The inflation bias under Calvo and Rotemberg pricing

New Keynesian analysis relies heavily on two workhorse models of nominal inertia – due to Calvo (1983) and Rotemberg (1982), respectively – to generate a meaningful role for monetary policy. These are often used interchangeably since they imply an isomorphic linearized Phillips curve and, if the steady-state is efficient, the same policy conclusions. In this paper we compute time-consistent optimal monetary policy in the benchmark New Keynesian model containing each form of price stickiness using global solution techniques. We find that, due to an offsetting endogenous impact on average markups, the inflation bias problem under Calvo contracts is often significantly greater than under Rotemberg pricing, despite the fact that the former typically exhibits far greater welfare costs of inflation. The nonlinearities inherent in the New Keynesian model are significant and the form of nominal inertia adopted is not innocuous

Spectral method for matching exterior and interior elliptic problems

A spectral method is described for solving coupled elliptic problems on an interior and an exterior domain. The method is formulated and tested on the two-dimensional interior Poisson and exterior Laplace problems, whose solutions and their normal derivatives are required to be continuous across the interface. A complete basis of homogeneous solutions for the interior and exterior regions, corresponding to all possible Dirichlet boundary values at the interface, are calculated in a preprocessing step. This basis is used to construct the influence matrix which serves to transform the coupled boundary conditions into conditions on the interior problem. Chebyshev approximations are used to represent both the interior solutions and the boundary values. A standard Chebyshev spectral method is used to calculate the interior solutions. The exterior harmonic solutions are calculated as the convolution of the free-space Green's function with a surface density; this surface density is itself the solution to an integral equation which has an analytic solution when the boundary values are given as a Chebyshev expansion. Properties of Chebyshev approximations insure that the basis of exterior harmonic functions represents the external near-boundary solutions uniformly. The method is tested by calculating the electrostatic potential resulting from charge distributions in a rectangle. The resulting influence matrix is well-conditioned and solutions converge exponentially as the resolution is increased. The generalization of this approach to three-dimensional problems is discussed, in particular the magnetohydrodynamic equations in a finite cylindrical domain surrounded by a vacuum

Efficient Implementation of Elastohydrodynamics via Integral Operators

The dynamics of geometrically non-linear flexible filaments play an important role in a host of biological processes, from flagella-driven cell transport to the polymeric structure of complex fluids. Such problems have historically been computationally expensive due to numerical stiffness associated with the inextensibility constraint, as well as the often non-trivial boundary conditions on the governing high-order PDEs. Formulating the problem for the evolving shape of a filament via an integral equation in the tangent angle has recently been found to greatly alleviate this numerical stiffness. The contribution of the present manuscript is to enable the simulation of non-local interactions of multiple filaments in a computationally efficient manner using the method of regularized stokeslets within this framework. The proposed method is benchmarked against a non-local bead and link model, and recent code utilizing a local drag velocity law. Systems of multiple filaments (1) in a background fluid flow, (2) under a constant body force, and (3) undergoing active self-motility are modeled efficiently. Buckling instabilities are analyzed by examining the evolving filament curvature, as well as by coarse-graining the body frame tangent angles using a Chebyshev approximation for various choices of the relevant non-dimensional parameters. From these experiments, insight is gained into how filament-filament interactions can promote buckling, and further reveal the complex fluid dynamics resulting from arrays of these interacting fibers. By examining active moment-driven filaments, we investigate the speed of worm- and sperm-like swimmers for different governing parameters. The MATLAB(R) implementation is made available as an open-source library, enabling flexible extension for alternate discretizations and different surrounding flows.Comment: 37 pages, 17 figure