On multigraded generalizations of Kirillov-Reshetikhin modules

We study the category of Z^l-graded modules with finite-dimensional graded pieces for certain Z+^l-graded Lie algebras. We also consider certain Serre subcategories with finitely many isomorphism classes of simple objects. We construct projective resolutions for the simple modules in these categories and compute the Ext groups between simple modules. We show that the projective covers of the simple modules in these Serre subcategories can be regarded as multigraded generalizations of Kirillov-Reshetikhin modules and give a recursive formula for computing their graded characters

Extended T-systems

We use the theory of q-characters to establish a number of short exact sequences in the category of finite-dimensional representations of the quantum affine groups of types A and B. That allows us to introduce a set of 3-term recurrence relations which contains the celebrated T-system as a special case.Comment: 36 pages, latex; v2: version to appear in Selecta Mathematic

Why farmers sometimes love risks: evidence from India

Using a unique data set collected among farmers in India’s semiarid tropics, we document the surprising prevalence of risk-taking behavior in the face of realistically framed high-stakes gambles. We hypothesize that this apparently anomalous behavior is due to a combination of credit constraints and nonconvexities in production. In particular, the high-stakes nature of the gambles creates the potential for a farmer to undertake a productive investment that would normally be unaffordable and thereby move to a permanently higher level of income. We show that the degree to which farmers are willing to accept risk in return for this opportunity appears to relate in an intuitive way to their current agricultural production technology as well as the demographic composition of their household

Extensions and block decompositions for finite-dimensional representations of equivariant map algebras

Suppose a finite group acts on a scheme $X$ and a finite-dimensional Lie algebra $\mathfrak{g}$. The associated equivariant map algebra is the Lie algebra of equivariant regular maps from $X$ to $\mathfrak{g}$. The irreducible finite-dimensional representations of these algebras were classified in previous work with P. Senesi, where it was shown that they are all tensor products of evaluation representations and one-dimensional representations. In the current paper, we describe the extensions between irreducible finite-dimensional representations of an equivariant map algebra in the case that $X$ is an affine scheme of finite type and $\mathfrak{g}$ is reductive. This allows us to also describe explicitly the blocks of the category of finite-dimensional representations in terms of spectral characters, whose definition we extend to this general setting. Applying our results to the case of generalized current algebras (the case where the group acting is trivial), we recover known results but with very different proofs. For (twisted) loop algebras, we recover known results on block decompositions (again with very different proofs) and new explicit formulas for extensions. Finally, specializing our results to the case of (twisted) multiloop algebras and generalized Onsager algebras yields previously unknown results on both extensions and block decompositions.Comment: 41 pages; v2: minor corrections, formatting changed to match published versio

Sticky price models of the business cycle: can the contract multiplier solve the persistence problem?

We construct a quantitative equilibrium model with price setting and use it to ask whether with staggered price setting monetary shocks can generate business cycle fluctuations. These fluctuations include persistent output fluctuations along with the other defining features of business cycles, like volatile investment and smooth consumption. We assume that prices are exogenously sticky for a short period of time. Persistent output fluctuations require endogenous price stickiness in the sense that firms choose not to change prices very much when they can do so. We find that for a wide range of parameter values the amount of endogenous stickiness is small. As a result, we find that in a standard quantitative business cycle model staggered price setting, by itself, does not generate business cycle fluctuations.Business cycles ; Multiplier (Economics) ; Price regulation

New Keynesian models: not yet useful for policy analysis

In the 1970s macroeconomists often disagreed bitterly. Macroeconomists have now largely converged on method, model design, and macroeconomic policy advice. The disagreements that remain all stem from the practical implementation of the methodology. Some macroeconomists think that New Keynesian models are on the verge of being useful for quarter-to-quarter quantitative policy advice. We do not. We argue that the shocks in these models are dubiously structural and show that many of the features of the model as well as the implications due to these features are inconsistent with microeconomic evidence. These arguments lead us to conclude that New Keynesian models are not yet useful for policy analysis.

A critique of structural VARs using real business cycle theory

The main substantive finding of the recent structural vector autoregression literature with a differenced specification of hours (DSVAR) is that technology shocks lead to a fall in hours. Researchers have used these results to argue that business cycle models in which technology shocks lead to a rise in hours should be discarded. We evaluate the DSVAR approach by asking, is the specification derived from this approach misspecified when the data are generated by the very model the literature is trying to discard? We find that it is misspecified. Moreover, this misspecification is so great that it leads to mistaken inferences that are quantitatively large. We show that the other popular specification that uses the level of hours (LSVAR) is also misspecified. We argue that alternative state space approaches, including the business cycle accounting approach, are more fruitful techniques for guiding the development of business cycle theory.> > Replaced by Staff Report No. 364Vector autoregression ; Business cycles

Comparing alternative representations and alternative methodologies in business cycle accounting

We make two comparisons relevant for the business cycle accounting approach. We show that in theory representing the investment wedge as a tax on investment is equivalent to representing this wedge as a tax on capital income as long as the probability distributions over this wedge in the two representations are the same. In practice, convenience dictates differing probability distributions over this wedge in the two representations. Even so, the quantitative results under the two representations are essentially identical. We also compare our methodology, the CKM methodology, to an alternative one used in Christiano and Davis (2006) as well as by us in early incarnations of the business cycle accounting approach. We argue that the CKM methodology rests on more secure theoretical foundations.> > Replaced by Staff Report No. 384Business cycles - Econometric models

Business cycle accounting

We propose a simple method to help researchers develop quantitative models of economic fluctuations. The method rests on the insight that many models are equivalent to a prototype growth model with time-varying wedges which resemble productivity, labor and investment taxes, and government consumption. Wedges corresponding to these variables - efficiency, labor, investment, and government consumption wedges - are measured with data and then fed back into the model in order to assess the fraction of various fluctuations accounted for by these wedges. Applying this method to U.S. data for the Great Depression and the 1982 recession reveals that models with frictions which manifest themselves primarily as investment wedges are not promising for the study of business cycles. The efficiency and labor wedges together account for essentially all of the fluctuations, the investment wedge leads to an increase in output rather than a decline, and the government consumption wedge plays an insignificant role.Business cycles - Econometric models

Accounting for the Great Depression

Economists have offered many theories for the U.S. Great Depression, but no consensus has formed on the main forces behind it. Here we describe and demonstrate a simple methodology for determining which theories are the most promising. We show that a large class of models, including models with various frictions, are equivalent to a prototype growth model with time-varying efficiency, labor, and investment wedges that, at least on face value, look like time-varying productivity, labor taxes, and investment taxes. We use U.S. data to measure these wedges, feed them back into the prototype growth model, and assess the fraction of the fluctuations in 1929?39 that they account for. We find that the efficiency and labor wedges account for essentially all of the decline and subsequent recovery. Investment wedges play, at best, a minor role. This article originally appeared in the American Economic Review. (c) American Economic Association. ; RELATED PAPER: Staff Report 328 Business Cycle AccountingDepressions