Is the political business cycle for real?

This paper's macroeconomic model combines features from both real and political business cycle models. It augments a standard real business cycle tax model by allowing for varying levels of government partisanship and competence in order to replicate two important empirical regularities: First, that on average the economy expands early under Democratic presidents and contracts early under Republican presidents. Second, that presidents whose parties successfully retain the presidency have stronger-than-average growth in the second half of their terms. The model generates both of these features in conformity with U.S. post-World War II data.Business cycles

Is the Political Business Cycle for Real?

This paper constructs and examines a macroeconomic model which combines features from both real and political business cycle models. We augment a standard real business cycle tax model by allowing for varying levels of government partisanship and competence in order to replicate two important empirical regularities: First, that on average the economy expands early under Democratic Presidents and contracts early under Republican Presidents. Second, that Presidents whose parties successfully retain the presidency have stronger than average growth in the second half of their terms. The model generates both of these features that conform to U.S. Post World War II data.Political business cycle

The long-run costs of moderate inflation

Long-run price stability is generally considered to be a primary goal of monetary policymakers in many countries. One reason policymakers care about inflation is that it can harm economic performance. Numerous studies of the impact of inflation on economic performance have focused on whether increases in inflation reduce economic growth in the long run These studies have found that prolonged high inflation does in fact reduce economic growth, but they were not able to detect a significant long-run relationship between real growth and low or moderate inflation. Because anti-inflationary policies typically have short-run costs, such as higher unemployment and slower economic growth, the results from these studies may lead people to ask whether such policies are appropriate when inflation is low or moderate.> Hess and Morris contend that anti-inflationary policies may be appropriate, even if low to moderate long-run inflation does not reduce long-run growth, if inflation harms the economy in other ways. Three potentially harmful consequences of inflation are considered: (1) inflation uncertainty, (2) real growth variability, and (3) relative price volatility. These consequences are costly because they reduce economic efficiency and therefore the level of economic output and consumer welfare.> The authors discuss the costs of inflation uncertainty, real growth variability, and relative price volatility, and examine their empirical relationship with inflation. They show that inflation uncertainty, real growth variability, and relative price volatility all tend to rise as long-run inflation rises from low to moderate levels. As a result, they conclude that policymakers may find it justifiable to pursue anti-inflationary policies even when inflation is low.Inflation (Finance) ; Prices

Planar cell polarity genes Frizzled3a, Vangl2, and Scribble are required for spinal commissural axon guidance

Background A fundamental feature of early nervous system development is the guidance of axonal projections to their targets in order to assemble neural circuits that control behavior. Spinal commissural neurons are an attractive model to investigate the multiple guidance cues that control growth cone navigation both pre- and post-midline crossing, as well as along both the dorsal–ventral (D–V) and anterior–posterior (A–P) axes. Accumulating evidence suggests that guidance of spinal commissural axons along the A–P axis is dependent on components of the planar cell polarity (PCP) signaling pathway. In the zebrafish, the earliest born spinal commissural neuron to navigate the midline and turn rostrally is termed commissural primary ascending (CoPA). Unlike mammalian systems, CoPA axons cross the midline as a single axon and allow an analysis of the role of PCP components in anterior pathfinding in single pioneering axons. Results Here, we establish CoPA cells in the zebrafish spinal cord as a model system for investigating the molecular function of planar cell polarity signaling in axon guidance. Using mutant analysis, we show that the functions of Fzd3a and Vangl2 in the anterior turning of commissural axons are evolutionarily conserved in teleosts. We extend our findings to reveal a role for the PCP gene scribble in the anterior guidance of CoPA axons. Analysis of single CoPA axons reveals that these commissural axons become responsive to PCP-dependent anterior guidance cues even prior to midline crossing. When midline crossing is prevented by dcc gene knockdown, ipsilateral CoPA axons still extend axons anteriorly in response to A–P guidance cues. We show that this ipsilateral anterior pathfinding that occurs in the absence of midline crossing is dependent on PCP signaling. Conclusion Our results demonstrate that anterior guidance decisions by CoPA axons are dependent on the function of planar cell polarity genes both prior to and after midline crossing

Terrorism From Within: An Economic Model of Terrorism

In this paper, we develop and explore the implications of an economic model that links the incidence of terrorism in a country to the economic circumstances facing that country. We briefly sketch out a theory, in the spirit of Tornell (1998), that describes terrorist activities as being initiated by groups that are unhappy with the current economic status quo, yet unable to bring about drastic political and institutional changes that can improve their situation. Such groups with limited access to opportunity may find it rational to engage in terrorist activities. The result is then a pattern of reduced economic activity and increased terrorism. In contrast, an alternative environment can emerge where access to economic resources is more abundant and terrorism is reduced. Our empirical results are consistent with the theory. We find that for democratic, high income countries, economic contractions (i.e. recessions) can provide the spark for increased probabilities of terrorist activities.Growth; Terrorism; Political Economy

Relativistic Effects in Extrasolar Planetary Systems

This paper considers general relativistic (GR) effects in currently observed extrasolar planetary systems. Although GR corrections are small, they can compete with secular interactions in these systems and thereby play an important role. Specifically, some of the observed multiple planet systems are close to secular resonance, where the dynamics is extremely sensitive to GR corrections, and these systems can be used as laboratories to test general relativity. For the three-planet solar system Upsilon Andromedae, secular interaction theory implies an 80% probability of finding the system with its observed orbital elements if GR is correct, compared with only a 2% probability in the absence of GR. In the future, tighter constraints can be obtained with increased temporal coverage.Comment: Accepted for publication in International Journal of Modern Physics D; this paper received ``Honorable Mention'' in the 2006 Essay Competition of the Gravity Research Foundation; 9 pages including 1 figur

The Macroeconomic Consequences of Terrorism

We perform an empirical investigation of the macroeconomic consequences of international terrorism and interactions with alternative forms of collective violence. Our analysis is based on a rich unbalanced panel data set with annual observations on 177 countries from 1968 to 2000, which brings together information from the Penn World Table dataset, the ITERATE dataset for terrorist events, and datasets of external and internal conflict. We explore these data with cross-sectional and panel growth regression analysis and a structural VAR model. We find that, on average, the incidence of terrorism may have an economically significant negative effect on growth, albeit one that is considerably smaller and less persistent than that associated with either external wars or internal conflict. As well, terrorism is associated with a redirection of economic activity away from investment spending and towards government spending. However, our investigation also suggests important differences both regarding the incidence and the economic consequences of terrorism among different sets of countries. In OECD economies, in particular, terrorist incidents are considerably more frequent than in other nations, but the negative influence of these incidents on growth is smaller.growth, conflict, terrorism