WZW fusion rings in the limit of infinite level

We show that the WZW fusion rings at finite levels form a projective system with respect to the partial ordering provided by divisibility of the height, i.e. the level shifted by a constant. From this projective system we obtain WZW fusion rings in the limit of infinite level. This projective limit constitutes a mathematically well-defined prescription for the `classical limit' of WZW theories which replaces the naive idea of `sending the level to infinity'. The projective limit can be endowed with a natural topology, which plays an important role for studying its structure. The representation theory of the limit can be worked out by considering the associated fusion algebra; this way we obtain in particular an analogue of the Verlinde formula.Comment: Latex2e, 31 pages (A4

Fermi Surface of the 2D Hubbard Model at Weak Coupling

We calculate the interaction-induced deformation of the Fermi surface in the two-dimensional Hubbard model within second order perturbation theory. Close to half-filling, interactions enhance anisotropies of the Fermi surface, but they never modify the topology of the Fermi surface in the weak coupling regime.Comment: 4 pages, LaTeX2e, 5 embedded EPS figures, accepted to be published in Z. Phys.

The dynamics of the leverage cycle

We present a simple agent-based model of a financial system composed of leveraged investors such as banks that invest in stocks and manage their risk using a Value-at-Risk constraint, based on historical observations of asset prices. The Value-at-Risk constraint implies that when perceived risk is low, leverage is high and vice versa, a phenomenon that has been dubbed pro-cyclical leverage. We show that this leads to endogenous irregular oscillations, in which gradual increases in stock prices and leverage are followed by drastic market collapses, i.e. a leverage cycle. This phenomenon is studied using simplified models that give a deeper understanding of the dynamics and the nature of the feedback loops and instabilities underlying the leverage cycle. We introduce a flexible leverage regulation policy in which it is possible to continuously tune from pro-cyclical to countercyclical leverage. When the policy is sufficiently countercyclical and bank risk is sufficiently low the endogenous oscillation disappears and prices go to a fixed point. While there is always a leverage ceiling above which the dynamics are unstable, countercyclical leverage can be used to raise the ceiling. We also study the impact on leverage cycles of direct, temporal control of the bank's riskiness via the bank's required Value-at-Risk quantile. Under such a rule the regulator relaxes the Value-at-Risk quantile following a negative stock price shock and tightens it following a positive shock. While such a policy rule can reduce the amplitude of leverage cycles, its effectiveness is highly dependent on the choice of parameters. Finally, we investigate fixed limits on leverage and show how they can control the leverage cycle.Comment: 35 pages, 9 figure

Comment on "Separability of quantum states and the violation of Bell-type inequalities"

The statement of E.R. Loubenets, Phys. Rev. A 69, 042102 (2004), that separable states can violate classical probabilistic constraints is based on a misleading definition of classicality, which is much narrower than Bell's concept of local hidden variables. In a Bell type setting the notion of classicality used by Loubenets corresponds to the assumption of perfect correlations if the same observable is measured on both sides. While it is obvious that most separable states do not satisfy this assumption, this does not constitute "non-classical" behaviour in any usual sense of the word.Comment: 1 page, accepted by Phys. Rev.