The Use and Abuse of Taylor Rules: How Precisely Can We Estimate Them?

This paper draws attention to inconsistencies in estimating simple monetary policy rules and their implications for policy advice. We simulate a macroeconomic model with a backward reaction function similar to Taylor (1993). We estimate different versions of a policy rule, using these simulated data.

Vital Functions Contribute to the Spread of Extracellular Fluids in the Brain: Comparison Between Life and Death

Vascular pulsations, contractions of vascular smooth muscle cells and breathing have been reported to foster movement and clearance of interstitial and cerebrospinal fluids from the brain. The aim of this study was to estimate the contribution of these vital functions. We compared the spread of an injected hydrophilic tracer (Fluoro-Emerald, a 10 kDa fluorescein-coupled dextran amine) in the brains of live anesthetized and sacrificed rats at 30 and 90 min after injection. To determine the overall pattern of distribution of tracers, we created 3D-reconstructions of the horizontal transections of the whole brain. Immunofluorescence staining with laminin and collagen IV was performed to determine the pattern of distribution of tracer in relation to the cerebrovascular basement membranes. We found that diffusion was widely restricted to the periventricular region in sacrificed rats with no spread to the contralateral hemisphere, while the bulk flow occurred along the vasculature and reached the surface and the contralateral hemisphere as soon as 30 min after injection in live anesthetized animals. The tracer appeared to be localized along the vascular basement membranes and along fiber tracts as reported previously. Thus, our data indicate that vital functions are essential for the remote movement of extracellular fluids within the cerebral parenchyma

Spillovers of Domestic Shocks

Even prior to the extreme volatility just observed, output growth volatility-following protracted decline-was flattening or mildly rising in some countries. More widespread was an increasing tendency from the mid-1990s for shocks in one country to transmit rapidly to other countries, creating the potential for heightened global volatility. The higher sensitivity to foreign shocks, in turn, appears related to stepped-up vertical specialization associated with the integration of emerging markets in international trade. Increased international spillovers call for stronger ex post coordination mechanisms when shocks are large but the best ex ante prevention strategy probably is sensible national policies.Spillovers;Developed countries;Emerging markets;External shocks;Industrial production;Production growth;vertical specialization, output growth, domestic shocks, global trade, output volatility, idiosyncratic shocks, trade intensity, world trade, global production, global supply, international trade, supply chain, aggregate volatility, trade share, trade agreement, lead, trade integration, trade links, free trade agreement, global shocks, oil shock, transport equipment, national policies, global integration, transition countries, trade relationships, bilateral trade, per capita income, trade openness, political economy, free trade, vertical integration, trade costs

Inflation Smoothing and the Modest Effect of VAT in Germany

Increases in German core inflation following the 2007 VAT hike were smaller than expected, leading to speculation about delayed inflationary effects. This paper argues to the contrary that price increases in advance of the VAT hike explain the small increase upon implementation. We find that core inflation rose by 0.36 percentage point in the run up and by a further 0.40 percentage point at the time of the VAT hike. Cumulatively, the tax hike contributed to two thirds of the increase in core inflation in 2006-07 at an estimated pass-through of 73 percent. Most of the increase in 2006 was of general nature, while about one sixth can be attributed to durable goods and items with low degree of competition.Value added tax;Price increases;vat, inflation, inflation rates, inflation rate, annual inflation, aggregate demand, inflation dynamics, annual inflation rate, communications, inflationary pressures, inflation data, audio, price stability, increase in inflation, newspapers, rising inflation, low inflation, inflation experiences, average inflation, price inflation, rate of inflation, internet

Revisiting the new normal hypothesis

The paper estimates the impact of crises on output growth, augmenting Cerra and Saxena\u27s (2008) analysis by extending the data until 2010, and by taking into account globalization and contagion effects. The paper finds that the decline in output growth rates following currency, banking and stock market crises are much larger in the sample ending in 2010, than in the one ending in 2001. The results are robust across different specifications and crisis databases. The paper finds that globalization, estimated using a factor augmented panel, has benefitted economic growth in the long run, but those gains have been diminishing in the new millennium. Moreover, globalization also amplifies the negative effects of crises, especially for upper middle and high income OECD countries, starting with the new millenium. As such, lower output growth is to be expected as the new norm, especially in these more advanced economies for a lot longer than what would have been expected in an usual cyclical recovery, confirming El-Erian and PIMCO\u27s (2009) statement of a “new normal.” Last, but not least, the estimation using a factor augmented panel leads to results consistent with thresholds effects of finance and growth, and of globalization on growth

Inflation Targeting Regimes

This paper classifies countries that define their monetary policy framework by an inflation target into full-fledged inflation targeters, eclectic inflation targeters and inflation targeting lite regimes. This classification is based on indicators of the clarity and credibility of the commitment to the inflation target. The three regimes can be viewed as corresponding to different welfare maximizing combinations of policy objectives, each conditional on a country''s "endowed" level of credibility. The credibility of the regimes is related empirically to structural differences. Policy implications are drawn, especially for emerging market countries aiming at full-fledged inflation targeting.Inflation targeting;Price stabilization;inflation, monetary policy, inflation target, central bank, price stability, financial stability, percent inflation, low inflation, inflation objective, inflation targeting regime, monetary regime, monetary aggregate, monetary fund, monetary policy framework, monetary framework, inflation rate, foreign exchange, open market operations, monetary economics, real interest rates, monetary objective, annual inflation, actual inflation, monetary target, monetary policy objectives, monetary program, money demand, independent monetary policy, inflation-targeting, increase in inflation, inflation performance, monetary policy frameworks, monetary policy implementation, money growth, annual inflation rate, national bank, open market operation, rates of inflation, inflationary expectations, rate of inflation, monetary instruments, monetary regimes, average inflation, effects of inflation, transitional monetary regime, inflation targeting framework, monetary policy regimes, lower inflation, variable inflation, monetary aggregate target, monetary targeting, monetary policies, actual rate of inflation, monetary aggregates, monetary stability, macroeconomic stability, monetary frameworks

Vital Functions Contribute to the Spread of Extracellular Fluids in the Brain: Comparison Between Life and Death

Vascular pulsations, contractions of vascular smooth muscle cells and breathing have been reported to foster movement and clearance of interstitial and cerebrospinal fluids from the brain. The aim of this study was to estimate the contribution of these vital functions. We compared the spread of an injected hydrophilic tracer (Fluoro-Emerald, a 10 kDa fluorescein-coupled dextran amine) in the brains of live anesthetized and sacrificed rats at 30 and 90 min after injection. To determine the overall pattern of distribution of tracers, we created 3D-reconstructions of the horizontal transections of the whole brain. Immunofluorescence staining with laminin and collagen IV was performed to determine the pattern of distribution of tracer in relation to the cerebrovascular basement membranes. We found that diffusion was widely restricted to the periventricular region in sacrificed rats with no spread to the contralateral hemisphere, while the bulk flow occurred along the vasculature and reached the surface and the contralateral hemisphere as soon as 30 min after injection in live anesthetized animals. The tracer appeared to be localized along the vascular basement membranes and along fiber tracts as reported previously. Thus, our data indicate that vital functions are essential for the remote movement of extracellular fluids within the cerebral parenchyma