Aggressive Oil Extraction and Precautionary Saving: Coping with Volatility

The effects of stochastic oil demand on optimal oil extraction paths and tax, spending and government debt policies are analyzed when the oil demand schedule is linear and preferences quadratic. Without prudence, optimal oil extraction is governed by the Hotelling rule and optimal budgetary policies by the tax and consumption smoothing principle. Volatile oil demand brings forward oil extraction and induces a bigger government surplus. With prudence, the government depletes oil reserves even more aggressively and engages in additional precautionary saving financed by postponing spending and bringing taxes forward, especially if it has substantial monopoly power on the oil market, gives high priority to the public spending target, is very prudent, and future oil demand has high variance. Uncertain economic prospects induce even higher precautionary saving and, if non]oil revenue shocks and oil revenue shocks are positively correlated, even more aggressive oil extraction. In contrast, prudent governments deliberately underestimate oil reserves which induce less aggressive oil depletion and less government saving, but less so if uncertainty about reserves and oil demand are positively correlated.Hotelling rule, tax smoothing, prudence, vigorous oil extraction, precautionary saving, taxation and under-spending, oil price volatility, uncertain economic prospects and oil reserves

Machine Learning-Driven Decision Making based on Financial Time Series

L'abstract è presente nell'allegato / the abstract is in the attachmen

Long Distance GNSS-Denied Visual Inertial Navigation for Autonomous Fixed Wing Unmanned Air Vehicles: SO(3) Manifold Filter based on Virtual Vision Sensor

This article proposes a visual inertial navigation algorithm intended to diminish the horizontal position drift experienced by autonomous fixed wing UAVs (Unmanned Air Vehicles) in the absence of GNSS (Global Navigation Satellite System) signals. In addition to accelerometers, gyroscopes, and magnetometers, the proposed navigation filter relies on the accurate incremental displacement outputs generated by a VO (Visual Odometry) system, denoted here as a Virtual Vision Sensor or VVS, which relies on images of the Earth surface taken by an onboard camera and is itself assisted by the filter inertial estimations. Although not a full replacement for a GNSS receiver since its position observations are relative instead of absolute, the proposed system enables major reductions in the GNSS-Denied attitude and position estimation errors. In order to minimize the accumulation of errors in the absence of absolute observations, the filter is implemented in the manifold of rigid body rotations or SO (3). Stochastic high fidelity simulations of two representative scenarios involving the loss of GNSS signals are employed to evaluate the results. The authors release the C++ implementation of both the visual inertial navigation filter and the high fidelity simulation as open-source software.Comment: 27 pages, 14 figures. arXiv admin note: substantial text overlap with arXiv:2205.1324

Regional Debt in Monetary Unions: Is it Inflationary?

This paper studies the inflationary implications of interest bearing regional debt in a monetary union. Is this debt simply backed by future taxation with no inflationary consequences? Or will the circulation of region debt induce monetization by a central bank? We argue here that both outcomes can arise in equilibrium. In the model economy, there are multiple equilibria which reflect the perceptions of agents regarding the manner in which the debt obligations will be met. In one equilibrium, termed Ricardian, the future obligations are met with taxation by a regional government while in the other, termed Monetization, the central bank is induced to print money to finance the region's obligations. The multiplicity of equilibria reflects a commitment problem of the central bank. A key indicator of the selected equilibrium is the distribution of the holdings of the regional debt. We show that regional governments, anticipating central bank financing of their debt obligations, have an incentive to create excessively large deficits. We use the model to assess the impact of policy measures within a monetary union.Monetary Union ; Inflation tax ; Seigniorage ; Public debt.