Global imbalances, saving glut and investment strike.

The present state of the global economy is characterised by persistent and increasingly polarised current account imbalances, in a context of historically low long-term interest rates, which stand below the equilibrium levels proxied by potential growth and trend inflation. A comprehensive analysis by Ben Bernanke1 attributes those two phenomena to one common cause: a global saving glut outside the United States. The approach below is more pessimistic than the global saving glut theory as far as the diagnosis is concerned, as the most striking feature of the present state of the global economy is not so much a saving glut as an investment strike, in spite of low long-term interest rates. This also affects the US economy where corporate investment remains subdued relative to profi ts, adding to the gradual loss in its tradable productive capacity, possibly to the benefi t of large foreign direct investment outflows. So far, such a model could be seen as sustainable. Indeed, in spite of an increasingly large deterioration in the US net international investment position, the balance of income has remained positive owing to a favourable yield spread between assets and liabilities. However, the tipping point, beyond which net investment income turns negative and therefore becomes a levy on domestic resources, seems to be near. This may lead to serious foreign debt sustainability issues and reinforces the “steep exchange rate adjustment” exit scenario with all its potentially harmful side effects. Recently, some optimistic assessments of exchange-rate-led adjustment have focused on valuation effects, through which a large amount of the US net foreign debt could be wiped out by a US dollar depreciation. We suggest that such an exchange rate shock would be likely to trigger an increase in US interest rates, which makes an exchange rate shock not as painless as it seems for the US economy. Besides, such a shock could be potentially more harmful than previous episodes of sharp US dollar adjustment from the perspective of the global economy, as the ratio of foreign-owned assets in the United States to the world GDP has tripled since the mid-1980s. However, as far as the other exit strategies are concerned, the approach below is more optimistic: since economic policies had a significant influence on the run-up to the current situation of low interest rates/global imbalances, reorienting economic policies may successfully address the issues at stake, leading to a gradual policy-driven resolution process which could be less disruptive than a market-led adjustment. The note is organised as follows: section 1 provides a brief summary of the mechanisms and implications of the “saving glut hypothesis”; section 2 discusses the accuracy of the saving glut hypothesis by looking at savings and investment behaviour in various economic regions; section 3 focuses on the saving/investment balance in the corporate sector, particularly in the United States, and the shift to the rent economy hypothesis and finally section 4 outlines various possible adjustment mechanisms of the global imbalances/low interest rates combination.

Reform of the Swiss Fiscal Equalisation System

Finanzausgleich, Reform, Schweiz, Fiscal transfer, Reform, Switzerland

Cloud altitude determination from infrared spectral radiances

The CO2 slicing method is generally recognized as the most accurate means of inferring cloud altitude from passive infrared radiance observations. The method is applicable to semi-transparent and broken clouds. During the cirrus FIRE and COHMEX field experiments, CO2 channel radiance data suitable for cloud altitude specification were achieved from moderate spectral resolution satellite sounders (NOAA-TOVS and GOES-VAS) and from a High spectral resolution Interferometer Spectrometer (HIS) flown on the NASA U2/ER2 aircraft. Also aboard the ER2 was a down-looking active lidar unit capable of providing cloud top pressure verifications with high accuracy. A third instrument, the Multispectral Atmospheric Mapping Sensor (MAMS) provided 50 meter resolution infrared window data which is used wtih radiosonde data to verify the heights of middle and low level clouds. Comparisons of lidar and MAMS/radiosonde ground truth cloud heights are made with those determined from: high resolution (0.5/cm) HIS spectra, HIS spectra degraded to the moderate resolution (15/cm) of the VAS/TOVS instruments, and spectrally averaged HIS radiances for individual pairs of VAS spectral channels. The results show that the best results are achieved from high resolution spectra; the RMS difference with the ground truth is 23 mb. The RMS differences between the infrared radiance determination and ground truth increase by 35 percent when the spectral resolution is degraded to the moderate spectral resolution of the VAS/TOVS instruments and by 52 to 183 percent, depending upon channel combinations, when only two spectral channels at VAS/TOVS spectral resolution are used

Into the central 10 pc of the most distant known radio quasar. VLBI imaging observations of J1429+5447 at z=6.21

Context: There are about 60 quasars known at redshifts z>5.7 to date. Only three of them are detected in the radio above 1 mJy flux density at 1.4 GHz frequency. Among them, J1429+5447 (z=6.21) is the highest-redshift radio quasar known at present. These rare, distant, and powerful objects provide important insight into the activity of the supermassive black holes in the Universe at early cosmological epochs, and on the physical conditions in their environment. Aims: We studied the compact radio structure of J1429+5447 on the milli-arcsecond (mas) angular scale, in order to compare the structural and spectral properties with those of other two z~6 radio-loud quasars, J0836+0054 (z=5.77) and J1427+3312 (z=6.12). Methods: We performed Very Long Baseline Interferometry (VLBI) imaging observations of J1429+5447 with the European VLBI Network (EVN) at 1.6 GHz on 2010 June 8, and at 5 GHz on 2010 May 27. Results: Based on its observed radio properties, the compact but somewhat resolved structure on linear scales of <100 pc, and the steep spectrum, the quasar J1429+5447 is remarkably similar to J0836+0054 and J1427+3312. To answer the question whether the compact steep-spectrum radio emission is a "universal" feature of the most distant radio quasars, it is essential to study more, yet to be discovered radio-loud active galactic nuclei at z>6.Comment: 4 pages, 2 figures, accepted for publication as a Letter to the editor in Astronomy & Astrophyic

Modeling Emission from the First Explosions: Pitfalls and Problems

Observations of the explosions of Population III (Pop III) stars have the potential to teach us much about the formation and evolution of these zero-metallicity objects. To realize this potential, we must tie observed emission to an explosion model, which requires accurate light curve and spectra calculations. Here, we discuss many of the pitfalls and problems involved in such models, presenting some preliminary results from radiation-hydrodynamics simulations.Comment: 6 pages, 3 figures, proceedings of 'The First Stars and Galaxies: Challenges for the Next Decade", Austin, TX, March 8-11, 201

International Public Procurement Agreements - Problems of Implemetations in Switzerland

Öffentliche Beschaffung, Reform, Public Choice, Wohlfahrtstheorie, Schweiz, Public Procurement, Welfare economics, Switzerland

Relative Income Position and Performance: An Empirical Panel Analysis

Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals’ relative income position affects their performance. Using a unique data set for 1114 soccer players over a period of eight seasons (2833 observations), our analysis suggests that the larger the income differences within a team, the worse the performance of the soccer players is. The more the players are integrated in a particular social environment (their team), the more evident this negative effect is.Relative Income, Positional Concerns, Envy, Performance, Social Integration

The Power of Positional Concerns: A Panel Analysis

Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals’ relative income position affects their performance. Using a unique data set for 1040 soccer players over a period of eight seasons, our analysis suggests that if a player’s salary is below the average and this difference increases, his performance worsens and the productivity decreasing effects of positional concerns are stronger. Moreover, the larger the income differences within a team, the stronger positional concern effects are observable. We also find that the more the players are integrated in a particular social environment (their team), the more evident a relative income effect is. Finally, we find that positional effects are stronger among high performing teams.Relative income, positional concerns, envy, performance, social integration