State-Dependent Probability Distributions in Non Linear Rational Expectations Models

In this paper, we provide solution methods for non-linear rational expectations models in which regime-switching or the shocks themselves may be "endogenous", i.e. follow state-dependent probability distributions. We use the perturbation approach to find determinacy conditions, i.e. conditions for the existence of a unique stable equilibrium. We show that these conditions directly follow from the corresponding conditions in the exogenous regime-switching model. Whereas these conditions are difficult to check in the general case, we provide for easily verifiable and sufficient determinacy conditions and first-order approximation of the solution for purely forward-looking models. Finally, we illustrate our results with a Fisherian model of inflation determination in which the monetary policy rule may change across regimes according to a state-dependent transition probability matrix.Perturbation methods, monetary policy, indeterminacy, regime switching, DSGE.

AIGO: a southern hemisphere detector for the worldwide array of ground-based interferometric gravitational wave detectors

This paper describes the proposed AIGO detector for the worldwide array of interferometric gravitational wave detectors. The first part of the paper summarizes the benefits that AIGO provides to the worldwide array of detectors. The second part gives a technical description of the detector, which will follow closely the Advanced LIGO design. Possible technical variations in the design are discussed

Method and apparatus for determining return stroke polarity of distant lightning

A method is described for determining the return stroke polarity of distant lightning for distances beyond 600 km by detecting the electric field associated with a return stroke of distant lightning, and processing the electric field signal to determine the polarity of the slow tail of the VLF waveform signal associated with the detected electric field. The polarity of the return stroke of distant lightning is determined based upon the polarity of the slow tail portion of the waveform

Trends and Cycles : an Historical Review of the Euro Area.

We analyze the euro area business cycle in a medium scale DSGE model where we assume two stochastic trends: one on total factor productivity and one on the inflation target of the central bank. To justify our choice of integrated trends, we test alternative specifications for both of them. We do so, estimating trends together with the model's structural parameters, to prevent estimation biases. In our estimates, business cycle fluctuations are dominated by investment specific shocks and preference shocks of households. Our results cast doubts on the view that cost push shocks dominate economic fluctuations in DSGE models and show that productivity shocks drive fluctuations on a longer term. As a conclusion, we present our estimation's historical reading of the business cycle in the euro area. This estimation gives credible explanations of major economic events since 1985.New Keynesian model, Business Cycle, Bayesian estimation.

Alternative axiomatics and complexity of deliberative STIT theories

We propose two alternatives to Xu's axiomatization of the Chellas STIT. The first one also provides an alternative axiomatization of the deliberative STIT. The second one starts from the idea that the historic necessity operator can be defined as an abbreviation of operators of agency, and can thus be eliminated from the logic of the Chellas STIT. The second axiomatization also allows us to establish that the problem of deciding the satisfiability of a STIT formula without temporal operators is NP-complete in the single-agent case, and is NEXPTIME-complete in the multiagent case, both for the deliberative and the Chellas' STIT.Comment: Submitted to the Journal of Philosophical Logic; 13 pages excluding anne

Americans' Dependency on Social Security

This paper determines the standard of living reductions that young, middle aged, and older households would experience were the U.S. government to cut Social Security benefits (but not taxes) to deal with its well documented (see Gokhale and Smetters, 2005) long-term fiscal crisis. To determine pre- and post-retirement living standards in the absence and presence of Social Security benefit cuts the paper relies on ESPlanner, a financial planning software program. ESPlanner calculates a household's highest sustainable living standard taking into account the household's economic resources including its claims to future Social Security benefits. The program also incorporates borrowing/liquidity constraints that limit households' abilities to smooth their living standards over their life cycles. The analysis considers both stylized single and married households of different ages and resource levels as well as actual households sampled from the 2004 Federal Reserve Survey of Consumer Finances (SCF). The extent of current and future living standard reductions in response to announcements of future Social Security benefit cuts depends critically on the age of the household, when the cuts are announced, the size of the cuts, the income of the household, and the degree to which the household is liquidity constrained. For our stylized households on the brink of retirement the complete elimination of Social Security benefits would entail retirement living standards reductions ranging from roughly one third to one hundred percent depending on the household's income. Our SCF findings also point to a strong dependency on Social Security. Indeed, 41 percent of older SCF couples and 33 percent of SCF singles would experience a living standard reduction of 90 percent or more were Social Security benefits eliminated. A surprising finding is the major dependency of very high-income households on Social Security. Take the highest earning couple in our stylized sample. This couple earns $500,000 per year from age 30 through age 64 when it retires. It enters retirement with over$2.3 million in assets. But given the length of its potential retirement, the modest real return it can safely earn on its assets, its off-the-top housing expenses, and its tax payments, this household is highly dependent on Social Security benefits, notwithstanding their taxable status. Indeed, were this household denied all its Social Security benefits on the eve of its retirement, it would suffer a 35.6 percent reduction in its living standard throughout retirement.