Monetary Policy Transparency and Pass-Through of retail interest rates

This paper examines the degree of pass-through and adjustment speed of retail interest rates in response to changes in benchmark wholesale rates in New Zealand during the period 1994 to 2004. We consider the effect of policy transparency and financial structure in the transmission mechanism. New Zealand is the first OECD country to adopt a formal inflation targeting regime with specific accountability and transparency provisions. Policy transparency was further enhanced by a shift from quantity (settlement cash) to price (interest rate) operating targets in 1999. We find complete long-term pass-through for some but not all retail rates. Our results also show that the introduction of the Official Cash Rate (OCR) increased the pass-through of floating and deposit rates but not fixed mortgage rates. Overall, our results confirm that monetary policy rate has more influence on short-term interest rates and that increased transparency has lowered instrument volatility and enhanced the efficacy of policy

The role of energy productivity in the U.S. agriculture

This paper investigates the role of energy on U.S. agricultural productivity using panel data at the state level for the period 1960-2004. We first provide a historical account of energy use in U.S. agriculture. To do this we rely on the Bennet cost indicator to study how the price and volume components of energy costs have developed over time. We then proceed to analyze the contribution of energy to productivity in U.S. agriculture employing the Bennet-Bowley productivity indicator. An important feature of the Bennet-Bowley indicator is its direct association with the change in (normalized) profits. Thus our study is also able to analyze the link between profitability and productivity in U.S. agriculture. Panel regression estimates indicate that energy prices have a negative effect on profitability in the U.S. agricultural sector. We also find that energy productivity has generally remained below total farm productivity following the 1973-1974 global energy crisis

The IBMAP approach for Markov networks structure learning

In this work we consider the problem of learning the structure of Markov networks from data. We present an approach for tackling this problem called IBMAP, together with an efficient instantiation of the approach: the IBMAP-HC algorithm, designed for avoiding important limitations of existing independence-based algorithms. These algorithms proceed by performing statistical independence tests on data, trusting completely the outcome of each test. In practice tests may be incorrect, resulting in potential cascading errors and the consequent reduction in the quality of the structures learned. IBMAP contemplates this uncertainty in the outcome of the tests through a probabilistic maximum-a-posteriori approach. The approach is instantiated in the IBMAP-HC algorithm, a structure selection strategy that performs a polynomial heuristic local search in the space of possible structures. We present an extensive empirical evaluation on synthetic and real data, showing that our algorithm outperforms significantly the current independence-based algorithms, in terms of data efficiency and quality of learned structures, with equivalent computational complexities. We also show the performance of IBMAP-HC in a real-world application of knowledge discovery: EDAs, which are evolutionary algorithms that use structure learning on each generation for modeling the distribution of populations. The experiments show that when IBMAP-HC is used to learn the structure, EDAs improve the convergence to the optimum

Scheme Independence and the Exact Renormalization Group

We compute critical exponents in a $Z_2$ symmetric scalar field theory in three dimensions, using Wilson's exact renormalization group equations expanded in powers of derivatives. A nontrivial relation between these exponents is confirmed explicitly at the first two orders in the derivative expansion. At leading order all our results are cutoff independent, while at next-to-leading order they are not, and the determination of critical exponents becomes ambiguous. We discuss the possible ways in which this scheme ambiguity might be resolved.Comment: 15 pages, TeX with harvmac, 2 figures in compressed postscript; presentation of first section revised, several minor errors corrected, two references adde

Renormalization Group and Universality

It is argued that universality is severely limited for models with multiple fixed points. As a demonstration the renormalization group equations are presented for the potential and the wave function renormalization constants in the $O(N)$ scalar field theory. Our equations are superior compared with the usual approach which retains only the contributions that are non-vanishing in the ultraviolet regime. We find an indication for the existence of relevant operators at the infrared fixed point, contrary to common expectations. This result makes the sufficiency of using only renormalizable coupling constants in parametrizing the long distance phenomena questionable.Comment: 32pp in plain tex; revised version to appear in PR

Quantum and Thermal Fluctuations in Field Theory

Blocking transformation is performed in quantum field theory at finite temperature. It is found that the manner temperature deforms the renormalized trajectories can be used to understand better the role played by the quantum fluctuations. In particular, it is conjectured that domain formation and mass parameter generation can be observed in theories without spontaneous symmetry breaking.Comment: 27pp+7 figures, MIT-CTP-214

Derivative expansion of the renormalization group in O(N) scalar field theory

We apply a derivative expansion to the Legendre effective action flow equations of O(N) symmetric scalar field theory, making no other approximation. We calculate the critical exponents eta, nu, and omega at the both the leading and second order of the expansion, associated to the three dimensional Wilson-Fisher fixed points, at various values of N. In addition, we show how the derivative expansion reproduces exactly known results, at special values N=infinity,-2,-4, ... .Comment: 29 pages including 4 eps figures, uses LaTeX, epsfig, and latexsy

The Saracens as Demons in Cretan Legends

Translatio

Lectures on the functional renormalization group method

These introductory notes are about functional renormalization group equations and some of their applications. It is emphasised that the applicability of this method extends well beyond critical systems, it actually provides us a general purpose algorithm to solve strongly coupled quantum field theories. The renormalization group equation of F. Wegner and A. Houghton is shown to resum the loop-expansion. Another version, due to J. Polchinski, is obtained by the method of collective coordinates and can be used for the resummation of the perturbation series. The genuinely non-perturbative evolution equation is obtained in a manner reminiscent of the Schwinger-Dyson equations. Two variants of this scheme are presented where the scale which determines the order of the successive elimination of the modes is extracted from external and internal spaces. The renormalization of composite operators is discussed briefly as an alternative way to arrive at the renormalization group equation. The scaling laws and fixed points are considered from local and global points of view. Instability induced renormalization and new scaling laws are shown to occur in the symmetry broken phase of the scalar theory. The flattening of the effective potential of a compact variable is demonstrated in case of the sine-Gordon model. Finally, a manifestly gauge invariant evolution equation is given for QED.Comment: 47 pages, 11 figures, final versio