take care of your animals for as long as lesions are present. And if you think your pet has a monkeypox infection, be sure to contact a veterinarian so they can test the lesion and provide care when needed.

Even though monkeypox has been declared a public health emergency, it is unlikely to directly affect most people. Taking precautionary steps can protect you and your pets and will hopefully prevent monkeypox from getting into wildlife in the U.S., too.

Amy Macneill does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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UBC researchers discover ‘weak spot’ across major COVID-19 variants

Researchers at the University of British Columbia have discovered a key vulnerability across all major variants of the SARS-CoV-2 virus, including the…



Researchers at the University of British Columbia have discovered a key vulnerability across all major variants of the SARS-CoV-2 virus, including the recently emerged BA.1 and BA.2 Omicron subvariants.

Credit: Dr. Sriram Subramaniam, UBC

Researchers at the University of British Columbia have discovered a key vulnerability across all major variants of the SARS-CoV-2 virus, including the recently emerged BA.1 and BA.2 Omicron subvariants.

The weakness can be targeted by neutralizing antibodies, potentially paving the way for treatments that would be universally effective across variants.

The findings, published today in Nature Communications, use cryo-electron microscopy (cryo-EM) to reveal the atomic-level structure of the vulnerable spot on the virus’ spike protein, known as an epitope. The paper further describes an antibody fragment called VH Ab6 that is able to attach to this site and neutralize each major variant. 

“This is a highly adaptable virus that has evolved to evade most existing antibody treatments, as well as much of the immunity conferred by vaccines and natural infection,” says Dr. Sriram Subramaniam (he/him), a professor at UBC’s faculty of medicine and the study’s senior author. “This study reveals a weak spot that is largely unchanged across variants and can be neutralized by an antibody fragment. It sets the stage for the design of pan-variant treatments that could potentially help a lot of vulnerable people.”

Identifying COVID-19 master keys

Antibodies are naturally produced by our bodies to fight infection, but can also be made in a laboratory and administered to patients as a treatment. While several antibody treatments have been developed for COVID-19, their effectiveness has waned in the face of highly-mutated variants like Omicron.

“Antibodies attach to a virus in a very specific manner, like a key going into a lock. But when the virus mutates, the key no longer fits,” says Dr. Subramaniam. “We’ve been looking for master keys — antibodies that continue to neutralize the virus even after extensive mutations.”

The ‘master key’ identified in this new paper is the antibody fragment VH Ab6, which was shown to be effective against the Alpha, Beta, Gamma, Delta, Kappa, Epsilon and Omicron variants. The fragment neutralizes SARS-CoV-2 by attaching to the epitope on the spike protein and blocking the virus from entering human cells.

The discovery is the latest from a longstanding and productive collaboration between Dr. Subramaniam’s team at UBC and colleagues at the University of Pittsburgh, led by Drs. Mitko Dimitrov and Wei Li. The team in Pittsburgh has been screening large antibody libraries and testing their effectiveness against COVID-19, while the UBC team has been using cryo-EM to study the molecular structure and characteristics of the spike protein.

Focusing in on COVID-19’s weak points

The UBC team is world-renowned for its expertise in using cryo-EM to visualize protein-protein and protein-antibody interactions at an atomic resolution. In another paper published earlier this year in Science, they were the first to report the structure of the contact zone between the Omicron spike protein and the human cell receptor ACE2, providing a molecular explanation for Omicron’s enhanced viral fitness.

By mapping the molecular structure of each spike protein, the team has been searching for areas of vulnerability that could inform new treatments.

“The epitope we describe in this paper is mostly removed from the hot spots for mutations, which is why it’s capabilities are preserved across variants,” says Dr. Subramaniam. “Now that we’ve described the structure of this site in detail, it unlocks a whole new realm of treatment possibilities.”

Dr. Subramaniam says this key vulnerability can now be exploited by drug makers, and because the site is relatively mutation-free, the resulting treatments could be effective against existing—and even future—variants.

“We now have a very clear picture of this vulnerable spot on the virus. We know every interaction the spike protein makes with the antibody at this site. We can work backwards from this, using intelligent design, to develop a slew of antibody treatments,” says Dr. Subramaniam. “Having broadly effective, variant-resistant treatments would be a game changer in the ongoing fight against COVID-19.”

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