Consumption Growth Parallels Income Growth: Some New Evidence

This paper argues that the versions of both permanent income and life-cycle theories which have recently become fashionable are inconsistent with the grossest features of cross-country and cross-section data on consumption and income. There is clear evidence that consumption and income growth are much more closely linked than would be predicted by these theories. it appears that consumption smoothing takes place over periods of several years not several decades. These results confirm Milton Friedman's (1957) initial view that: "The permanent income component is not to be regarded as expected lifetime earnings... It is to be interpreted as the mean income at any age regarded as permanent by the consumer unit in question, which in turn depends on its horizon and foresightedness." They call into question the usefulness of standard representative Consumer approaches to the analysis of saving behavior. And they call for increased emphasis on liquidity constraints and short run precautionary saving as determinants of consumption behavior.

Non-linear Market Behavior: Events Detection in the Malaysian Stock Market

This paper advocates a reverse from of event studies that is data-dependent to determine endogeneously the events that trigger non-linear market behavior. Using the Malaysian stock market as our case study, coupled with the ‘windowing' approach proposed by Hinich and Patterson (1995), the present study is able to identify major political and economic events that contributed to the short bursts of non-linear behavior. The present framework can be extended to individual firm to examine the adjustment of its stock price to firm-specific events, which will provide deeper insight into issues on corporate finance.

Future Directions in Parity Violation: From Quarks to the Cosmos

I discuss the prospects for future studies of parity-violating (PV) interactions at low energies and the insights they might provide about open questions in the Standard Model as well as physics that lies beyond it. I cover four types of parity-violating observables: PV electron scattering; PV hadronic interactions; PV correlations in weak decays; and searches for the permanent electric dipole moments of quantum systems.Comment: Talk given at PAVI 06 workshop on parity-violating interactions, Milos, Greece (May, 2006); 10 page

A search for varying fundamental constants using Hz-level frequency measurements of cold CH molecules

Many modern theories predict that the fundamental constants depend on time, position, or the local density of matter. We develop a spectroscopic method for pulsed beams of cold molecules, and use it to measure the frequencies of microwave transitions in CH with accuracy down to 3 Hz. By comparing these frequencies with those measured from sources of CH in the Milky Way, we test the hypothesis that fundamental constants may differ between the high and low density environments of the Earth and the interstellar medium. For the fine structure constant we find \Delta\alpha/\alpha = (0.3 +/- 1.1)*10^{-7}, the strongest limit to date on such a variation of \alpha. For the electron-to-proton mass ratio we find \Delta\mu/\mu = (-0.7 +/- 2.2) * 10^{-7}. We suggest how dedicated astrophysical measurements can improve these constraints further and can also constrain temporal variation of the constants.Comment: 8 pages, 3 figure

A retrospective on Friedman’s Theory of Permanent Income

Friedman’s book on the “Consumption Function” is one of the great works of Economics demonstrating how the interplay between theoretical ideas and data analysis could lead to major policy implications. We present a short review of Friedman’s Permanent Income Hypothesis, the origins of the idea and its theoretical foundations. We give a brief overview of its influence in modern economics and discuss some relevant empirical results and the way they relate to the original approach taken by Friedman

States for phase estimation in quantum interferometry

Ramsey interferometry allows the estimation of the phase $\phi$ of rotation of the pseudospin vector of an ensemble of two-state quantum systems. For $\phi$ small, the noise-to-signal ratio scales as the spin-squeezing parameter $\xi$, with $\xi<1$ possible for an entangled ensemble. However states with minimum $\xi$ are not optimal for single-shot measurements of an arbitrary phase. We define a phase-squeezing parameter, $\zeta$, which is an appropriate figure-of-merit for this case. We show that (unlike the states that minimize $\xi$), the states that minimize $\zeta$ can be created by evolving an unentangled state (coherent spin state) by the well-known 2-axis counter-twisting Hamiltonian. We analyse these and other states (for example the maximally entangled state, analogous to the optical "NOON" state $|\psi> = (|N,0>+|0,N>)/\sqrt{2}$) using several different properties, including $\xi$, $\zeta$, the coefficients in the pseudo angular momentum basis (in the three primary directions) and the angular Wigner function $W(\theta,\phi)$. Finally we discuss the experimental options for creating phase squeezed states and doing single-shot phase estimation.Comment: 8 pages and 5 figure

Inflation and the size of government

It is commonly supposed in public and academic discourse that inflation and big government are related. The authors show that economic theory delivers such a prediction only in special cases. As an empirical matter, inflation is significantly positively related to the size of government mainly when periods of war and peace are compared. The authors find a weak positive peacetime time series correlation between inflation and the size of government and a negative cross-country correlation of inflation with non-defense spending.Inflation (Finance)

Using intraday data to gauge financial market responses to Fed and ECB monetary policy decisions

This paper examines bond and stock market volatility reactions in the euro area and the US following their respective economies’ monetary policy decisions, over a uniform sample period (April 1999 to May 2006). For this purpose, intraday data on the US and euro area bond and stock markets are used. A strong upsurge in intraday volatility at the time of the release of the monetary policy decisions by the two central banks is found, which is more pronounced for the US financial markets following Fed monetary policy decisions. Part of the increase in intraday volatility in the two economies surrounding monetary policy decisions can be explained by both news of the level of monetary policy and revisions in the expected future monetary policy path. The observed strong discrepancy between asset price reactions in the US and in the euro area following monetary policy decisions still remains a puzzle, although some tentative explanations are provided in the paper. JEL Classification: E52, E58, G14intraday data, monetary policy