The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve

The founding of the Federal Reserve System in 1914 led to a substantial change in the behavior of nominal interest rates. We examine the timing of this change and the speed with which it was effected. We then use data on the term structure of interest rates to determine how expectations responded. Our results indicate that the change in policy regime was rapid and that individuals quickly understood the new environment they were facing.

Historical Perspectives on the Monetary Transmission Mechanism

This paper examines changes over time in the importance of the lending channel in the transmission of monetary shocks to the real economy. We first use a simple extension of the Bernanke-Blinder model to isolate the observable factors that affect the strength of the lending channel. We then show that based on changes in the structure of banks assets, reserve requirements, and the composition of external firm finance, the lending channel should have been stronger before 1929 than during the post-World War II period, especially the first half of this period. Finally, we demonstrate that conventional indicators of the importance of the lending channel, such as the spread between the loan rate and the bond rate and the correlation between loans and output, do not show the predicted decline in the importance of lending over time. From this we conclude that either the traditional indicators are not useful measures of the strength of the lending channel or that the lending channel has not been quantitatively important in any era.

The Worldwide Change in the Behavior of Interest Rates and Prices in 1914

This paper evaluates the role of the destruction of the gold standard and the founding of the Federal Reserve, both of which occurred in 1914, in contributing to observed changes in the behavior of interest rates and prices after 1914. The paper presents a model of policy coordination in which the introduction of the Fed stabilizes interest rates, even if the gold standard remains intact, and it offers empirical evidence that the dismantling of the gold standard did not play a crucial role in precipitating the changes in interest rate behavior.

Mg II Absorption Systems in SDSS QSO Spectra

We present the results of a MgII absorption-line survey using QSO spectra from the SDSS EDR. Over 1,300 doublets with rest equivalent widths greater than 0.3\AA and redshifts $0.366 \le z \le 2.269$ were identified and measured. We find that the $\lambda2796$ rest equivalent width ($W_0^{\lambda2796}$) distribution is described very well by an exponential function $\partial N/\partial W_0^{\lambda2796} = \frac{N^*}{W^*} e^{-\frac{W_0}{W^*}}$, with $N^*=1.187\pm0.052$ and $W^*=0.702\pm0.017$\AA. Previously reported power law fits drastically over-predict the number of strong lines. Extrapolating our exponential fit under-predicts the number of $W_0 \le 0.3$\AA systems, indicating a transition in $dN/dW_0$ near $W_0 \simeq 0.3$\AA. A combination of two exponentials reproduces the observed distribution well, suggesting that MgII absorbers are the superposition of at least two physically distinct populations of absorbing clouds. We also derive a new redshift parameterization for the number density of $W_0^{\lambda2796} \ge 0.3$\AA lines: $N^*=1.001\pm0.132(1+z)^{0.226\pm0.170}$ and $W^*=0.443\pm0.032(1+z)^{0.634\pm 0.097}$\AA. We find that the distribution steepens with decreasing redshift, with $W^*$ decreasing from $0.80\pm0.04$\AA at $z=1.6$ to $0.59\pm0.02$\AA at $z=0.7$. The incidence of moderately strong MgII $\lambda2796$ lines does not show evidence for evolution with redshift. However, lines stronger than $\approx 2$\AA show a decrease relative to the no-evolution prediction with decreasing redshift for $z \lesssim 1$. The evolution is stronger for increasingly stronger lines. Since $W_0$ in saturated absorption lines is an indicator of the velocity spread of the absorbing clouds, we interpret this as an evolution in the kinematic properties of galaxies from moderate to low z.Comment: 50 pages, 26 figures, accepted for publication in Ap

The Genesis and Evolution of Social Security

We examine the creation of Social Security during the Great Depression, and how it has evolved since, asking in particular to what extent the program as it exists today is the same as that created in 1935 and 1939. We find that there has been surprising continuity. Much of the program's growth was built in from its inception. The replacement rate and the ratio of benefits to payrolls are today roughly at the levels designed into the original legislation. Payroll tax rates today are higher than had been planned, in part because of the failure to accumulate a trust fund during the program's early years. The change in the ratio of contributors to beneficiaries which has taken place over the last 60 years was fully anticipated. The most dramatic changes in Social Security's functioning have come not from legislation, but from changes in the environment in which the program operates. Before the Depression, retirement was unlikely and often involuntary. Higher life expectancy, lower labor force participation, and better health have undermined Social Security's original purpose, which was as a form of insurance. We also find that the Depression itself had surprisingly little influence on the design chosen for Social Security.

Preservation of DNA Privacy During the Large Scale Detection of COVID-19

As humanity struggles to contain the global COVID-19 pandemic, privacy concerns are emerging regarding confinement, tracing and testing. The scientific debate concerning privacy of the COVID-19 tracing efforts has been intense, especially focusing on the choice between centralised and decentralised tracing apps. The privacy concerns regarding COVID-19 testing, however, have not received as much attention even though the privacy at stake is arguably even higher. COVID-19 tests require the collection of samples. Those samples possibly contain viral material but inevitably also human DNA. Patient DNA is not necessary for the test but it is technically impossible to avoid collecting it. The unlawful preservation, or misuse, of such samples at a massive scale may hence disclose patient DNA information with far-reaching privacy consequences. Inspired by the cryptographic concept of "Indistinguishability under Chosen Plaintext Attack", this paper poses the blueprint of novel types of tests allowing to detect viral presence without leaving persisting traces of the patient's DNA. Authors are listed in alphabetical order.Comment: 10 pages, 1 figur

RNA-Seq of the Caribbean reef-building coral Orbicella faveolata (Scleractinia-Merulinidae) under bleaching and disease stress expands models of coral innate immunity

Climate change-driven coral disease outbreaks have led to widespread declines in coral populations. Early work on coral genomics established that corals have a complex innate immune system, and whole-transcriptome gene expression studies have revealed mechanisms by which the coral immune system responds to stress and disease. The present investigation expands bioinformatic data available to study coral molecular physiology through the assembly and annotation of a reference transcriptome of the Caribbean reef-building coral, Orbicella faveolata. Samples were collected during a warm water thermal anomaly, coral bleaching event and Caribbean yellow band disease outbreak in 2010 in Puerto Rico. Multiplex sequencing of RNA on the Illumina GAIIx platform and de novo transcriptome assembly by Trinity produced 70,745,177 raw short-sequence reads and 32,463 O. faveolata transcripts, respectively. The reference transcriptome was annotated with gene ontologies, mapped to KEGG pathways, and a predicted proteome of 20,488 sequences was generated. Protein families and signaling pathways that are essential in the regulation of innate immunity across Phyla were investigated in-depth. Results were used to develop models of evolutionarily conserved Wnt, Notch, Rig-like receptor, Nod-like receptor, and Dicer signaling. O. faveolata is a coral species that has been studied widely under climate-driven stress and disease, and the present investigation provides new data on the genes that putatively regulate its immune system