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.

The Price Level, the Quantity Theory of Money, and the Fiscal Theory of the Price Level

We consider price level determination from the perspective of portfolio choice. Arbitrages among money balances, bonds, and investment goods determine their relative demands. Returns to real balance holdings (transactions services), the nominal interest rate, and after-tax returns to investment goods determine the relative values of nominal and real assets. Since expectations of government policies ultimately determine the expected returns to both nominal and real assets, monetary and fiscal policies jointly determine the price level. Special cases of the fiscal and monetary policies considered produce the quantity theory of money and the fiscal theory of the price level.

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

Experiences in deploying metadata analysis tools for institutional repositories

Current institutional repository software provides few tools to help metadata librarians understand and analyze their collections. In this article, we compare and contrast metadata analysis tools that were developed simultaneously, but independently, at two New Zealand institutions during a period of national investment in research repositories: the Metadata Analysis Tool (MAT) at The University of Waikato, and the Kiwi Research Information Service (KRIS) at the National Library of New Zealand. The tools have many similarities: they are convenient, online, on-demand services that harvest metadata using OAI-PMH; they were developed in response to feedback from repository administrators; and they both help pinpoint specific metadata errors as well as generating summary statistics. They also have significant differences: one is a dedicated tool wheres the other is part of a wider access tool; one gives a holistic view of the metadata whereas the other looks for specific problems; one seeks patterns in the data values whereas the other checks that those values conform to metadata standards. Both tools work in a complementary manner to existing Web-based administration tools. We have observed that discovery and correction of metadata errors can be quickly achieved by switching Web browser views from the analysis tool to the repository interface, and back. We summarize the findings from both tools' deployment into a checklist of requirements for metadata analysis tools

Trust and Control: The Value Effect of Venture Capital Term Sheet Provisions as Risk Allocation Tools

The parties to a venture funding agreement are in a state of coopetition. The parties account for perceived risk in the entrepreneur-investor relationship through varying levels of control demanded from and trust afforded to the other party. The level of risk perceived by each party may differ along individual aspects of the prospective equity deal. The provisions of the term sheet delineate the subjective risk perceptions of each party to the transaction by allocating control or trusting a party with decision-making rights. When negotiating term sheet provisions, a party should seek to understand and recognize the risk perceived by the other party and attempt to afford the level of control or trust necessary to achieve a relational agreement that provides the greatest value for the parties collectively. An optimal allocation of control and trust adequately captures the perceived risk of each party, promotes cooperation between the parties, and ultimately facilitates the performance of the business venture. Understanding the subjective risk perceptions of each party to the investment transaction will facilitate the objective of negotiating a term sheet that maximizes the value created for all parties

Trust and Control: The Value Effect of Venture Capital Term Sheet Provisions as Risk Allocation Tools

The parties to a venture funding agreement are in a state of coopetition. The parties account for perceived risk in the entrepreneur-investor relationship through varying levels of control demanded from and trust afforded to the other party. The level of risk perceived by each party may differ along individual aspects of the prospective equity deal. The provisions of the term sheet delineate the subjective risk perceptions of each party to the transaction by allocating control or trusting a party with decision-making rights. When negotiating term sheet provisions, a party should seek to understand and recognize the risk perceived by the other party and attempt to afford the level of control or trust necessary to achieve a relational agreement that provides the greatest value for the parties collectively. An optimal allocation of control and trust adequately captures the perceived risk of each party, promotes cooperation between the parties, and ultimately facilitates the performance of the business venture. Understanding the subjective risk perceptions of each party to the investment transaction will facilitate the objective of negotiating a term sheet that maximizes the value created for all parties

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