It is important to note that the thyroid gland is largely responsible for regulating the rate of protein production in the body. Underactive thyroid means a slower rate of protein production. Because the skin and coat are made up of so much protein, hypothyroidism often results in coat loss or thinning. The body's physiology is full of cycles like these that must be borne in mind as treatment is designed. Fortunately, hypothyroidism is easy to treat, so that part of the cycle can be broken once proper testing has established a hypothyroid diagnosis.
Allergies also represent an overactive immune system, at least initially.
The body mounts a vigorous immune response to a relatively harmless foreign substance, like pollen or dust or a diet component. When allergies persist over long periods, the immune system begins to pour more and more effort into the allergic response alone, exhausting its resources to fight off really dangerous infections. Hence, a dog with bad allergies may develop skin infections that it is relatively helpless to fight off. If stress is chronic, however, cortisone release will also be chronic, which can actually collapse the immune system. The fact that cortisone exists in the body, however, means that medical science can use a synthetic analog of cortisone to interrupt severe immune reactions when it is necessary.