February 2001 Crisis in Turkey: Causes and Consequences

Turkey has suffered from different economic crises since 1990. However, the February 2001 crisis has been unprecedented in intensity and repercussions. Although many factors, both internal and external, may have contributed to their occurrences, the former owing to their inducing corruption and waste in the economy, seem to have fomented them more than the latter. Although Turkey has been getting transformed into a market economy since 1980, government intervention is still pervasive in its economy. Government still controls Central Bank, owns commercial banks, and operates public enterprises. It has liberalised market, currency, foreign trade and foreign direct investment (FDI), but still operates sectors like energy, sugar and tobacco. Such a level of state intervention had adverse implications for corruption, waste, effective reforms, etc. in the country. Further, since the transformation of the economy could not be accompanied by concomitant structural, legal and institutional reforms in 1990s, resources have constantly been misused over the years. Further still, groups owning bank, media and holding companies jointly have notoriously precipitated domestic financial crisis by stashing away the home deposits in their offshore branches. Finally, supporting agriculture and industry with politically-motivated credit for voting purposes has constantly been aggravating the drain of resources and thereby financial crises of the country. This paper attempts a critical examination of how such factors may have contributed to the occurrence and accentuation of economic crises suffered by Turkey over the last decade.

Modulated Information Flows in Financial Markets

We model continuous-time information flows generated by a number of information sources that switch on and off at random times. By modulating a multi-dimensional L\'evy random bridge over a random point field, our framework relates the discovery of relevant new information sources to jumps in conditional expectation martingales. In the canonical Brownian random bridge case, we show that the underlying measure-valued process follows jump-diffusion dynamics, where the jumps are governed by information switches. The dynamic representation gives rise to a set of stochastically-linked Brownian motions on random time intervals that capture evolving information states, as well as to a state-dependent stochastic volatility evolution with jumps. The nature of information flows usually exhibits complex behaviour, however, we maintain analytic tractability by introducing what we term the effective and complementary information processes, which dynamically incorporate active and inactive information, respectively. As an application, we price a financial vanilla option, which we prove is expressed by a weighted sum of option values based on the possible state configurations at expiry. This result may be viewed as an information-based analogue of Merton's option price, but where jump-diffusion arises endogenously. The proposed information flows also lend themselves to the quantification of asymmetric informational advantage among competitive agents, a feature we analyse by notions of information geometry.Comment: 27 pages, 1 figur

LEP Indications for Two Light Higgs Bosons and U(1)' Model

Reanalyses of LEP data have shown preference to two light CP-even Higgs bosons. We discuss implications of such a Higgs boson spectrum for the minimal supersymmetric model extended by a Standard Model singlet chiral superfield and an additional Abelian gauge invariance (the U(1)' model). We, in particular, determine parameter regions that lead to two light CP-even Higgs bosons while satisfying existing bounds on the mass and mixings of the extra vector boson. In these parameter regions, the pseudoscalar Higgs is found to be nearly degenerate in mass with either the lightest or next-to-lightest Higgs boson. Certain parameters of the U(1)' model such as the effective mu parameter are found to be significantly bounded by the LEP two-light-Higgs signal.Comment: 20 pp, 7 figs, 2 table

Interdependent Preference Formation

A standard assumption in the economic approach to individual decision making is that people have independent preferences, that is, they care only about their absolute (material) payoffs. We study equilibria of the classic common pool resource extraction and public good games when some of the players have negatively interdependent preferences (in the sense that they care not only about their absolute payoffs but also about their relative payoffs) while the remainder have independent preferences. It is shown that at any equilibrium, those with interdependent preferences earn strictly higher absolute payoffs than do players with independent preferences. If the population composition evolves in accordance with any payoff monotonic evolutionary selection dynamics, then all players will have interdependent preferences in the long run. Similar (but weaker) results obtain for some other economically important classes of games in strategic form. The robustness of our findings with respect to other preference formation mechanisms such as myopic and rational socialization is also discussed.Interdependent Preferences, Evolution, Socialization.

On the Strategic Advantage of Negatively Interdependent Preferences

We study certain classes of supermodular and submodular games which are symmetric with respect to material payoffs but in which not all players seek to maximize their material payoffs. Specifically, a subset of players have negatively interdependent preferences and care not only about their own material payoffs but also about their payoffs relative to others. We identify sufficient conditions under which members of the latter group have a strategic advantage in the following sense: at all intragroup symmetric equilibria of the game, they earn strictly higher material payoffs than do players who seek to maximize their material payoffs. We show that these conditions are satisfied by a number of games of economic importance, and discuss the implications of these findings for the evolutionary theory of preference formation and the theory of Cournot competition.Interdependent Preferences, Submodular and Supermodular Games, Relative Profits, Cournot Oligopoly

Equivariant Symplectic Geometry of Gauge Fixing in Yang-Mills Theory

The Faddeev-Popov gauge fixing in Yang-Mills theory is interpreted as equivariant localization. It is shown that the Faddeev-Popov procedure amounts to a construction of a symplectic manifold with a Hamiltonian group action. The BRST cohomology is shown to be equivalent to the equivariant cohomology based on this symplectic manifold with Hamiltonian group action. The ghost operator is interpreted as a (pre)symplectic form and the gauge condition as the moment map corresponding to the Hamiltonian group action. This results in the identification of the gauge fixing action as a closed equivariant form, the sum of an equivariant symplectic form and a certain closed equivariant 4-form which ensures convergence. An almost complex structure compatible with the symplectic form is constructed. The equivariant localization principle is used to localize the path integrals onto the gauge slice. The Gribov problem is also discussed in the context of equivariant localization principle. As a simple illustration of the methods developed in the paper, the partition function of N=2 supersymmetric quantum mechanics is calculated by equivariant localizationComment: 46 pages, added remarks, typos and references correcte

Sneutrino Dark Matter: Symmetry Protection and Cosmic Ray Anomalies

We present an R-parity conserving model of sneutrino dark matter within a Higgs-philic U(1)' extension of the minimal supersymmetric standard model. In this theory, the mu parameter and light Dirac neutrino masses are generated naturally upon the breaking of the U(1)' gauge symmetry. The leptonic and hadronic decays of sneutrinos in this model, taken to be the lightest and next-to-lightest superpartners, allow for a natural fit to the recent results reported by the PAMELA experiment.Comment: Revised to match the published version; 11 pages (2 column format), 1 table, 6 figures, to appear in PR

Computational complexity of decomposing a symmetric matrix as a sum of positive semidefinite and diagonal matrices

We study several variants of decomposing a symmetric matrix into a sum of a low-rank positive semidefinite matrix and a diagonal matrix. Such decompositions have applications in factor analysis and they have been studied for many decades. On the one hand, we prove that when the rank of the positive semidefinite matrix in the decomposition is bounded above by an absolute constant, the problem can be solved in polynomial time. On the other hand, we prove that, in general, these problems as well as their certain approximation versions are all NP-hard. Finally, we prove that many of these low-rank decomposition problems are complete in the first-order theory of the reals; i.e., given any system of polynomial equations, we can write down a low-rank decomposition problem in polynomial time so that the original system has a solution iff our corresponding decomposition problem has a feasible solution of certain (lowest) rank