Chaotic Dynamics in Optimal Monetary Policy

There is by now a large consensus in modern monetary policy. This consensus has been built upon a dynamic general equilibrium model of optimal monetary policy as developed by, e.g., Goodfriend and King (1997), Clarida et al. (1999), Svensson (1999) and Woodford (2003). In this paper we extend the standard optimal monetary policy model by introducing nonlinearity into the Phillips curve. Under the specific form of nonlinearity proposed in our paper (which allows for convexity and concavity and secures closed form solutions), we show that the introduction of a nonlinear Phillips curve into the structure of the standard model in a discrete time and deterministic framework produces radical changes to the major conclusions regarding stability and the efficiency of monetary policy. We emphasize the following main results: (i) instead of a unique fixed point we end up with multiple equilibria; (ii) instead of saddle--path stability, for different sets of parameter values we may have saddle stability, totally unstable equilibria and chaotic attractors; (iii) for certain degrees of convexity and/or concavity of the Phillips curve, where endogenous fluctuations arise, one is able to encounter various results that seem intuitively correct. Firstly, when the Central Bank pays attention essentially to inflation targeting, the inflation rate has a lower mean and is less volatile; secondly, when the degree of price stickiness is high, the inflation rate displays a larger mean and higher volatility (but this is sensitive to the values given to the parameters of the model); and thirdly, the higher the target value of the output gap chosen by the Central Bank, the higher is the inflation rate and its volatility.Comment: 11 page

Firms' Main Market, Human Capital and Wages

Recent international trade literature emphasizes two features in characterizing the current patterns of trade: efficiency heterogeneity at the firm level and quality differentiation. This paper explores human capital and wage differences across firms in that context. We build a partial equilibrium model predicting that firms selling in more-remote markets employ higher human capital and pay higher wages to employees within each education group. The channel linking these variables is firms’ endogenous choice of quality. Predictions are tested using Spanish employer-employee matched data that classify firms according to four main destination markets: local, national, European Union, and rest of the World. Employees’ average education is increasing in the remoteness of firm’s main output market. Market–destination wage premia are large, increasing in the remoteness of the market, and increasing in individual education. These results suggest that increasing globalization may play a significant role in raising wage inequality within and across education groups

Anomalous Quasiparticle Lifetime in Graphite: Band Structure Effects

We report ab initio calculation of quasiparticle lifetimes in graphite, as determined from the imaginary part of the self-energy operator within the GW aproximation. The inverse lifetime in the energy range from 0.5 to 3.5 eV above the Fermi level presents significant deviations from the quadratic behavior naively expected from Fermi liquid theory. The deviations are explained in terms of the unique features of the band structure of this material. We also discuss the experimental results from different groups and make some predictions for future experiments.Comment: 4 pages, 4 figures, submitted PR

Central Bank Policies and Income and Wealth Inequality:A Survey

This paper reviews recent research on the relationship between central bank policies and inequality. A new paradigm which integrates sticky-prices, incomplete markets, and heterogeneity among households is emerging, which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality. The new paradigm features multiple distributional channels of monetary policy. Most empirical studies, however, analyze each potential channel of redistribution in isolation. Our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings, although there seems to be a consensus that higher inflation, at least above some threshold, increases inequality. In contrast to common wisdom, conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut. To better understand policy effects on inequality, future research should focus on the estimation of General Equilibrium models with heterogeneous agents

Employment Expectations and Gross Flows by Type of Work Contract

There is growing interest in understanding firms’ temporary and permanent employment practices and how institutional changes shape them. Using data on Spanish establishments, we examine: (a) how employers adjust temporary and permanent job and worker flows to prior employment expectations, and (b) how the 1994 and 1997 labour reforms promoting permanent employment affected establishments’ employment practices. Generally, establishments’ prior employment expectations are realized through changes in all job and worker flows. However, establishments uniquely rely on temporary hires as a buffer to confront diminishing long-run employment expectations. None of the reforms significantly affected establishments’ net temporary or permanent employment flows.http://deepblue.lib.umich.edu/bitstream/2027.42/40032/3/wp646.pd

Plasmonic excitations in noble metals: The case of Ag

The delicate interplay between plasmonic excitations and interband transitions in noble metals is described by means of {\it ab initio} calculations and a simple model in which the conduction electron plasmon is coupled to the continuum of electron-hole pairs. Band structure effects, specially the energy at which the excitation of the $d$-like bands takes place, determine the existence of a subthreshold plasmonic mode, which manifests itself in Ag as a sharp resonance at 3.8 eV. However, such a resonance is not observed in the other noble metals. Here, this different behavior is also analyzed and an explanation is provided.Comment: 9 pages, 8 figure

Interfacing Neurons with Nanostructured Electrodes Modulates Synaptic Circuit Features

Understanding neural physiopathology requires advances in nanotechnology-based interfaces, engineered to monitor the functional state of mammalian nervous cells. Such interfaces typically contain nanometer-size features for stimulation and recording as in cell-non-invasive extracellular microelectrode arrays. In such devices, it turns crucial to understand specific interactions of neural cells with physicochemical features of electrodes, which could be designed to optimize performance. Herein, versatile flexible nanostructured electrodes covered by arrays of metallic nanowires are fabricated and used to investigate the role of chemical composition and nanotopography on rat brain cells in vitro. By using Au and Ni as exemplary materials, nanostructure and chemical composition are demonstrated to play major roles in the interaction of neural cells with electrodes. Nanostructured devices are interfaced to rat embryonic cortical cells and postnatal hippocampal neurons forming synaptic circuits. It is shown that Au-based electrodes behave similarly to controls. Contrarily, Ni-based nanostructured electrodes increase cell survival, boost neuronal differentiation, and reduce glial cells with respect to flat counterparts. Nonetheless, Au-based electrodes perform superiorly compared to Ni-based ones. Under electrical stimulation, Au-based nanostructured substrates evoke intracellular calcium dynamics compatible with neural networks activation. These studies highlight the opportunity for these electrodes to excite a silent neural network by direct neuronal membranes depolarization