Examining the Effectiveness of Monetary Policy

The main objective of my dissertation is to examine the causal effect of monetary policy. The first two chapters focus on the effectiveness of inflation targeting considering the role of preconditions such as institutional independence of central banks and a healthy financial system. It also analyzes the time-varying behavior of the inflation gap in all explicit inflation targeting countries and captures the gradual transition of actual inflation to its target over time. The last chapter examines monetary unification impact on bond markets before and after the European crisis. Chapter 2 estimates the treatment effect of inflation targeting for 27 explicit inflation targeting countries. Our approach takes into account the problem of model misspecification and inconsistent estimation of parametric propensity scores by using a nonparametric series estimator and semiparametric single index method. In addition, this chapter also examines the impact of inflation targeting regime on a wider set of macroeconomic outcomes. The findings suggest that the results are sensitive to the choice of propensity score estimates based on different methods, and the semiparametric single-index model of propensity score provides the most economically meaningful results. The findings illustrate that the inflation targeting framework lowers inflation variability and improves fiscal discipline. We find that this monetary policy regime reduces the real exchange rate volatility in developing countries but increases it in developed economies. Chapter 3 analyzes the performance of the central banks by examining their success in achieving their explicit inflation targets. For this purpose, we decompose the inflation gap into predictable and unpredictable components. We argue that the central banks are successful if the predictable component in the inflation gap diminishes over time. The predictable component of inflation gap is measured by the conditional mean of a parsimonious time-varying autoregressive model. Our results find considerable heterogeneity in the success of these IT countries in achieving their targets at the start of this policy regime. Our findings also suggest that the central banks of inflation targeting countries started targeting inflation implicitly before becoming an explicit inflation targeter. The panel data analysis suggests that the relative success of these countries in reducing the gap is influenced by their institutional characteristics. Chapter 4 determines the behavior of bond yields in Eurozone by examining the antithetic role of monetary unification before and after the European Debt Crisis. We study the causal effect of monetary unification on the European bond markets. We capture the causal effect by estimating treatment effects of European union. The findings illustrate that the treatment effects on bond yields varies before and after the European crisis. The results indicate that monetary unification reduces the level and volatility of long-term and short-term sovereign bond yields for the period before the crisis, 1993--2008. However, after the banking crisis, we witnessed a rise in yield spreads due to higher degree of debt-GDP ratios and higher risk of default in sovereign bonds

Geochemistry and Origin of Diagenetic Fluids and Paleohydrology of Paleozoic Carbonates in Southwestern Ontario, Canada

This study presents integrated petrography, stable carbon and oxygen isotopes, strontium isotopes and rare earth elements (REE) geochemistry as well as fluid inclusion microthermometry of diagenetic minerals from the Paleozoic carbonates succession of southwestern Ontario, Canada. These data provide new insights into the nature of fluids affecting these rocks and their spatial and temporal relationships. Fractures in the Paleozoic succession had an important role in reservoir enhancement, channelling of diagenetic fluids and migration of hydrocarbons. The spatial patterns, extent of dolomitization and dolomite petrography indicate that different hydrologic systems were responsible for dolomitization in each of the stratigraphic intervals considered. Fine-crystalline Devonian and Silurian dolomite formed in early stages of diagenesis whereas coarse-crystalline fracture-related Ordovician dolomite formed in later stages of diagenesis in burial environment and in the presence of hydrothermal fluids. The distinct δ18 Ofluid , δ 13 C, ΣREE values, and REESN patterns of dolomite from each age interval suggest compartmentalization of diagenetic fluids. The δ18 Ofluid and 87 Sr/ 86 Sr ratios indicate diagenetic fluids in each strata originated from coeval seawater and evolved through water/rock interaction. The more positive δ 18 Ofluid calculated from dolomite δ18 O values and the high salinity of Ordovician and Silurian brines and less radiogenic 87 Sr/86 Sr ratios of Ordovician dolomite relative to those of coeval seawater indicate mixing of Ordovician and Silurian connate waters with 18 O-enriched fluids influenced by dissolution of Silurian evaporites. The significantly higher dolomite Th values (75 to 120°C) from Devonian to Ordovician units relative to inferred maximum burial temperature (60 to 90°C) of these strata suggest involvement of hydrothermal fluids in the precipitation and/or recrystallization of dolomite. The presence of hydrocarbon-bearing fluid inclusions with high T h values (\u3e80°C) in late-stage calcite cements from Devonian to Ordovician and their negative δ 13 C values (approaching -32[per thousand]VPDB) implies that hydrothermal diagenetic fluids carried hydrocarbons. A thermal anomaly along the mid-continent rift during Devonian to Mississippian (Alleghanian orogeny) time likely was the source of excess heat in the Michigan Basin. The potential thermal buoyancy of hot brines was the driving force for migration of hydrothermal fluids from the center of the basin towards its margin through regional aquifers and network of fractures

Variants of Mixtures: Information Properties and Applications

In recent years, we have studied information properties of various types of mixtures of probability distributions and introduced a new type, which includes previously known mixtures as special cases. These studies are disseminated in different fields: reliability engineering, econometrics, operations research, probability, the information theory, and data mining. This paper presents a holistic view of these studies and provides further insights and examples. We note that the insightful probabilistic formulation of the mixing parameters stipulated by Behboodian (1972) is required for a representation of the well-known information measure of the arithmetic mixture. Applications of this information measure presented in this paper include lifetime modeling, system reliability, measuring uncertainty and disagreement of forecasters, probability modeling with partial information, and information loss of kernel estimation. Probabilistic formulations of the mixing weights for various types of mixtures provide the Bayes-Fisher information and the Bayes risk of the mean residual function

