Debt limits and endogenous growth

This paper studies the consequences on growth and welfare of imposing limits to public borrowing. In the model economy, government spending may play two different roles, either as input in the production function, or providing services directly in the utility function. In these setups I study the effects of different fiscal policies with and without debt limits both in the balanced growth path and during the transitional dynamics. In the long run, if there is no limit, the growth effects of raising labor income taxes are negative, regardless of the role of government spending. However, the role public spending is crucial for the growth effects of changes in the ratio of public expenditures to output. In the presence of a limit to debt, higher labor tax rates have a positive effect on growth if government spending is productive. The opposite is true when private capital drives growth. Regarding welfare, raising labor income taxes imply a lower welfare cost of reducing debt than does cutting government spending, when this is productive

Performance of interest rate rules under credit market imperfections

The stabilization effects of Taylor rules are analyzed in a limited participation framework with and without credit market imperfections in capital goods production. Financial frictions substantially amplify the impact of shocks, and also reinforce the stabilizing or destabilizing effects of interest rate rules. However, these effects are reversed relative to New Keynesian models: under limited participation, interest rate rules are stabilizing for technology shocks, but imply an output-inflation tradeoff for demand shocks. Moreover, because financial frictions imply excessive fluctuation, stabilization via an interest rate rule can be a welfare-improving response to technology shocks

Cooling, Physical Scales and the Vacuum Structure of Y-M Theories

We present a cooling method controlled by a physical cooling radius that defines a scale below which fluctuations are smoothed out while leaving physics unchanged at all larger scales. This method can be generally used as a gauge invariant low pass filter to extract the physics from noisy MC configurations. Here we apply this method to study topological properties of lattice gauge theories where it allows to retain instanton--anti-instanton pairs.Comment: Lattice'99 contribution, 3 pages, 5 figure

Simulation of Rapidly-Exploring Random Trees in Membrane Computing with P-Lingua and Automatic Programming

Methods based on Rapidly-exploring Random Trees (RRTs) have been widely used in robotics to solve motion planning problems. On the other hand, in the membrane computing framework, models based on Enzymatic Numerical P systems (ENPS) have been applied to robot controllers, but today there is a lack of planning algorithms based on membrane computing for robotics. With this motivation, we provide a variant of ENPS called Random Enzymatic Numerical P systems with Proteins and Shared Memory (RENPSM) addressed to implement RRT algorithms and we illustrate it by simulating the bidirectional RRT algorithm. This paper is an extension of [21]a. The software presented in [21] was an ad-hoc simulator, i.e, a tool for simulating computations of one and only one model that has been hard-coded. The main contribution of this paper with respect to [21] is the introduction of a novel solution for membrane computing simulators based on automatic programming. First, we have extended the P-Lingua syntax –a language to define membrane computing models– to write RENPSM models. Second, we have implemented a new parser based on Flex and Bison to read RENPSM models and produce source code in C language for multicore processors with OpenMP. Finally, additional experiments are presented.Ministerio de Economía, Industria y Competitividad TIN2017-89842-

Guide to the classics: Don Quixote, the world’s first novel – and one of the best

Completed by Cervantes when he was in prison, Don Quixote is the tale of a man so passionate about reading he leaves home to live the life of his fictional heroes

The dynamics of durable goods markets: rational expectations and sticky prices

This paper studies price dynamics in a durable good market under the assumption that consumers have rational expectations on future prices. For a wide variety of expectations, optimal consumption plans result in sticky-price demand functions. Market dynamics are characterized by intertemporal price discrimination which provides a possible explanation for the declining path of price observed in many "young" industries. Unexpected shocks on demand result in price overshooting, while unexpected supplyshocks have the opposite effect on price

CAN FINANCIAL FRICTIONS HELP EXPLAIN THE PERFORMANCE OF THE US FED?

This paper analyzes the contribution of additional factors, apart from monetary policy, to the stabilization of the economy observed in the US since the 1980s. I estimate a limited participation model with financial frictions, allowing for changes in the interest rate rule, financial frictions, and shock processes. The results confirm the well-known differences in the interest rate rules between subsamples. However, when monitoring costs are considered, these differences are much smaller. A comparison of fit across several specifications finds that a decrease in financial frictions was more important than changed monetary policy or changed shock processes in stabilizing the economy. These results highlight the important differences in the effects of shocks and policies between limited participation and sticky price models.

Debt limits and endogenous growth.

This paper studies the consequences on growth and welfare of imposing limits to public borrowing. In the model economy, government spending may play two different roles, either as input in the production function, or providing services directly in the utility function. In these setups I study the effects of different fiscal policies with and without debt limits both in the balanced growth path and during the transitional dynamics. In the long run, if there is no limit, the growth effects of raising labor income taxes are negative, regardless of the role of government spending. However, the role public spending is crucial for the growth effects of changes in the ratio of public expenditures to output. In the presence of a limit to debt, higher labor tax rates have a positive effect on growth if government spending is productive. The opposite is true when private capital drives growth. Regarding welfare, raising labor income taxes imply a lower welfare cost of reducing debt than does cutting government spending, when this is productive.

The role of fiscal delegation in a monetary union: a survey of the political economy issues

Current proposals to address the European sovereign debt crisis envision some sort of fiscal union to complement the Economic and Monetary Union, backed by stronger sanctions against countries that deviate from budget balance. We argue that sanctions are an indirect approach to balancing budgets, and that member states, and Europe as a whole, could instead consider delegating effective fiscal instruments with a direct budgetary impact to an independent authority. Outside of a fiscal union, a solvent country could establish an independent fiscal authority at the national level, with a mandate to maintain long-term budget balance. Delegating a few powerful fiscal instruments to an institution of this type could cut off speculation about fiscal sustainability without ceding sovereignty to a supranational body. Inside a fiscal union, delegating one or more fiscal levers of each Eurozone member state to a national or European fiscal authority could eliminate moral hazard without relying on sanctions per se. Many fiscal instruments can serve to balance budgets, but in the context of a monetary union the chosen instrument should ideally be one that increases competitiveness when recession looms. The instrument should also be one that is quick and simple to adjust, with a large budgetary impact and minimal redistributional consequences. For consistency with these criteria, we argue that fiscal adjustments should operate on the spending side, rather than the revenue side, and that spending adjustments should affect the prices the government pays, instead of the quantities of goods and services it purchases. We discuss in detail how a system of this sort could be implemente

Can financial frictions help explain the performance of the us fed?.

This paper analyzes the contribution of additional factors, apart from monetary policy, to the stabilization of the economy observed in the US since the 1980s. I estimate a limited participation model with financial frictions, allowing for changes in the interest rate rule, financial frictions, and shock processes. The results confirm the well-known differences in the interest rate rules between subsamples. However, when monitoring costs are considered, these differences are much smaller. A comparison of fit across several specifications finds that a decrease in financial frictions was more important than changed monetary policy or changed shock processes in stabilizing the economy. These results highlight the important differences in the effects of shocks and policies between limited participation and sticky price models.