Optimal Budget Deficit Rules

This paper discusses the problem of the optimal determination of budget deficit limits in cases where the fiscal authority wishes to keep the budget deficit close to a reference value. It is assumed that the fiscal authority minimizes the expected discounted value of squared deviations from the reference value. Lump-sum and proportional intervention costs are considered. This paper is also an example of integration between stochastic process optimal control methods and the continuous time stochastic models. In fact, the characteristics of the stochastic process that rules the path of the budget deficit are taken from a previously developed continuous time stochastic model (Amador, 1999). Finally, simulation methods are used in order to conduct a comparative dynamics analysis. The paper concludes that, in the case of proportional intervention costs, the optimal ceiling depends positively on the cost parameter and on the variance of the budget deficit. On the contrary, the optimal ceiling depends negatively on the average budget deficit. These results remain valid in the case where there are both lump-sum and proportional intervention costs. Finally, in a stationary equilibrium context, we conclude that economies with higher tax rates and lower public expenditure should set higher budget deficit ceilings. The same is true for economies with a higher variance in technology and public expenditure shocks.

On complexified analytic Hamiltonian flows and geodesics on the space of Kahler metrics

In the case of a compact real analytic symplectic manifold M we describe an approach to the complexification of Hamiltonian flows [Se, Do1, Th1] and corresponding geodesics on the space of Kahler metrics. In this approach, motivated by recent work on quantization, the complexified Hamiltonian flows act, through the Grobner theory of Lie series, on the sheaf of complex valued real analytic functions, changing the sheaves of holomorphic functions. This defines an action on the space of (equivalent) complex structures on M and also a direct action on M. This description is related to the approach of [BLU] where one has an action on a complexification M_C of M followed by projection to M. Our approach allows for the study of some Hamiltonian functions which are not real analytic. It also leads naturally to the consideration of continuous degenerations of diffeomorphisms and of Kahler structures of M. Hence, one can link continuously (geometric quantization) real, and more general non-Kahler, polarizations with Kahler polarizations. This corresponds to the extension of the geodesics to the boundary of the space of Kahler metrics. Three illustrative examples are considered. We find an explicit formula for the complex time evolution of the Kahler potential under the flow. For integral symplectic forms, this formula corresponds to the complexification of the prequantization of Hamiltonian symplectomorphisms. We verify that certain families of Kahler structures, which have been studied in geometric quantization, are geodesic families.Comment: final versio

Generalized CP Invariance and the Yukawa sector of Two-Higgs Models

We analyze generalized CP symmetries of two-Higgs doublet models, extending them from the scalar to the fermion sector of the theory. We show that, with a single exception, those symmetries imply massless fermions. The single model which accommodates a fermionic mass spectrum compatible with experimental data possesses a remarkable feature. It displays a new type of spontaneous CP violation, which occurs not in the scalar sector responsible for the symmetry breaking mechanism but, rather, in the fermion sector.Comment: RevTex, 4 pages, no figures Version2: Remarkable additional conclusion => title & text changes; section adde