Adverse Selection and the Accelerator

This paper reexamines the relationship between financial market imperfections and economic instability. I present a model in which financial accelerator effects come from adverse selection in credit markets. Unlike other models of the financial accelerator, the model I present has the potential to stabilize the economy rather than destabilize it. The stabilizing forces in the dynamic model are closely related to forces that cause overinvestment in static models. Consequently, the stabilizing properties of the model are not specific to adverse selection but rather are present in any environment in which credit market distortions cause overinvestment. When investment projects are equity financed, or when contracts are written optimally, the only equilibria that emerge are stabilizer equilibria. Thus, stabilizing outcomes are more robust in this model. Finally, the empirical distinction between accelerator equilibria and stabilizer equilibria is subtle. Many statistics used to test for financial accelerators are observationally equivalent in stabilizer equilibria.subliminal extant Smith economagic gmm

Bayesian nonparametric models for peak identification in MALDI-TOF mass spectroscopy

We present a novel nonparametric Bayesian approach based on L\'{e}vy Adaptive Regression Kernels (LARK) to model spectral data arising from MALDI-TOF (Matrix Assisted Laser Desorption Ionization Time-of-Flight) mass spectrometry. This model-based approach provides identification and quantification of proteins through model parameters that are directly interpretable as the number of proteins, mass and abundance of proteins and peak resolution, while having the ability to adapt to unknown smoothness as in wavelet based methods. Informative prior distributions on resolution are key to distinguishing true peaks from background noise and resolving broad peaks into individual peaks for multiple protein species. Posterior distributions are obtained using a reversible jump Markov chain Monte Carlo algorithm and provide inference about the number of peaks (proteins), their masses and abundance. We show through simulation studies that the procedure has desirable true-positive and false-discovery rates. Finally, we illustrate the method on five example spectra: a blank spectrum, a spectrum with only the matrix of a low-molecular-weight substance used to embed target proteins, a spectrum with known proteins, and a single spectrum and average of ten spectra from an individual lung cancer patient.Comment: Published in at http://dx.doi.org/10.1214/10-AOAS450 the Annals of Applied Statistics (http://www.imstat.org/aoas/) by the Institute of Mathematical Statistics (http://www.imstat.org

Durable Goods and Conformity

Is the variety of products supplied in markets a reflection of the diversity of consumers' preferences? In this paper, we argue that the distribution of durable goods offered in markets tends to be compressed relative to the distribution of consumers' underlying preferences. In particular, there are strong incentives for conformity in markets for durable goods. The reason for conformity is natural: durables (for example houses) are traded and as a result, demand for these goods is influenced by their resale value. Agents may like one product, but purchase another because of resale concerns. We show that (1) there is a tendency to conform to the average preference; (2) conformity depends primarily on the number of people with extreme preferences; (3) conformity increases with increases in durability, patience, and the likelihood of trade; and (4) equilibrium conformity is not necessarily optimal. Surprisingly, there tends to be too little conformity in equilibrium. Conformity also creates a demand for rental markets. Renting does not necessarily decrease conformity however. Instead, renting tends to exaggerate conformity in the owner-occupied market.

An sS Model with Adverse Selection

We present a model of the market for used cars in which agents face a fixed cost of adjustment, the magnitude of which depend on the degree of adverse selection in the secondary market. We find that, unlike typical models, the sS bands in our model contract as the variance of the shock process increases. We also analyze a dynamic version of the model in which agents are allowed to make decisions that are conditional of the age of a used car. We find that, as a car ages, the lemons problem tends to decline in importance, and the sS bands contract.

Phased-In Tax Cuts and Economic Activity

Phased-in tax reductions are a common feature of tax legislation. This paper uses a dynamic general equilibrium model to quantify the effects of delaying tax cuts. According to the analysis of the model, the phased-in tax cuts of the 2001 tax law substantially reduced employment, output, and investment during the phase-in period. In contrast, the immediate tax cuts of the 2003 tax law provided significant incentives for immediate production and investment. The paper argues that the rules and accounting procedures used by Congress for formulating tax policy have a significant impact in shaping the details of tax policy and led to the phase-ins, sunsets, and temporary tax changes in both the 2001 and 2003 tax laws.Fiscal Policy, Tax Policy

