Investment cost channel and monetary transmission

Copyright @ 2011 Central Bank Review. This article is available open access through the publisher’s website at the link below.We show that a standard DSGE model with investment cost channels has important model stability and policy implications. Our analysis suggests that in economies characterized by supply side well as demand side channels of monetary transmission, policymakers may have to resort to a much more aggressive stand against inflation to obtain locally unique equilibrium. In such an environment targeting output gap may cause model instability. We also show that it is difficult to distinguish between the New Keynesian model and labor cost channel only case, while with investment cost channel differences are more significant. This result is important as it suggests that if one does not take into account the investment cost channel, one is underestimating the importance of supply side effects

Computational alternatives to obtain time optimal jet engine control

Two computational methods to determine an open loop time optimal control sequence for a simple single spool turbojet engine are described by a set of nonlinear differential equations. Both methods are modifications of widely accepted algorithms which can solve fixed time unconstrained optimal control problems with a free right end. Constrained problems to be considered have fixed right ends and free time. Dynamic programming is defined on a standard problem and it yields a successive approximation solution to the time optimal problem of interest. A feedback control law is obtained and it is then used to determine the corresponding open loop control sequence. The Fletcher-Reeves conjugate gradient method has been selected for adaptation to solve a nonlinear optimal control problem with state variable and control constraints

Lending relationships and monetary policy

Financial intermediation and bank spreads are important elements in the analysis of business cycle transmission and monetary policy. We present a simple framework that introduces lending relationships, a relevant feature of financial intermediation that has been so far neglected in the monetary economics literature, into a dynamic stochastic general equilibrium model with staggered prices and cost channels. Our main findings are: (i) banking spreads move countercyclically generating amplified output responses, (ii) spread movements are important for monetary policy making even when a standard Taylor rule is employed (iii) modifying the policy rule to include a banking spread adjustment improves stabilization of shocks and increases welfare when compared to rules that only respond to output gap and inflation, and finally (iv) the presence of strong lending relationships in the banking sector can lead to indeterminacy of equilibrium forcing the central bank to react to spread movements

Investment cost channel and monetary transmission

We show that a standard DSGE model with investment cost channels has important model stability and policy implications. Our analysis suggests that in economies characterized by supply side well as demand side channels of monetary transmission, policymakers may have to resort to a much more aggressive stand against inflation to obtain locally unique equilibrium. In such an environment targeting output gap may cause model instability. We also show that it is difficult to distinguish between the New Keynesian model and labor cost channel only case, while with investment cost channel differences are more significant. This result is important as it suggests that if one does not take into account the investment cost channel, one is underestimating the importance of supply side effects

Liquidity effects and cost channels in monetary transmission

We study liquidity effects and cost channels within a model of nominal rigidities and imperfect competition that gives explicit role for money-credit markets and investment decisions. We find that cost channels matter for monetary transmission, amplifying the impact of supply shocks and dampening the effects of demand shocks. Liquidity effects only obtain when the policy is specified by an interest rate policy rule and money-credit conditions are determined endogenously. We also find that determinacy issues are particularly relevant when models include the cost channel and explicit money-credit markets

A singlet-triplet extension for the Higgs search at LEP and LHC

We describe a simple extension of the standard model, containing a scalar singlet and a triplet fermion. The model can explain the possible enhancement in the decay $H \rightarrow \gamma \gamma$ at the LHC together with the excess found in the Higgs boson search at LEP2. The structure of the model is motivated by a recent argument, that was used to explain the number of fermion generations. For the sake of completenes we also considered the contributions from higher multiplets.Comment: 12 pages, 2 figure

Precision tests of unitarity in leptonic mixing

In the light of the recent LHC data, we study precision tests sensitive to the violation of lepton universality, in particular the violation of unitarity in neutrino mixing. Keeping all data we find no satisfatory fit, even allowing for violations of unitarity in neutrino mixing. Leaving out sin^2 \theta_{\scriptsize \mbox{eff}} from the hadronic forward-backward asymmetry at LEP, we find a good fit to the data with some evidence of lepton universality violation at the $\mathcal{O}(10^{-3})$ level.Comment: 5 pages, 4 figure

A renormalization group analysis of the Hill model and its HEIDI extension

The parameter space of the simplest extension of the standard model, is studied in the light of the 125 GeV Higgs boson discovery. The Hill model extends the scalar sector of the standard model with a real singlet, that mixes with the SM Higgs boson. The two-loop SM renormalization group equations are completed with the one-loop Hill equations. Stability up to the Planck scale is possible without tension with the other parameters. An extension with more singlet fields, in particular a higher dimensional (HEIDI) field is presented.Comment: 6 pages, 4 figure