Differences in Interest Rate Policy at the ECB and the Fed: An Investigation with a Medium-Scale DSGE Model.

Using two estimated models for the euro area and the United States, this paper investigates whether the observed difference in the amplitude of the interest rate cycle since 1999 in both areas is due to differences in the estimated monetary policy reaction function, differences in the structure of the economy or differences in the size and nature of the shocks hitting both economies. The paper concludes that differences in the type, size and persistence of shocks in both areas can largely explain the different interest rate setting.Policy activism ; DSGE model ; Interest rates ; Macroeconomic shocks.

Second-Order Belief Hidden Markov Models

Hidden Markov Models (HMMs) are learning methods for pattern recognition. The probabilistic HMMs have been one of the most used techniques based on the Bayesian model. First-order probabilistic HMMs were adapted to the theory of belief functions such that Bayesian probabilities were replaced with mass functions. In this paper, we present a second-order Hidden Markov Model using belief functions. Previous works in belief HMMs have been focused on the first-order HMMs. We extend them to the second-order model

A consilience model to describe N₂O production during biological N removal

Nitrous oxide (N2O), a potent greenhouse gas, is produced during biological nitrogen conversion in wastewater treatment operations. Complex mechanisms underlie N2O production by autotrophic and heterotrophic organisms, which continue to be unravelled. Mathematical models that describe nitric oxide (NO) and N2O dynamics have been proposed. Here, a first comprehensive model that considers all relevant NO and N2O production and consumption mechanisms is proposed. The model describes autotrophic NO production by ammonia oxidizing bacteria associated with ammonia oxidation and with nitrite reduction, followed by NO reduction to N2O. It also considers NO and N2O as intermediates in heterotrophic denitrification in a 4-step model. Three biological NO and N2O production pathways are accounted for, improving the capabilities of existing models while not increasing their complexity. Abiotic contributions from NH2OH and HNO2 reactions are also included. The consilient model structure can theoretically predict NO and N2O emissions under a wide range of operating conditions and will help develop mitigation strategies