Analyses of earth radiation budget data from unrestricted broadband radiometers on the ESSA 7 satellite

Six months of data from the wide-field-of-view low resolution infrared radiometers on the Environmental Science Services Administration (ESSA) 7 satellite were analyzed. Earth emitted and earth reflected irradiances were computed at satellite altitude using data from a new in-flight calibration technique. Flux densitites and albedos were computed for the top of the earth's atmosphere. Monthly averages of these quantities over 100 latitude zones, each hemisphere, and the globe are presented for each month analyzed, and global distributions are presented for typical months. Emitted flux densities are generally lower and albedos higher than those of previous studies. This may be due, in part, to the fact that the ESSA 7 satellite was in a 3 p.m. Sun-synchronous orbit and some of the comparison data were obtained from satellites in 12 noon sun-synchronous orbits. The ESSA 7 detectors seem to smooth out spatial flux density variations more than scanning radiometers or wide-field-of-view fixed-plate detectors. Significant longitudinal and latitudinal variations of emitted flux density and albedo were identified in the tropics in a zone extending about + or - 25 deg in latitude

Sorghum and food security in Southern Africa: present and future research priorities of technical scientists

A research paper on sorghum and food security in Southern Africa.Maize, sorghum and pearl millet are important summer cereals in the SADCC region. Maize is by far the dominant crop. Generally, maize is grown in good farming environments, sorghum in drier areas and pearl millet in hot dry conditions. The yield potential of maize and sorghum is about the same, but that of pearl millet is less (50-60 percent) when all three crops are well managed and under conditions of no stress. Africa is a traditional sorghum - millet area but maize has encroached over the last 50-70 years and the process is still taking place. The reverse is true in Latin America, particularly Mexico, Argentina, and Brazil where sorghum has encroached into traditional maize growing areas. The Buenos Aires district of Argentina is an example where maize was the dominant crop and it was yielding 1750 kg/hectare. Over a period of years in the early-mid 1970s, the average yield of both sorghum and maize increased to 2250 kg/ha and sorghum replaced maize in the drier parts of the district

Sticky Price Models and Durable Goods

This paper shows that there are striking implications that stem from including durable goods in otherwise conventional sticky price models. The behavior of these models depends heavily on whether durable goods are present and whether these goods have sticky prices. If long-lived durables have sticky prices, then even small durables sectors can cause the model to behave as though most prices were sticky. Conversely, if durable goods prices are flexible then the model exhibits unwelcome behavior. Flexibly priced durables contract during periods of economic expansion. The tendency towards negative comovement is very robust and can be so strong as to dominate the aggregate behavior of the model. In an instructive limiting case, money has no effects on aggregate output even though most prices in the model are sticky.Sticky prices, Durables, Comovement, Neutrality

Do Flexible Durable Goods Prices Undermine Sticky Price Models?

Multi-sector sticky price models have surprising implications when durable goods have flexible prices. While in actual data the production of virtually all durables exhibits strong negative responses to monetary contractions, in dynamic general equilibrium models a monetary contraction causes the output of flexibly priced durables to expand. Indeed, in the polar case in which only nondurables have sticky prices, the negative comovement of durable and nondurable production exactly offsets and the behavior of aggregate output mimics that of a model with fully flexible prices. While this neutrality' result is special, the comovement problem' -- the perverse response of flexibly priced durables to monetary policy shocks -- is highly robust. When some durables prices are flexible and others sticky, the comovement problem still applies strongly to the subset of durables with flexible prices. We argue that new housing construction might be best characterized as a flexible price industry for which the comovement problem is relevant. The underlying reason for the comovement problem is the combination of a naturally high intertemporal elasticity of substitution for the purchases of durables and temporarily low marginal costs associated with economic contractions.

The Faculty Handbook

This project presents a faculty handbook prepared for the staff at Tahoma Junior High School in Maple Valley, Washington, The handbook was designed with two main purposes in mind: 1) to establish two-way communication among staff members as well as staff and administration; and 2) to render the educational process more efficient. The handbook includes fifteen major sections dealing with such topics as duties, rights and responsibilities, school policy and procedures, evaluation, and scheduling. It also includes copies of the forms a teacher will be confronted with through the school year. It was found that a handbook is a credible instrument if used cooperatively by both staff and administration