Prior parameter uncertainty: Some implications for forecasting and policy analysis with VAR models

Models used for policy analysis should generate reliable unconditional forecasts as well as policy simulations (conditional forecasts) that are based on a structural model of the economy. Vector autoregression (VAR) models have been criticized for having inaccurate forecasts as well as being difficult to interpret in the context of an underlying economic model. In this paper, we examine how the treatment of prior uncertainty about parameter values can affect forecasting accuracy and the interpretation of identified structural VAR models. ; Typically, VAR models are specified with long lag orders and a diffuse prior about the unrestricted coefficients. We find evidence that alternatives that emphasize nonstationary aspects of the data as well as parsimony in parameterization have better out-of-sample forecast performance and smoother and more persistent responses to a given exogenous monetary policy change than do unrestricted VARs.Forecasting ; Vector autoregression ; Econometric models

Improving forecasts of the federal funds rate in a policy model

Vector autoregression (VAR) models are widely used for policy analysis. Some authors caution, however, that the forecast errors of the federal funds rate from such a VAR are large compared to those from the federal funds futures market. From these findings, it is argued that the inaccurate federal funds rate forecasts from VARs limit their usefulness as a tool for guiding policy decisions. In this paper, we demonstrate that the poor forecast performance is largely eliminated if a Bayesian estimation technique is used instead of OLS. In particular, using two different data sets we show that the forecasts from the Bayesian VAR dominate the forecasts from OLS VAR models—even after imposing various exact exclusion restrictions on lags and levels of the data.Forecasting ; Federal funds rate ; Vector autoregression

Eddy current damper

A high torque capacity eddy current damper used as a rate limiting device for a large solar array deployment mechanism is discussed. The eddy current damper eliminates the problems associated with the outgassing or leaking of damping fluids. It also provides performance advantages such as damping torque rates, which are truly linear with respect to input speed, continuous 360 degree operation in both directions of rotation, wide operating temperature range, and the capability of convenient adjustment of damping rates by the user without disassembly or special tools

Forecasting using relative entropy

The paper describes a relative entropy procedure for imposing moment restrictions on simulated forecast distributions from a variety of models. Starting from an empirical forecast distribution for some variables of interest, the technique generates a new empirical distribution that satisfies a set of moment restrictions. The new distribution is chosen to be as close as possible to the original in the sense of minimizing the associated Kullback-Leibler Information Criterion, or relative entropy. The authors illustrate the technique by using several examples that show how restrictions from other forecasts and from economic theory may be introduced into a model's forecasts.Forecasting

Virtual space and 2-dimensional effects in perspective displays

When interpreting three dimensional spatial relationships presented on a two dimensional display surface, the viewer is required to mentally reconstruct the original information. This reconstruction is influenced by both the perspective geometry of the displayed image and the viewer's eye position relative to the display. In a study which manipulated these variables, subjects judged the azimuth direction of a target object relative to a reference object fixed in the center of a perspective display. The results support a previously developed model which predicted that the azimuth judgement error would be a sinusoidal function of stimulus azimuth. The amplitude of this function was correctly predicted to be systematically modulated by both the perspective geometry of the image and the viewer's eye position relative to the screen. Interaction of the two components of the model, the virtual space effect and the 3D-to-2D projection effect, predicted the relative amplitudes of the sinusoidal azimuth error functions for the various conditions of the experiment. Mean azimuth judgements in some directions differed by as much as 25 degrees as a result of different combinations of eye position and image geometry. The results illustrate the need to consider the effects of perspective geometry when designing spatial information instruments, and show the model to be a reliable predictor of average performance

Stochastic compartmental analysis - Some applications and examples of estimation in a pulse labelled system

Stochastic compartmental analysis with examples of estimation in pulse labelled syste

Dynamics of Inflationary Universes with Positive Spatial Curvature

If the spatial curvature of the universe is positive, then the curvature term will always dominate at early enough times in a slow-rolling inflationary epoch. This enhances inflationary effects and hence puts limits on the possible number of e-foldings that can have occurred, independently of what happened before inflation began and in particular without regard for what may have happened in the Planck era. We use a simple multi-stage model to examine this limit as a function of the present density parameter $\Omega_0$ and the epoch when inflation ends.Comment: 9 Pages RevTex4. Revised and update

Spherically Symmetric Gravitational Collapse of General Fluids

We express Einstein's field equations for a spherically symmetric ball of general fluid such that they are conducive to an initial value problem. We show how the equations reduce to the Vaidya spacetime in a non-null coordinate frame, simply by designating specific equations of state. Furthermore, this reduces to the Schwarzschild spacetime when all matter variables vanish. We then describe the formulation of an initial value problem, whereby a general fluid ball with vacuum exterior is established on an initial spacelike slice. As the system evolves, the fluid ball collapses and emanates null radiation such that a region of Vaidya spacetime develops. Therefore, on any subsequent spacelike slice there exists three regions; general fluid, Vaidya and Schwarzschild, all expressed in a single coordinate patch with two free-boundaries determined by the equations. This implies complicated matching schemes are not required at the interfaces between the regions, instead, one simply requires the matter variables tend to the appropriate equations of state. We also show the reduction of the system of equations to the static cases, and show staticity necessarily implies zero ``heat flux''. Furthermore, the static equations include a generalization of the Tolman-Oppenheimer-Volkoff equations for hydrostatic equilibrium to include anisotropic stresses in general coordinates.Comment: 11 pages, 3 figures, submitted to Phys. Rev.

Diffractive jet production in a simple model with applications to HERA

In diffractive jet production, two high energy hadrons A and B collide and produce high transverse momentum jets, while hadron A is diffractively scattered. Ingelman and Schlein predicted this phenomenon. In their model, part of the longitudinal momentum transferred from hadron A is delivered to the jet system, part is lost. Lossless diffractive jet production, in which all of this longitudinal momentum is delivered to the jet system, has been discussed by Collins, Frankfurt, and Strikman. We study the structure of lossless diffractive jet production in a simple model. The model suggests that the phenomenon can be probed experimentally at HERA, with A being a proton and B being a bremsstrahlung photon with virtuality $Q^2$. Lossless events should be present for small $Q^2$, but not for $Q^2$ larger than $1/R_{\rm P}^2$, where $R_{\rm P}$ is a characteristic size of the pomeron.Comment: 23 pages, REVTeX 3.0 with 8 postscript figures compressed with uufiles, OITS 536 and AZPH-TH/94-0

Shrinking II -- The Distortion of the Area Distance-Redshift Relation in Inhomogeneous Isotropic Universes

This paper and the others in the series challenge the standard model of the effects of gravitational lensing on observations at large distances. We show that due to the cumulative effect of lensing, areas corresponding to an observed solid angle can be quite different than would be estimated from the corresponding Friedmann-Lema\^{\i}tre model, even when averaged over large angular scales. This paper concentrates on the specific example of spherically symmetric but spatially inhomogeneous dust universes, the Lema\^{\i}tre-Tolman-Bondi models, and shows that radial lensing significantly distorts the area distance-redshift and density-redshift relations in these exact solutions compared with the standard ones for Friedmann-Lema\^{\i}tre models. Thus inhomogeneity may introduce significant errors into distance estimates based on the standard FL relations, even after all-sky averaging. In addition a useful new gauge choice is presented for these models, solving the problem of locating the past null cone exactly.Comment: Minor technical refinement, 16 pages, RevTex, 8 eps figure