Money in monetary policy design: monetary cross-checking in the New-Keynesian model

In the New-Keynesian model, optimal interest rate policy under uncertainty is formulated without reference to monetary aggregates as long as certain standard assumptions on the distributions of unobservables are satisfied. The model has been criticized for failing to explain common trends in money growth and inflation, and that therefore money should be used as a cross-check in policy formulation (see Lucas (2007)). We show that the New-Keynesian model can explain such trends if one allows for the possibility of persistent central bank misperceptions. Such misperceptions motivate the search for policies that include additional robustness checks. In earlier work, we proposed an interest rate rule that is near-optimal in normal times but includes a cross-check with monetary information. In case of unusual monetary trends, interest rates are adjusted. In this paper, we show in detail how to derive the appropriate magnitude of the interest rate adjustment following a significant cross-check with monetary information, when the New-Keynesian model is the central bank’s preferred model. The cross-check is shown to be effective in offsetting persistent deviations of inflation due to central bank misperceptions. Keywords: Monetary Policy, New-Keynesian Model, Money, Quantity Theory, European Central Bank, Policy Under Uncertaint

Angiotensin receptors in GtoPdb v.2023.1

The actions of angiotensin II (Ang II) are mediated by AT1 and AT2 receptors (nomenclature as agreed by the NC-IUPHAR Subcommittee on Angiotensin receptors [63, 155]), which have around 30% sequence similarity. The decapeptide angiotensin I, the octapeptide angiotensin II and the heptapeptide angiotensin III are endogenous ligands. losartan, candesartan, olmesartan, telmisartan, etc. are clinically used AT1 receptor blockers

Angiotensin receptors (version 2019.4) in the IUPHAR/BPS Guide to Pharmacology Database

The actions of angiotensin II (Ang II) are mediated by AT1 and AT2 receptors (nomenclature as agreed by the NC-IUPHAR Subcommittee on Angiotensin receptors [61, 152]), which have around 30% sequence similarity. The decapeptide angiotensin I, the octapeptide angiotensin II and the heptapeptide angiotensin III are endogenous ligands. losartan, candesartan, telmisartan, etc. are clinically used AT1 receptor blockers

Dynamics of Wind Setdown at Suez and the Eastern Nile Delta

BACKGROUND: Wind setdown is the drop in water level caused by wind stress acting on the surface of a body of water for an extended period of time. As the wind blows, water recedes from the upwind shore and exposes terrain that was formerly underwater. Previous researchers have suggested wind setdown as a possible hydrodynamic explanation for Moses crossing the Red Sea, as described in Exodus 14. METHODOLOGY/PRINCIPAL FINDINGS: This study analyzes the hydrodynamic mechanism proposed by earlier studies, focusing on the time needed to reach a steady-state solution. In addition, the authors investigate a site in the eastern Nile delta, where the ancient Pelusiac branch of the Nile once flowed into a coastal lagoon then known as the Lake of Tanis. We conduct a satellite and modeling survey to analyze this location, using geological evidence of the ancient bathymetry and a historical description of a strong wind event in 1882. A suite of model experiments are performed to demonstrate a new hydrodynamic mechanism that can cause an angular body of water to divide under wind stress, and to test the behavior of our study location and reconstructed topography. CONCLUSIONS/SIGNIFICANCE: Under a uniform 28 m/s easterly wind forcing in the reconstructed model basin, the ocean model produces an area of exposed mud flats where the river mouth opens into the lake. This land bridge is 3-4 km long and 5 km wide, and it remains open for 4 hours. Model results indicate that navigation in shallow-water harbors can be significantly curtailed by wind setdown when strong winds blow offshore

Reserves, Liquidity and Money: An Assessment of Balance Sheet Policies

The financial crisis and its aftermath has stimulated a vigorous debate on the use of macro-prudential instruments for both regulating the banking system and for providing additional tools for monetary policy makers. The widespread adoption of non-conventional monetary policies has provided some evidence on the efficacy of liquidity and asset purchases for offsetting the lower zero bound. Central banks have thus been reminded as to the effectiveness of extended open market operations as a supplementary tool of monetary policy. These tools are essentially fiscal instruments, as they issue central bank liabilities backed by fiscal transfers. And so having written these tools into the fiscal budget constraint, we can examine the consequences of these operations within the context of a micro-founded macroeconomic model of banking and money. We can mimic the responses of the Federal Reserve balance sheet to the crisis. Specifically, we examine the role of reserves for bond and capital swaps in stabilising the economy and also the impact of changing the composition of the central bank balance sheet. We find that such policies can significantly enhance the ability of the central bank to stabilise the economy. This is because balance sheet operations supply (remove) liquidity to a financial market that is otherwise short (long) of liquidity and hence allows other .nancial spreads to move less violently over the cycle to compensate

How Much Fiscal Backing Must the ECB Have? – The Euro Area is Not the Philippines

The ECB has accepted increasing amounts of rubbish collateral since the crisis started leading to exposure to serious private sector credit risk (i.e. default risk) on its collateralised lending and reverse operations (repo). This has led some commentators to argue that the ECB needs fiscal back-up to cover any potential losses to be able to continue pursuing price stability. This Brief argues that fiscal backing is not necessary for the ECB for three reasons. Firstly, the ECB balance sheet risk is small compared to the FED and BoE as it neither increased its quasi-fiscal operations as much as the Fed or the BoE nor did it engage to a very large extent in outright bond purchases during the financial crisis. Secondly, the ECB's specific accounting principles of repo operations provide for more clarity and earlier recognition of losses. Thirdly, the ECB can draw on substantial reserves of the euro area national banks