Infrared regulators and SCETII

We consider matching from SCETI, which includes ultrasoft and collinear particles, onto SCETII with soft and collinear particles at one loop. Keeping the external fermions off their mass shell does not regulate all IR divergences in both theories. We give a new prescription to regulate infrared divergences in SCET. Using this regulator, we show that soft and collinear modes in SCETII are sufficient to reproduce all the infrared divergences of SCETI. We explain the relationship between IR regulators and an additional mode proposed for SCETII.Comment: 9 pages. Added discussion about relationship between IR regulators and messenger mode

Asymmetric monetary policy and the yield curve

We discuss the Taylor rule near low inflation and interest rates. Using an additional option-like term in the Federal Reserve’s loss function (i.e., the ‘‘deflation put’’) we extend the classic Taylor rule to one with an asymmetric response that is more accommodative when the inflation rate is very low. Once calibrated, this payoff profile gives an exact, and easily communicable prescription for Federal Reserve policy under regimes of low inflation. Simple models of central bank behavior can produce highly complex yield curve shapes. Using the usual Taylor rule and our proposed extension as building blocks, we construct a robust framework for generating realistic yield curves and the evolution of the economy. Our main focus is the impact on the yield curve and the economy of the ‘‘deflation put’’. We find that for economies like the U.S. the deflation put reduces yields for all maturities. We also find that in highly leveraged economies (such as Japan) the consequence of an asymmetric deflation fighting policy may result in improved economic conditions, but also raises the possibility of higher longterm yields as a consequence

Asymmetric monetary policy and the yield curve

We discuss the Taylor rule near low inflation and interest rates. Using an additional option-like term in the Federal Reserve's loss function (i.e., the "deflation put") we extend the classic Taylor rule to one with an asymmetric response that is more accommodative when the inflation rate is very low. Once calibrated, this payoff profile gives an exact, and easily communicable prescription for Federal Reserve policy under regimes of low inflation. Simple models of central bank behavior can produce highly complex yield curve shapes. Using the usual Taylor rule and our proposed extension as building blocks, we construct a robust framework for generating realistic yield curves and the evolution of the economy. Our main focus is the impact on the yield curve and the economy of the "deflation put". We find that for economies like the U.S. the deflation put reduces yields for all maturities. We also find that in highly leveraged economies (such as Japan) the consequence of an asymmetric deflation fighting policy may result in improved economic conditions, but also raises the possibility of higher long-term yields as a consequence.Taylor rule Monetary policy