On the optimality of transparent monetary policy

We analyze the optimal design of monetary rules. We suppose there is an agreed upon social welfare function that depends on the randomly fluctuating state of the economy and that the monetary authority has private information about that state. We suppose the government can constrain the policies of the monetary authority by legislating a rule. In general, well-designed rules trade-off the need to constrain policymakers from the standard time consistency problem arising from the temptation for unexpected inflation with the desire to give them flexibility to react to their private information. Surprisingly, we show that for a wide variety of circumstances the optimal rule gives the monetary authority no flexibility. This rule can be interpreted as a strict inflation targeting rule where the target is a prespecified function of publicly observed data. In this sense, optimal monetary policy is transparent.Monetary policy

The optimal degree of discretion in monetary policy

How much discretion should the monetary authority have in setting its policy? This question is analyzed in an economy with an agreed-upon social welfare function that depends on the randomly fluctuating state of the economy. The monetary authority has private information about that state. In the model, well-designed rules trade off society’s desire to give the monetary authority discretion to react to its private information against society’s need to guard against the time inconsistency problem arising from the temptation to stimulate the economy with unexpected inflation. Although this dynamic mechanism design problem seems complex, society can implement the optimal policy simply by legislating an inflation cap that specifies the highest allowable inflation rate. The more severe the time inconsistency problem and the less important is private information, the smaller is the optimal degree of discretion. As either the time inconsistency problem becomes sufficiently severe or private information becomes sufficiently unimportant, the optimal degree of discretion is none.

The optimal degree of discretion in monetary policy

How much discretion should the monetary authority have in setting its policy? This question is analyzed in an economy with an agreed-upon social welfare function that depends on the randomly fluctuating state of the economy. The monetary authority has private information about that state. In the model, well-designed rules trade off society’s desire to give the monetary authority discretion to react to its private information against society’s need to guard against the time inconsistency problem arising from the temptation to stimulate the economy with unexpected inflation. Although this dynamic mechanism design problem seems complex, society can implement the optimal policy simply by legislating an inflation cap that specifies the highest allowable inflation rate. The more severe the time inconsistency problem, the more tightly the cap constrains policy and the smaller is the degree of discretion. As this problem becomes sufficiently severe, the optimal degree of discretion is none. JEL Classification: E5, E6, E52, E58, E61inflation caps, inflation targets, optimal monetary policy, Rules vs discretion, time inconsistency

Exploring Predator-Prey Interactions in Agroecosystems through Molecular Gut-Content Analysis

Generalist predators can contribute to vital ecosystem services by potentially inducing trophic cascades as natural enemies of pests in agroecosystems. As the human population of the world gets larger, we need to produce more food on ever-smaller swaths of available land relying on ecosystem services, in the form of pest control, that may contribute to agricultural sustainability. Teasing apart the exact trophic linkages between predators and prey is a vital first step and essential to uncovering which predators are inducing trophic cascades and should be enhanced through conservation biological control. Combined with ecological experimentation, the main tool used throughout my research to identify trophic linkages is molecular gut-content analysis. I began by investigating mass sampling techniques and found they do not cause contamination in gut-content analysis and may be a simple method for collecting large numbers of cryptic predators for use in determining trophic linkages. Additionally, my research uncovered trophic interactions between stink bugs and generalist predators at multiple scales. Overall, I successfully designed molecular methods to investigate relationships between agricultural pests and generalist predators. A multi-year field study uncovered low predation on stink bug pests in contrast to previous research suggesting that generalist predators were contributing highly to biological control. This research highlights the need for replicated studies before making broad conservation biological control decisions. Although generalist predators were not consuming stink bugs in large numbers, my field cage study showed evidence of superfluous killing by spiders on adult stink bugs, highlighting the need to combine ecological studies with molecular methods to understand consumptive and non-consumptive effects on prey items. Gut-content analysis showed no evidence of consumption, but the field cage study allowed me to uncover the complicated relationships between spiders and stink bugs. In addition, I showed an invasive species can be detected in new areas through molecular gut-content analysis of predators before other sampling methods

Ants Increase Cloverworm Herbivory Via Nonconsumptive Pathways

Generalist arthropod predators often exhibit a range of intraguild interactions reducing their potential efficacy as biological control agents. These interactions may include consumptive or nonconsumptive effects that mediate the impacts of herbivores. We examined interactions among 2 generalist predators, the striped lynx spider (Oxyopes salticus Hentz; Araneae: Oxyopidae) and an ant (Lasius neoniger Emery; Hymenoptera: Formicidae), and a herbivore, the green cloverworm (Hypena scabra F.; Lepidoptera: Erebidae), all prevalent in central Kentucky soybean agroecosystems. We hypothesized that individual predator treatments would reduce green cloverworm survival and resultant leaf damage, but that predators would interfere with each other when both were present. To study these interactions, field cages containing potted soybeans were used to examine 8 treatment combinations (control, cloverworm, spider, ant, spider + cloverworm, ant + cloverworm, ant + spider, and ant + spider + cloverworm). When proportional leaf damage was compared, spider, ant + spider, and spider + cloverworm treatments had significantly less damage than the ant, ant + cloverworm, and ant + spider + cloverworm treatments. Spider presence tended to decrease plant damage while ant presence significantly increased damage. No differences among treatments were found for either spider or cloverworm recovery, indicating potential nonconsumptive effects of ants that may include compensatory feeding. We found that generalist predators, such as L. neoniger, can inhibit biological control due to nonconsumptive interactions even when the same species in a different system provides substantial levels of pest suppression

lassopack: Model selection and prediction with regularized regression in Stata

This article introduces lassopack, a suite of programs for regularized regression in Stata. lassopack implements lasso, square-root lasso, elastic net, ridge regression, adaptive lasso and post-estimation OLS. The methods are suitable for the high-dimensional setting where the number of predictors $p$ may be large and possibly greater than the number of observations, $n$. We offer three different approaches for selecting the penalization (`tuning') parameters: information criteria (implemented in lasso2), $K$-fold cross-validation and $h$-step ahead rolling cross-validation for cross-section, panel and time-series data (cvlasso), and theory-driven (`rigorous') penalization for the lasso and square-root lasso for cross-section and panel data (rlasso). We discuss the theoretical framework and practical considerations for each approach. We also present Monte Carlo results to compare the performance of the penalization approaches.Comment: 52 pages, 6 figures, 6 tables; submitted to Stata Journal; for more information see https://statalasso.github.io

The Decline of U.S. Manufacturing: Empirical Evidence and Policy Implications

This paper focuses on output as a prime indicator of the economic performance of business firms. Decline in the labor force does not necessarily mean that overall productivity is declining as well, due to factors such as improved technology.https://openscholarship.wustl.edu/mlw_papers/1188/thumbnail.jp

The Revival of the Rust Belt

The author questions whether there really is a decline in low-tech industries, and shows a comparison in their growth alongside that of high-tech industries.https://openscholarship.wustl.edu/mlw_papers/1061/thumbnail.jp