International economic spillovers and the liquidity trap

We study the effect of the zero bound constraint of interest rates on international transmission of eco-nomic policy and supply shocks. After some preliminary analysis with a simple theoretical model, we ap-ply a rich two-country simulation model to the problem. The model framework consists of EDGE, Bank of Finland’s dynamic equilibrium model for the euro area, linked to a similar model calibrated to resem-ble the US economy. The models have new Keynesian properties because of price rigidities and forward-looking pricing, consumption and investment behaviour. We assume freely floating exchange rates. Monetary policies are modelled with Taylor type policy rules, taking into account the zero bound con-straint for interest rates. We find that effects of policy and supply side shocks differ significantly from the ‘normal’ situation if one of the countries is in the ‘liquidity trap’, ie if the interest rate is constrained by the zero bound. Being in the liquidity trap amplifies the domestic effects of fiscal policy, but mitigates its spillover to abroad. Changing the long run inflation target, which does not have international spillovers in the normal case, does have effects abroad if the country where the target is changed is in a temporary li-quidity trap. The effects of supply shocks are also very different in the liquidity trap case compared to the normal case.zero bound; liquidity trap; international spillovers; edge

Virtual plants in machine automation research and development

Computational product development has become the mainstream methodology in modern product development. The same trend has been visible also in research, where computational methods have gained popularity beside the traditional approach relying on theory and experimentations. The objective of this project task was to study and demonstrate a realistic approach for an industrial case to reuse existing mechanical design CAD model as the starting point and the template for mechanical system simulation using multibody system simulation, and to use this MBS model as a virtual test plant for automation and control system testing. In the report, the role of system modelling and simulation in the product process is first dis-cussed and some selected technologies, such as Modelica simulation language and Functional Mock-up Interface specification, are introduced. Then different possible implementations approaches for a test environment of the control and automation system of a multi-technical system are discussed. The latter part of report focuses on describing the selected approach for a demonstration system and its implementation. The demonstration showed that, at least for the selected case, modelling, simulation and post-processing of a multi-technical simulation system is relatively straightforward and fast with the selected tools. The demonstration gives some understanding of the process for implementing one relatively small multi-technical system but does not give realistic feedback about the challenges in industrial-scale process for virtual prototyping of large and complex systems and related data exchange and data management

Combinatorics on words in information security: Unavoidable regularities in the construction of multicollision attacks on iterated hash functions

Classically in combinatorics on words one studies unavoidable regularities that appear in sufficiently long strings of symbols over a fixed size alphabet. In this paper we take another viewpoint and focus on combinatorial properties of long words in which the number of occurrences of any symbol is restritced by a fixed constant. We then demonstrate the connection of these properties to constructing multicollision attacks on so called generalized iterated hash functions.Comment: In Proceedings WORDS 2011, arXiv:1108.341