Liquidity Risk, Economic Development, and the Effects of Monetary Policy

Empirical evidence indicates that monetary policy is not super-neutral in many countries. In particular, in high in?ation economies, in?ation is negatively related to economic activity. By comparison, in?ation may be positively correlated with output in low in?ation countries. We present a neoclassical growth model with money in which the incidence of liquid- ity risk is inversely related to aggregate capital formation. Interestingly, there may be multiple monetary steady-states where the e¤ects of mon- etary policy vary. In poor economies, the ?nancial system is highly dis- torted and higher rates of money growth are associated with less capital formation. In contrast, in advanced economies, a Tobin e¤ect is observed. Since in?ation exacerbates distortions from a coordination failure in the low capital steady-state, individuals become much more exposed to liq- uidity risk. Consequently, optimal monetary policy depends on the level of development.Economic Development, Banks, Monetary Policy

The Stock Market, Monetary Policy, and Economic Development

In this paper, we examine the impact of financial market development on capital accumulation and inflation. In particular, we explore this issue in a setting in which banks provide risk pooling services. Furthermore, money overcomes incomplete information to facilitate transactions between individuals. In contrast to previous work, we incorporate a market for equity by allowing individuals to trade capital across generations. Interestingly, we find that the quantitative impact of the stock market may be indeterminate — the economy may respond with significant gains in capital accumulation or relatively little. Consequently, it is not clear how much financial development will drive down inflation in the longrun. In the case of unique steady-states, expansionary monetary policy causes long-run capital accumulation to fall. However, the response is much stronger in the presence of a stock market. Furthermore, the market for capital may lead to a different qualitative response to monetary policy. That is, financial development may lead to a Tobin effect from inflation. Finally, by studying dynamics, we demonstrate that financial markets and monetary policy can have a significant impact on volatility in the economy. In this manner, there is additional scope for monetary policy to stabilize the economy at higher levels of financial development.Monetary Policy, Stock Market, Economic Development

THE COST OF CAPITAL, ASSET PRICES AND THE AFFECTS OF MONETARY POLICY

The primary objective of this paper is to study the interaction between mon- etary policy, asset prices, and the sources of technological progress. We develop a two sector model in which ?nancial institutions promote risk sharing and ?at money alleviates trade frictions. Since the price of capital goods depends on in- ?ation, the Friedman Rule may be sub-optimal. In addition, di¤erent sources of productivity can a¤ect the degree of risk sharing. Although the optimal money growth rate falls in response to an increase in productivity in either sector of the economy, monetary policy should react more aggressively to investment-speci?c productivity. Our results are broadly consistent with U.S. monetary policy dur- ing the postwar period.Asset Prices, Investment, Monetary Policy

Recent advances in MPD thruster research at Princeton

A summary of last years anode, plasma, and cathode findings is presented. A summary of this years activities and findings is also presented. A brief discussion of previous and current understanding is given and covers the following topics: existence of microinstabilities; the scaling of Va with the Hall parameter; the scaling of anomalous resistivity with the Hall parameter; the relation between anomalous resistivity and the anode drop; the presence of turbulence in the anode region; numerical simulation with anomalous transport; the use of magnets to decrease dissipation; performance testing with the new anode; the mechanisms behind the ionization sink; and lithiated cathode research

Anton Muziwakhe Lembede and African nationalism

African Studies Seminar series. Paper presented 24 July,199

The Role of Financial Sector Competition for Monetary Policy

In this paper, we examine the impact of competition in the banking industry on ?nancial market activity. In particular, we explore this issue in a setting where banks simultaneously insure individuals against liquid- ity risk and o¤er loans to promote intertemporal consumption smoothing. In addition, spatial separation and private information generate a trans- actions role for money. Interestingly, we demonstrate that the industrial organization of the ?nancial system bears signi?cant implications for the e¤ects of monetary policy. Under perfect competition, higher rates of money growth lead to lower interest rates and a higher volume of lending activity. In contrast, in a monopoly banking sector, money growth restricts the availability of funds and raises the cost of borrowing.Monetary Policy, Financial Sector Concentration, Price Competition

Inter-Epidemic Transmission of Rift Valley Fever in\ud Livestock in the Kilombero River Valley, Tanzania:\ud A Cross-Sectional Survey

In recent years, evidence of Rift Valley fever (RVF) transmission during inter-epidemic periods in parts of Africa has increasingly been reported. The inter-epidemic transmissions generally pass undetected where there is no surveillance in the livestock or human populations. We studied the presence of and the determinants for inter-epidemic RVF transmission in an area experiencing annual flooding in southern Tanzania. A cross-sectional sero-survey was conducted in randomly selected cattle, sheep and goats in the Kilombero river valley from May to August 2011, approximately four years after the 2006/07 RVF outbreak in Tanzania. The exposure status to RVF virus (RVFV) was determined using two commercial ELISA kits, detecting IgM and IgG antibodies in serum. Information about determinants was obtained through structured interviews with herd owners. An overall seroprevalence of 11.3% (n = 1680) was recorded; 5.5% in animals born after the 2006/07 RVF outbreak and 22.7% in animals present during the outbreak. There was a linear increase in prevalence in the post-epidemic annual cohorts. Nine inhibition-ELISA positive samples were also positive for RVFV IgM antibodies indicating a recent infection. The spatial distribution of seroprevalence exhibited a few hotspots. The sex difference in seroprevalence in animals born after the previous epidemic was not significant (6.1% vs. 4.6% for females and males respectively, p = 0.158) whereas it was significant in animals present during the outbreak (26.0% vs. 7.8% for females and males respectively, p,0.001). Animals living .15 km from the flood plain were more likely to have antibodies than those living ,5 km (OR 1.92; 95% CI 1.04–3.56). Species, breed, herd composition, grazing practices and altitude were not associated with seropositivity. These findings indicate post-epidemic transmission of RVFV in the study area. The linear increase in seroprevalence in the post-epidemic annual cohorts implies a constant exposure and presence of active foci transmission preceding the survey