The applicability of physical optics in the millimetre and sub-millimetre spectral region. Part II: Application to a three-component model of ice cloud and its evaluation against the bulk single-scattering properties of various other aggregate models

The bulk single-scattering properties of various randomly oriented aggregate ice crystal models are com- pared and contrasted at a number of frequencies between 89 and 874 GHz. The model ice particles consist of the ten-branched plate aggregate, five-branched plate aggregate, eight-branched hexagonal aggregate, Voronoi ice aggregate, six-branched hollow bullet rosette, hexagonal column of aspect ratio unity, and the ten-branched hexagonal aggregate. The bulk single-scattering properties of the latter two ice particle models have been calculated using the light scattering methods described in Part I, which represent the two most extreme members of an ensemble model of cirrus ice crystals. In Part I, it was shown that the method of physical optics could be combined with the T-matrix at a size parameter of about 18 to compute the bulk integral ice optical properties and the phase function in the microwave to sufficient ac- curacy to be of practical value. Here, the bulk single-scattering properties predicted by the two ensemble model members and the Voronoi model are shown to generally bound those of all other models at fre- quencies between 89 and 874 GHz, thus representing a three-component model of ice cloud that can be generally applied to the microwave, rather than using many differing ice particle models. Moreover, the Voronoi model and hollow bullet rosette scatter similarly to each other in the microwave. Furthermore, from the various comparisons, the importance of assumed shapes of the particle size distribution as well as cm-sized ice aggregates is demonstrated.Peer reviewedFinal Accepted Versio

Risk aversion, intertemporal substitution, and the aggregate investment-uncertainty relationship

We analyze the role of risk aversion and intertemporal substitution in a simple dynamic general equilibrium model of investment and savings. Our main finding is that risk aversion cannot by itself explain a negative relationship between aggregate investment and aggregate uncertainty, as the effect of increased uncertainty on investment also depends on the intertemporal elasticity of substitution. In particular, the relationship between aggregate investment and aggregate uncertainty is positive even if agents are very risk averse, as long as the elasticity of intertemporal substitution is low. A negative investment-uncertainty relationship requires that the relative risk aversion and the elasticity of intertemporal substitution are both relatively high or both relatively low. We also show that the implications of our model are consistent with the available empirical evidence

Forecasting economic aggregates by disaggregates

We suggest an alternative use of disaggregate information to forecast the aggregate variable of interest, that is to include disaggregate information or disaggregate variables in the aggregate model as opposed to first forecasting the disaggregate variables separately and then aggregating those forecasts or, alternatively, using only lagged aggregate information in forecasting the aggregate. We show theoretically that the first method of forecasting the aggregate should outperform the alternative methods in population. We investigate whether this theoretical prediction can explain our empirical findings and analyse why forecasting the aggregate using information on its disaggregate components improves forecast accuracy of the aggregate forecast of euro area and US inflation in some situations, but not in others. JEL Classification: C51, C53, E31Disaggregate information, Factor models, forecast model selection, Predictability, VAR

Individual income, incomplete information, and aggregate consumption

In this paper I study a model of life-cycle consumption in which individuals react optimally to their own income process but ignore economy wide information. Since individual income is less persistent than aggregate income consumers will react too little to aggregate income variation. Aggregate consumption will be excessively smooth. Since aggregate information is slowly incorporated into consumption, aggregate consumption will be autocorrelated and correlated with lagged income. The second part of the paper provides empirical evidence on individual and aggregate income processes and calibrates the model using the estimated parameters. The mode predictions roughly correspond to the empirical findings for aggregate consumption data. Allowing for the existence of measurement error in micro income, durables, finite lifetimes of consumers, and advance information improves the predictions of the model. --

Can a Representative-Agent Model Represent a Heterogeneous-Agent Economy?

Accounting for observed fluctuations in aggregate employment, consumption, and real wage using the optimality conditions of a representative household requires preferences that are incompatible with economic priors. In order to reconcile theory with data, we construct a model with heterogeneous agents whose decisions are difficult to aggregate because of incomplete capital markets and the indivisible nature of labor supply. If we were to explain the model-generated aggregate time series using decisions of a stand-in household, such a household must have a non-concave or unstable utility as is often found with the aggregate U.S. data.Representative-Agent Model, Heterogeneous Agent, Macroeconomics

Welfare in Models of Trade with Heterogeneous Firms

I illustrate that the welfare improvement property of the Melitz model is due to the shape of the aggregate labor demand curve, which slopes upwards. By slightly changing some assumptions in the model, this curve may have a negative slope. In this case, increases in aggregate productivity result in a reduction in welfare. For example, this may occur when fixed costs are measured in units of aggregate output instead of labor.heterogenous firms, international trade, aggregate labor demand curve, welfare

Lumpy Investment in Dynamic General Equilibrium

Microeconomic lumpiness matters for macroeconomics. According to our DSGE model, it is responsible for 92 percent of the smoothing in the investment response to aggregate shocks, and it introduces important nonlinearities and history dependance in business cycles and policy sensitivity. General equilibrium forces are responsible for the remaining 8 percent of smoothing and attenuate, but do not eliminate, aggregate nonlinearities. Not only is the lumpy model better micro-founded than the frictionless model, it also represents an improvement in terms of its ability to match conventional RBC moments, since it raises the volatility of consumption and employment to the levels observed in US data. The model also has distinct implications for the economy's response to large shocks and policy interventions. We illustrate these mechanisms by simulating the dynamics of an investment overhang episode. Our main methodological contribution is to develop a calibration procedure that combines data at different levels of aggregation (sectoral and aggregate)Lumpy investment, RBC model,$(S,s)$ model, idiosyncratic and aggregate shocks, sectoral shocks, adjustment costs, inertia, nonlinearities and history dependence, moments matching.

A Structural Vector Autoregressive (SVAR) model for the Hungarian labour market

This paper presents a Structural Vector Autoregressive (SVAR) model with particular attention to the Hungarian labour market. The identification of structural shocks is based on sign restrictions. We identify four structural shocks: a labour supply, an aggregate supply, an aggregate demand and a monetary policy shock. It is worth emphasising that a negative labour supply shock cannot be distinguished from minimum wage hikes in this model. Impulse response analysis shows that after an aggregate supply shock, real wages react more persistently and to a greater extent than prices. In addition, aggregate supply and monetary policy shocks induce relatively strong reactions on the real side of the economy. Unlike in estimated DSGE models for Hungary, we found a positive response of employment with respect to monetary policy shock. All impulse responses are estimated to be less persistent than in the SVAR model estimated using eurozone data pointing to a more flexible Hungarian economy. Our impulse responses are closer to the DSGE model of Jakab and Világi (2008) and Baksa, Benk and Jakab (2009) than to the model of Jakab and Kónya (2009) which describes a relatively rigid labour market. Historical decomposition exercises revealed the presence of positive labour supply shocks between 2003 and 2006. The other important factor in explaining employment was aggregate supply shock. Neither monetary nor aggregate demand shocks contributed significantly to employment fluctuations.Bayesian, VAR, employment, inflation, wage, labour economics