Assesing HP Filter Performance for Argentina and U.S. Macro Aggregates

Hodrick-Prescott filter has been the favourite empirical technique among researchers studying "cycles". Software facilities and the optimality criterion, from which the filter can be derived, can explain its wide use. However, different shortcomings and drawbacks have been pointed out in the literature, as alteration of variability and persistence and detecting spurious cycles and correlations. This paper discusses these criticisms from an empirical point of view trying to clarify what the filter can and cannot do. In particular, a less mechanical use for descriptive analysis is proposed: testing how the estimated cyclical component behaves and using autocorrelation adjusted standard errors to evaluate cross correlations to differentiate the "genuine" from "spurious" case. Simulation results to test these bivariate correlations when there is a "genuine" relationship are presented. Some examples of descriptive analysis for macro aggregates (real activity, trade flows and money) of Argentina and USA are reported to show that not always the filter is appropriate. Simple tools are used to appreciate how the filtered series result and to evaluate cross correlations.HP filter; cycles; spurious cycles; genuine cross correlation

Municipal transitions: The social, energy, and spatial dynamics of sociotechnical change in South Tyrol, Italy

With the aim of proposing recommendations on how to use social and territorial specificities as levers for wider achievement of climate and energy targets at local level, this research analyses territories as sociotechnical systems. Defining the territory as a sociotechnical system allows us to underline the interrelations between space, energy and society. Groups of municipalities in a region can be identified with respect to their potential production of renewable energy by means of well-known data-mining approaches. Similar municipalities linking together can share ideas and promote collaborations, supporting clever social planning in the transition towards a new energy system. The methodology is applied to the South Tyrol case study (Italy). Results show eight different spatially-based sociotechnical systems within the coherent cultural and institutional context of South Tyrol. In particular, this paper observes eight different systems in terms of (1) different renewable energy source preferences in semi-urban and rural contexts; (2) different links with other local planning, management, and policy needs; (3) different socio-demographic specificities of individuals and families; (4) presence of different kinds of stakeholders or of (5) different socio-spatial organizations based on land cover. Each energy system has its own specificities and potentialities, including social and spatial dimensions, that can address a more balanced, inclusive, equal, and accelerated energy transition at the local and translocal scale

GIS-based approach for assessing the energy potential and the financial feasibility of run-off-river hydro-power in Alpine valleys

In the last decade, European attractive policies are favoring the construction of new run-off hydro-power plants. The realization cost of these plants is quite low in mountain areas thanks to small water discharges and high gross heads. For this reason, small rivers have been strongly exploited without considering an optimal use of the resource. Nowadays, available sites are often in areas with low accessibility and a greater specific cost of civil engineering works. However, during the planning of new small hydro-power plants, the dependency of physical, technical, legal and financial variable on space is often not assessed. The tool presented in this paper addresses this gap to support the planning of run-off-river plants. The method improves on previous approaches by (1) integrating all the legal, technical and financial analysis in a GIS tool, and (2) trying to validate the site-specific model with local knowledge. The tool is applied to the Gesso and Vermenagna valleys in the Alps. Information and data were collected and discussed with local stakeholders in order to improve the model results

A probabilistic finite element method based on random meshes: Error estimators and Bayesian inverse problems

We present a novel probabilistic finite element method (FEM) for the solution and uncertainty quantification of elliptic partial differential equations based on random meshes, which we call random mesh FEM (RM-FEM). Our methodology allows to introduce a probability measure on standard piecewise linear FEM. We present a posteriori error estimators based uniquely on probabilistic information. A series of numerical experiments illustrates the potential of the RM-FEM for error estimation and validates our analysis. We furthermore demonstrate how employing the RM-FEM enhances the quality of the solution of Bayesian inverse problems, thus allowing a better quantification of numerical errors in pipelines of computations

Understanding money demand of Argentina: 1935-2000

This paper investigates whether or not a simple -Cagan like- econometric model of demand for currency can be developed for Argentina based on more than sixty years of data (1935-2000). For such a long period the presence of structural breaks cannot be ignored given the variety of economic regimes this country has experienced. The purpose is to understand from an "ex-post" perspective how money holdings have reacted to the two main determinants of their demand: a transaction variable and an opportunity cost after suitable approximations for both concepts could be obtained. Transaction elasticity estimates matter for the distribution effects of inflation tax and for measuring the size of the shadow economy. Besides, a comparative analysis of the effect of inflation, interest rates and exchange rates could clarify about the relevant opportunity cost of holding money. Once two values of the transaction elasticity were taken for the long run relationship (1 and 0.5) and inflation and interest rates alternatively measured the opportunity cost of holding money, a stable money demand -a satisfactory approximation to the data generating process- was obtained for the Argentina case.Departamento de Economí

Hodrick-Prescott filter in practice

Hodrick-Prescott filter has been the favourite empirical technique among researchers studying "cycles". Software facilities and the optimality criterion, from which the filter can be derived, can explain its wide use. However, different shortcomings and drawbacks have been pointed out in the literature, as alteration of variability and persistence and detecting spurious cycles and correlations. This paper discusses these critics from an empirical point of view trying to clarify what the filter can and cannot do. In particular, a less mechanical use for descriptive analysis is proposed: testing how the estimated cyclical component behaves and using autocorrelation adjusted standard errors to evaluate cross correlations to differentiate the "genuine" from "spurious" case. Simulation results to test these bivariate correlations when there is a "genuine" relationship are presented. Some examples of descriptive analysis for macro aggregates (real activity, trade flows and money) of Argentina are reported to show that not always the filter is appropriate and simple tools could be used to appreciate how the filtered series result and to evaluate cross correlations.Departamento de Economí

The short-run dynamics of inflation: estimating a "hybrid new Keynesian Phillips curve" for Argentina

Based on recent developments in the empirical modeling of the short-run dynamics of inflation, we estimate a "Hybrid New Keynesian Phillips Curve" for Argentina over the period 1993-2003, which assumes that while a fraction of the firms are forward-looking, the others use a backward-looking rule to set prices. We extend the model to a small open economy, considering the influence of nominal devaluation and foreign inflation on domestic prices. Although we find a significant forward-looking behavior, backwardness seems to be more relevant for domestic prices setting. Finally, we cannot reject verticality of the Phillips Curve in the long run.Departamento de Economí