A Review of Economic Incentives for Efficient Operation of Flexible Transmission

The growing penetration of renewable energy requires upgrades to the transmission network to ensure the deliverability of renewable generation. As an efficient alternative to transmission expansion, flexible transmission technologies, whose benefits have been widely studied, can alleviate transmission system congestion and enhance renewable energy integration. However, under the current market structure, investments for these technologies only receive a regulated rate of return, providing little to no incentive for efficient operation. Additionally, a regulated rate of return creates an incentive for building more transmission lines rather than efficient utilization of the existing system. Therefore, investments in flexible transmission technologies remain rather limited. To facilitate the deployment of flexible transmission, improve system efficiency, and accommodate renewable energy integration, a proper incentive structure for flexible transmission technologies, compatible with the current market design, is vital. This paper reviews the current market-based mechanisms for various flexible transmission technologies, including impedance control, dynamic line rating, and transmission switching. This review pinpoints current challenges of the market-based operation of flexible transmission and provides insights for future endeavors in designing efficient price signals for flexible transmission operation.Comment: 2023 55th North American Power Symposium (NAPS

Flexible Transmission: A Comprehensive Review of Concepts, Technologies, and Market

As global concerns regarding climate change are increasing worldwide, the transition towards clean energy sources has accelerated. Accounting for a large share of energy consumption, the electricity sector is experiencing a significant shift towards renewable energy sources. To accommodate this rapid shift, the transmission system requires major upgrades. Although enhancing grid capacity through transmission system expansion is always a solution, this solution is very costly and requires a protracted permitting process. The concept of flexible transmission encompasses a broad range of technologies and market tools that enable effective reconfiguration and manipulation of the power grid for leveraged dispatch of renewable energy resources. The proliferation of such technologies allows for enhanced transfer capability over the current transmission network, thus reducing the need for grid expansion projects. This paper comprehensively reviews flexible transmission technologies and their role in achieving a net-zero carbon emission grid vision. Flexible transmission definitions from different viewpoints are discussed, and mathematical measures to quantify grid flexibility are reviewed. An extensive range of technologies enhancing flexibility across the grid is introduced and explored in detail. The environmental impacts of flexible transmission, including renewable energy utilization and carbon emission reduction, are presented. Finally, market models required for creating proper incentives for the deployment of flexible transmission and regulatory barriers and challenges are discussed

Examining the Success of the Central Banks in Inflation Targeting Countries: The Dynamics of Inflation Gap and the Institutional Characteristics

This paper analyzes the performance of central banks in 27 inflation targeting countries by examining their success in achieving their explicit inflation targets. For this purpose, we decompose the inflation gap, the difference between actual inflation and inflation target, into predictable and unpredictable components. We argue that the central banks are successful if the predictable component in the inflation gap diminishes over time. The predictable component of inflation gap is measured by the conditional mean of a time-varying autoregressive model. Our results find considerable heterogeneity in the success of these IT countries in achieving their targets at the start of this policy regime. Our findings also suggest that the central banks of the IT adopting countries started targeting inflation implicitly before becoming an explicit inflation targeter. The panel data analysis suggests that the relative success of these countries in reducing the gap is influenced by their institutional characteristics particularly by fiscal discipline and macroeconomic performance

On the Effectiveness of Inflation Targeting: Evidence from a Semiparametric Approach

This paper estimates the treatment effect of inflation targeting for all explicit inflation targeting countries by taking into account the problem of model misspecification and inconsistent estimation of parametric propensity scores by using a semiparametric single index method. In addition, our study uses a broader set of preconditions for inflation targeting and macroeconomic outcome variables than the existing literature. Overall our results suggest no significant difference in level of inflation and inflation volatility in targeters versus non-targeters after the adoption of inflation targeting. Unlike parametric and non-parametric method, we find that inflation targeting leads to a significant decline in the sacrifice ratio and interest rate volatility in developed economies. The results suggest that inflation targeting framework enhances fiscal discipline in both industrial and developing countries

On the Effectiveness of Inflation Targeting: Evidence from a Semiparametric Approach

This paper estimates the treatment effect of inflation targeting for all explicit inflation targeting countries by taking into account the problem of model misspecification and inconsistent estimation of parametric propensity scores by using a semiparametric single index method. In addition, our study uses a broader set of preconditions for inflation targeting and macroeconomic outcome variables than the existing literature. Overall our results suggest no significant difference in level of inflation and inflation volatility in targeters versus non-targeters after the adoption of inflation targeting. Unlike parametric and non-parametric method, we find that inflation targeting leads to a significant decline in the sacrifice ratio and interest rate volatility in developed economies. The results suggest that inflation targeting framework enhances fiscal discipline in both industrial and developing countries

CoLA, Works in Progress Series

Georgia Southern University faculty member, Prof. Omid Ardakani was a presenter at Armstrong State University, CoLA, Works in Progress Serie

Presentation given at Georgia Southern University, Parker College of Business

Presentation given at Georgia Southern University, Parker College of Business