The expectations trap hypothesis

This article explores a hypothesis about the take-off in inflation in the early 1970s. According to the expectations trap hypothesis, the Fed was driven to high money growth by a fear of violating the expectations of high inflation that existed at the time. The authors argue that this hypothesis is more compelling than the Phillips curve hypothesis, according to which the Fed produced the high inflation as an unfortunate by product of a conscious decision to jump start a weak economy.Inflation (Finance) ; Phillips curve

The expectations trap hypothesis

The authors examine the inflation take-off of the early 1970s in terms of the expectations trap hypothesis, according to which fear of violating the public’s inflation expectations pushed the Fed into producing high inflation. This interpretation is compared with the Phillips curve hypothesis, according to which the Fed produced high inflation as the unfortunate byproduct of a conscious decision to jump-start a weak economy. Which hypothesis is more plausible has important implications for what should be done to prevent future inflation flare-ups.Inflation (Finance) ; Phillips curve ; Economic conditions - United States

Taylor rules in a limited participation model

The authors use the limited participation model of money to study Taylor rules' operating characteristics for setting the interest rate. Rules are evaluated according to their ability to protect the economy from bad outcomes like the burst of inflation observed in the 1970s. On the basis of their analysis, the authors argue for a rule that 1) raises the nominal interest rate more than one-for-one with a rise in inflation; and 2) does not change the interest rate in response to a change in output relative to trend.Monetary policy ; Interest rates

Functional-Decode-Forward for the General Discrete Memoryless Two-Way Relay Channel

We consider the general discrete memoryless two-way relay channel, where two users exchange messages via a relay, and propose two functional-decode-forward coding strategies for this channel. Functional-decode-forward involves the relay decoding a function of the users' messages rather than the individual messages themselves. This function is then broadcast back to the users, which can be used in conjunction with the user's own message to decode the other user's message. Via a numerical example, we show that functional-decode-forward with linear codes is capable of achieving strictly larger sum rates than those achievable by other strategies

Capacity Theorems for the AWGN Multi-Way Relay Channel

The L-user additive white Gaussian noise multi-way relay channel is considered, where multiple users exchange information through a single relay at a common rate. Existing coding strategies, i.e., complete-decode-forward and compress-forward are shown to be bounded away from the cut-set upper bound at high signal-to-noise ratios (SNR). It is known that the gap between the compress-forward rate and the capacity upper bound is a constant at high SNR, and that between the complete-decode-forward rate and the upper bound increases with SNR at high SNR. In this paper, a functional-decode-forward coding strategy is proposed. It is shown that for L >= 3, complete-decode-forward achieves the capacity when SNR <= 0 dB, and functional-decode-forward achieves the capacity when SNR >= 0 dB. For L=$, functional-decode-forward achieves the capacity asymptotically as SNR increases.Comment: accepted and to be presented at ISIT 201

Optimal Coding Functions for Pairwise Message Sharing on Finite-Field Multi-Way Relay Channels

This paper considers the finite-field multi-way relay channel with pairwise message sharing, where multiple users exchange messages through a single relay and where the users may share parts of their source messages (meaning that some message parts are known/common to more than one user). In this paper, we design an optimal functional-decode-forward coding scheme that takes the shared messages into account. More specifically, we design an optimal function for the relay to decode (from the users on the uplink) and forward (back to the users on the downlink). We then show that this proposed function-decode-forward coding scheme can achieve the capacity region of the finite-field multi-way relay channel with pairwise message sharing. This paper generalizes our previous result for the case of three users to any number of users.Comment: Author's final version (accepted for presentation at the 2014 IEEE International Conference on Communications [ICC 2014]

The Binary-Symmetric Parallel-Relay Network

We present capacity results of the binary-symmetric parallel-relay network, where there is one source, one destination, and K relays in parallel. We show that forwarding relays, where the relays merely transmit their received signals, achieve the capacity in two ways: with coded transmission at the source and a finite number of relays, or uncoded transmission at the source and a sufficiently large number of relays. On the other hand, decoding relays, where the relays decode the source message, re-encode, and forward it to the destination, achieve the capacity when the number of relays is small.Comment: accepted and to be presented at ISIT 201