What caused the Great Moderation? : some cross-country evidence

Over the last 20 years or so, the volatility of aggregate economic activity has fallen dramatically in most of the industrialized world. The timing and nature of the decline vary across countries, but the phenomenon has been so widespread and persistent that it has earned the label: “the Great Moderation.” A growing body of research has focused on the Great Moderation and its possible explanations, especially as it applies to the U.S. experience. The literature documents the international dimension of this volatility reduction, but so far little is known about the possible causes from a cross-country perspective. Summers shows why the Great Moderation has indeed been a common feature of much of the industrialized world. Specifically, he focuses on the reduction in the volatility of GDP growth that occurred in the G-7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) and Australia. He uses international evidence to evaluate the merits of three likely explanations. He concludes that, from an international perspective, good luck in the form of smaller energy price shocks is not a compelling explanation for widespread moderation of GDP growth volatility. Rather, the Great Moderation is more likely due to better monetary policy outcomes and improved inventory management techniques.Gross domestic product ; Group of Seven countries ; Monetary policy

Local Operations and Completely Positive Maps in Algebraic Quantum Field Theory

Einstein introduced the locality principle which states that all physical effect in some finite space-time region does not influence its space-like separated finite region. Recently, in algebraic quantum field theory, R\'{e}dei captured the idea of the locality principle by the notion of operational separability. The operation in operational separability is performed in some finite space-time region, and leaves unchanged the state in its space-like separated finite space-time region. This operation is defined with a completely positive map. In the present paper, we justify using a completely positive map as a local operation in algebraic quantum field theory, and show that this local operation can be approximately written with Kraus operators under the funnel property

Unsupervised Body Part Regression via Spatially Self-ordering Convolutional Neural Networks

Automatic body part recognition for CT slices can benefit various medical image applications. Recent deep learning methods demonstrate promising performance, with the requirement of large amounts of labeled images for training. The intrinsic structural or superior-inferior slice ordering information in CT volumes is not fully exploited. In this paper, we propose a convolutional neural network (CNN) based Unsupervised Body part Regression (UBR) algorithm to address this problem. A novel unsupervised learning method and two inter-sample CNN loss functions are presented. Distinct from previous work, UBR builds a coordinate system for the human body and outputs a continuous score for each axial slice, representing the normalized position of the body part in the slice. The training process of UBR resembles a self-organization process: slice scores are learned from inter-slice relationships. The training samples are unlabeled CT volumes that are abundant, thus no extra annotation effort is needed. UBR is simple, fast, and accurate. Quantitative and qualitative experiments validate its effectiveness. In addition, we show two applications of UBR in network initialization and anomaly detection.Comment: Oral presentation in ISBI1

The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation

This paper uses data on the abnormal returns earned by the shareholders of Texaco and Pennzoil to examine whether resources were "lost" in the course of the litigation. We find that the leakage involved in the forced transfer is enormous: each dollar of value lost by Texaco's shareholders has been matched by only about 30 cents gain to the owners of Pennzoil. Our estimates suggest that the Texaco-Pennzoil conflict has reduced the combined equity value of the two companies by about $2 billion. Further losses have been suffered by Texaco's bondholders, though these may be offset by the tax collections that would result if Texaco made a large payment to Pennzoil.

Survey Response Variation in the Current Population Survey

This paper investigates the problem of responseand coding errors in the Current Population Survey. It draws upon a potentially rich source o finformation for verifying survey answers, a three month matched sample of CPS respondents, to analyze whether individuals' questionnaire responses inadjacent months are mutually consistent.We focus primarily on reported durations of unemployment spells.For individuals who were coded as unemployed in two consecutive months and who experienced no intervening labor market withdrawal or employment,their reported duration in the second interview should exceed the first interview duration by about four weeks. However, this is not what survey responses show. In more than three quarters of all cases, reported durations in successive months are logically inconsistent. The reporting problemis not confined to spell durations. In 25 percent of all cases,the professed reason for unemployment changes as the unemployment spell progresses.Furthermore, analysis of labor force entrants shows that reported changes in labor force status between unemployment and not-in-the labor force are not reliable guides to actual behavior.We conclude that reported durations of unemployment, and to a lesser extent, reasons for unemployment, may be very misleading indicators of future behavior. Econometric analyses which focus on changes in individual behavior over time are likely to be badly flawed by spurious changes due to reporting errors. These problems with the Current Population Survey, one of the best sample surveys available, may suggest far greater difficulties in interpreting other sources of panel data.

Dividend Taxes, Corporate Investment, and "Q"

Taxes on corporate distributions have traditionally been regarded as a "double tax" on corporate income. This view implies that while the total effective tax rate on corporate source income affects real economic decisions, the distribution of this tax burden between the shareholders and the corporation is irrelevant. Recent research has suggested an alter- native to this traditional view. One explanation of why firms in the U.S. pay dividends in spite of the heavy tax liabilities associated with this form of distribution is that the stock market capitalizes the tax payments associated with corporate distributions. This capitalization leaves investors indifferent at the margin between corporations paying our dividends and retaining earnings. This alternative view holds that while changes in the dividend tax rate will affect shareholder wealth, they will have no impact on corporate investment decisions. This paper develops econometric tests which distinguish between these two views of dividend taxation. By extending Tobin's "q" theory of investment to incorporate taxes at both the corporate and personal levels, the implications of each view for corporate investment decisions can be derived. The competing views may be tested by comparing the performance of investment equations estimates under each theory's predict ions. British time series data are particularly appropriate for testing hypotheses about dividend taxes because of the substantial postwar variation in effective tax rates on corporate distributions. The econometric results suggest that dividend taxes have important effects on investment decisions.

The Persistence of Volatility and Stock Market Fluctuations

This paper examines the potential influence of changing volatility in stock market prices on the level of stock market prices. It demonstrates that volatility is only weakly serially correlated, implying that shocks to volatility do not persist. These shocks can therefore have only a small impact on stockmarket prices, since changes in volatility affect expected required rates of return for relatively short intervals. These findings lead us to be skeptical of recent claims that the stock market's poor performance during the 1970's can be explained by volatility-induced increases in risk premia.

Adjusting the Gross Changes Data: Implications for Labor Market Dynamics

This paper develops a procedure for adjusting the Current Population Survey gross changes data for the effects of reporting errors. The corrected data suggest that the labor market is much less dynamic than has frequently been suggested. Conventional measures sy understate the duration of unemployment by as much as eighty percent and overstate the extent of movement into and out ofthe labor force by several hundred percent. The adjusted data also throw demographic differences in patterns of labor market dynamics into sharp relief.