Are Countercyclical Fiscal Policies Counterproductive?

Economists generally believe that countercyclical fiscal policies have stabilizing effects that work through automatic stabilizers and discretionary actions. Analyses underlying this conventional wisdom focus on intratemporal margins: how employment and personal income respond in the short run to changes in government expenditures and taxes. But in economic downturns, countercyclical policies increase government indebtedness, raising future debt service obligations. These new expenditure commitments must be financed by some mix of higher taxes, lower spending, or higher money growth in the future. Expectations of how future policies will adjust change current savings rates and the efficacy of countercyclical policies. It is thus possible for responses to expected future policies to exacerbate and prolong recessions. This paper highlights these expectations effects. Connecting the theory to U.S. data we find: (1) through this expectations channel, countercyclical policies may create a business cycle when there would be no cycle in the absence of countercyclical policies; (2) nontrivial fractions of variation in investment and velocity can be explained by variation in macro policies alone---without any nonpolicy sources of fluctuation; and (3) persistence in key macro variables can arise solely from expectations of policy.

Trends in velocity and policy expectations

U.S. velocity of base money exhibits three distinct trends since 1950. After rising steadily for thirty years, it flattens out in the 1980s and falls substantially in the 1990s. This paper explores whether the observed secular movements in velocity can be accounted for exclusively by endogenous responses to changing expectations about monetary and fiscal policy. We use a model with two key features: a substitute for money in transactions and an array of assets that includes money, nominal bonds, and physical capital. The model maps policy expectations into portfolio decisions, making equilibrium velocity a function of expected future money growth, tax rates, and government spending. When expectations are estimated using Bayesian updating, simulated velocity matches the trends in actual velocity surprisingly well.Macroeconomics ; Money supply ; Monetary policy ; Velocity of money

Heart and Minds: A Social Model of U.S. Productivity Growth

macroeconomics, product growth

Strong Evidence that the Galactic Bulge is Shining in Gamma Rays

There is growing evidence that the Galactic Center Excess identified in the $\textit{Fermi}$-LAT gamma-ray data arises from a population of faint astrophysical sources. We provide compelling supporting evidence by showing that the morphology of the excess traces the stellar over-density of the Galactic bulge. By adopting a template of the bulge stars obtained from a triaxial 3D fit to the diffuse near-infrared emission, we show that it is detected at high significance. The significance deteriorates when either the position or the orientation of the template is artificially shifted, supporting the correlation of the gamma-ray data with the Galactic bulge. In deriving these results, we have used more sophisticated templates at low-latitudes for the $\textit{Fermi}$ bubbles compared to previous work and the three-dimensional Inverse Compton (IC) maps recently released by the ${\tt GALPROP}$ team. Our results provide strong constraints on Millisecond Pulsar (MSP) formation scenarios proposed to explain the excess. We find that an $\textit{admixture formation}$ scenario, in which some of the relevant binaries are $\textit{primordial}$ and the rest are formed $\textit{dynamically}$, is preferred over a primordial-only formation scenario at $7.6\sigma$ confidence level. Our detailed morphological analysis also disfavors models of the disrupted globular clusters scenario that predict a spherically symmetric distribution of MSPs in the Galactic bulge. For the first time, we report evidence of a high energy tail in the nuclear bulge spectrum that could be the result of IC emission from electrons and positrons injected by a population of MSPs and star formation activity from the same site.Comment: 21 pages, 13 figures, V2: Minor changes to match submitted version, V3: matches JCAP published versio

Personal Financial and Economic Issues for College Students

As students enter college, they typically encounter new responsibilities not experienced beforehand. The various financial decisions that college students encounter are one of the most important. These decisions often require students to educate themselves about banking, employment, budgeting, credit card usage, student loans, credit ratings, different types of debt, and insurance, among other things. This paper addresses those various issues. We offer both information and advice with regard to these issues. Consideration of how various financial events and choices effect the student’s long term goals and opportunities is crucial to developing long-term financial well-being. The ability to make sound decisions regarding personal financial issues will help new graduates emerge from college upon solid financial footing

A user evaluation of hierarchical phrase browsing

Phrase browsing interfaces based on hierarchies of phrases extracted automatically from document collections offer a useful compromise between automatic full-text searching and manually-created subject indexes. The literature contains descriptions of such systems that many find compelling and persuasive. However, evaluation studies have either been anecdotal, or focused on objective measures of the quality of automatically-extracted index terms, or restricted to questions of computational efficiency and feasibility. This paper reports on an empirical, controlled user study that compares hierarchical phrase browsing with full-text searching over a range of information seeking tasks. Users found the results located via phrase browsing to be relevant and useful but preferred keyword searching for certain types of queries. Users experiences were marred by interface details, including inconsistencies between the phrase browser and the surrounding digital library interface