Informational Externalities, Strategic Delay, and the Search for Optimal Policy

This paper examines optimal policy when agents, private investors and a government, can learn about the economy by observing others. Investors can delay investment in order to exploit future information. Importantly, investors ignore the informational value of their actions to others when deciding: this externality results in inefficiently high delay, motivating government intervention. The government searches for the optimal policy, while learning about the economy. Complications arise since investors are aware of any systematic component to policy and may respond perversely to government initiatives. The paper characterizes the optimal government policy and shows that the government achieves its desired outcome.arrangement monotone; functional analysis; market structure; ordinal analysis; simplex; symmetry

On the Optimality of Delay in 'Monetary Policy As a Process of Search'

Caplin and Leahy (1996) show that, when central bankers learn about the economy by observing its response to policy shock, cautious monetary policy may be ineffectual as private agents correctly anticipate that today's interest rate cuts are likely to be followed by future cuts. The central banker has to account for this strategic response of private agents to small interest rate cuts by acting more aggressively than would otherwise be the case. Caplin and Leahy, however, do not examine whether or not this strategic behavior on the part of private agents represents a constraint on the ability of monetary policy to implement optimal investment outcomes. The purpose of this paper is to show that the kinds of strategic interactions between investors and the central banker highlighted by Caplin and Leahy affect only the policy rule and do not influence the investment outcome in equilibrium.monetary policy; strategy delay

Wage Posting Without Full Commitment

Wage posting models of job search typically assume that firms can commit to paying workers the posted wage. This paper investigates the consequences of relaxing this assumption. Under ``downward'' commitment, firms can commit only to paying at least their advertised wage. We show that wage posting is always an equilibrium, although in special cases other equilibria can exist. Surprisingly, the wage posting equilibrium in our economy is identical to the equilibrium when firms can commit to paying exactly their posted wage. When firms cannot even commit to paying at least their advertised wage, equilibrium exhibits job auctions with wage dispersion which generally is not constrained efficient.

Do Asymmetric Central Bank Preferences Help Explain Observed Inflation Outcomes?

When the central banker’s loss function is asymmetric, changes in the volatility of inflation and/or unemployment affect equilibrium inflation. This suggests that changing macroeconomic volatilities may be an important driving force behind trends in observed inflation. Previous evidence, which has offered support for this idea, suffers from a spurious regression problem. Once this problem is controlled for, the evidence suggests that the volatility of unemployment does not help explain inflation outcomes. There is some evidence of a relationship between inflation and its volatility, but overall the data does not support the view that changing economic volatility, as filtered through asymmetric central bank preferences, is an important driver of inflation trends.Inflation, Monetary Policy, Asymmetric Loss Function.

Do Asymmetric Central Bank Preferences Help Explain Observed Inflation Outcomes?

Recent theoretical work shows that changes in the volatility of inflation and/or unemployment affect equilibrium inflation outcomes when the central banker's loss function is asymmetric. We show that previous evidence offered in support of the proposition that the volatility of unemployment helps explain inflation outcomes suffers from a spurious regression problem. Once this problem is controlled for, the evidence suggests that the volatility of unemployment does not help explain inflation outcomes. There is some evidence of a relationship between inflation and its volatility, but the data is not strongly supportive of the view that asymmetric central bank preferences are an important driver of inflation.inflation; monetary policy; asymmetric loss

Testing Commitment Models of Monetary Policy: Evidence from OECD Economies

Inflation rates in a number of OECD follow a common trend over the past four decades: inflation starts out low in the 1960s, rises for a time before peaking in the 1970s or early 1980s, and then falls back to initial levels. This similarity in the behavior of trend inflation suggests that any explanation of long run inflation trends ought to apply across OECD countries. Ireland (1999) shows that a simple time inconsistency model of monetary policy, modified to allow for a time-varying NAIRU, can explain long run trends in U.S. inflation. In this paper we show that this result cannot serve as an explanation of the common trend in OECD inflation, as it fits the data only in the U.S.. We investigate two important variants of the hypothesis: i) that time inconsistency was an important component of central bank behavior in earlier decades, but has become less significant in recent years, and ii) that time inconsistency problems drive U.S. inflation, which affects inflation rates in other countries as a result of central bankers' attempts to manage nominal exchange rate movements vis a vis the U.S. dollar. We find that the first hypothesis fits the data no better than the baseline model. We find some support for the international spillovers version of the model, but the behavior of non-U.S. central bankers with respect to domestic unemployment rates is not well described by the time inconsistency mechanism.monetary policy; inflation; time incosistency

Is the New Keynesian Explanation of the Great Dis-Inflation Consistent with the Cross Country Data?

A leading explanation of long run U.S. inflation trends attributes both the fall of inflation in the 1980s and the subsequent years of low and stable inflation to well run monetary policy pinning down inflationary expectations. Most other OECD economies experienced a similar rise and fall of inflation, as well as subsequent low and stable inflation over the same period. This observation has been under-explored in the literature. In this paper we exploit the international dimension of the fall of inflation to investigate the hypothesis that good monetary policy is responsible for recent inflation outcomes. Our results suggest that this theory is not compatible with the cross country data.

Fisheries Management with Stock Growth Uncertainty and Costly Capital Adjustment: Extended Appendix

This Appendix is supplemntary to "Fisheries Management with Stock Growth Uncertainty and Costly Capital Adjustment".

Can states be decolonized? Indigenous peoples and radical constitutional reform in Bolivia

This article critically examines the project of transformative constitutionalism implemented by the Movement for Socialism (MAS) government which aims to decolonize Bolivian society through constructing a ‘plurinational’ state. Based on ethnography of the political institutions of a rural indigenous community and their interaction with this new state, it argues that programs of constitutional reform are limited in their capacity to address colonial legacies. This is due to the incompatibility of the polyvalent character of postcolonial indigenous societies with the disposition of states and legal systems to bureaucratically re-order and simplify social life, even when ostensibly providing rights and recognitions to marginalized groups

The Propulsion of Reconfigurable Modular Robots in Fluidic Environments

Reconfigurable modular robots promise to transform the way robotic systems are designed and operated. Fluidic or microgravity environments, which can be difficult or dangerous for humans to work in, are ideal domains for the use of modular systems. This thesis proposes that combining effective propulsion, large reconfiguration space and high scalability will increase the utility of modular robots. A novel concept for the propulsion of reconfigurable modular robots is developed. Termed Modular Fluidic Propulsion (MFP), this concept describes a system that propels by routing fluid though itself. This allows MFP robots to self-propel quickly and effectively in any configuration, while featuring a cubic lattice structure. A decentralized occlusion-based motion controller for the system is developed. The simplicity of the controller, which requires neither run-time memory nor computation via logic units, combined with the simple binary sensors and actuators of the robot, gives the system a high level of scalabilty. It is proven formally that 2-D MFP robots are able to complete a directed locomotion task under certain assumptions. Simulations in 3-D show that robots composed of 125 modules in a variety of configurations can complete the task. A hardware prototype that floats on the surface of water is developed. Experiments show that robots composed of four modules can complete the task in any configuration. This thesis also investigates the evo-bots, a self-reconfigurable modular system that floats in 2-D on an air table. The evo-bot system uses a stop-start propulsion mechanism to choose between moving randomly or not moving at all. This is demonstrated experimentally for the first time. In addition, the ability of the modules to detect, harvest and share energy, as well as self-assemble into simple structures, is demonstrated