Differences in the Transmission of Monetary Policy in the Euro-Area: An Empirical Approach

This paper examines the impact of interest rate changes on real economic activity for a range of European Union (EU) countries including Ireland. The objective is to compare how monetary policy changes are transmitted to output in these economies. The analysis is based on evidence prior to the establishment of the common monetary policy within Economic and Monetary Union (EMU). A number of international studies over the last five years, in particular by the International Monetary Fund (IMF) and the Bank of International Settlements (BIS), have analysed how the effects of monetary policy can vary between countries. These studies have analysed most EU countries but Ireland has generally been omitted. This is due in part to the lack of the necessary quarterly national accounts’ data for output but also to the small weighting of Irish output in the euro area. This paper re-addresses the omission of Ireland by using a constructed quarterly GDP data series from 1972 to 1998. The paper, in line with previous international studies, applies a common methodology based on time series relationships and economic theory that incorporates three variables - prices, output and interest rates. This common methodology is applied to thirteen EU countries. In order to compare the responses similar data series, sample periods and an identical econometric framework are used for all countries. The transmission mechanism is the process through which monetary policy decisions are transmitted into changes in output. Economic theory tends to draw a distinction between the short and medium term when distinguishing the effects of monetary policy on the real economy. Over the medium term inflation is primarily a monetary phenomenon and in terms of the real effects on output, money is considered to be neutral. In the short term, however, monetary policy is considered to have real effects. There are two important dimensions to the conduct of monetary policy to be clearly distinguished. The first is the adjustment of monetary policy instruments in reaction to changes in objective variables such as output and inflation. The second is the impact of monetary authorities’ actions on the real economy. The paper concentrates on the latter. The monetary transmission mechanism consists of several inter-linked channels, such as the interest rate or money channel, the credit channel, the exchange rate channel and the asset price channel, which can differ substantially across countries. The focus of this paper is on the aggregate effect of these different transmission channels rather than on the relative importance of each in the different EU countries. The motivation for this focus arises from the need for the real effects of monetary policy to be relatively uniform across the different EU countries in order to facilitate the smooth conduct of monetary policy in the euro-area. It is also motivated by the lack of consensus on the effects of monetary policy changes through different channels in different countries or even within a given country. The lack of consensus stems from the difficulty in disentangling time series on interest rates into parts that are due to deliberate monetary policy measures and those that are due to endogenous responses of financial markets to unobserved economic disturbances. As a result, different empirical methodologies give rise to different estimates of the role and effect of monetary policy. The results from the common specification used by the international agencies would suggest that a monetary shock resulting in higher interest rates would seem to have an implausibly large and persistent impact on output in the Irish case in comparison to other EU countries. This may point to the need for a unique econometric specification for each economy in order to capture the differences in the monetary transmission mechanism more accurately rather than something unique about the Irish economy. The consequence of this recommendation would diminish the comparability of the results, but to proceed otherwise would be ill advised. Using a modified framework shows that the effects on output from interest rate changes in the smaller, peripheral countries in the EU, such as Ireland, Portugal, Finland and Denmark are deeper than those in the larger countries. While the magnitude of effects may be similar in these groups, the duration over which they occur can differ markedly. Therefore no consistent, common grouping emerges in terms of impact and duration. There is no evidence on the basis of this paper that there is a core group of countries, with the exclusion of Ireland, forming an obvious optimum currency area with the EU.

From Steiner Formulas for Cones to Concentration of Intrinsic Volumes

The intrinsic volumes of a convex cone are geometric functionals that return basic structural information about the cone. Recent research has demonstrated that conic intrinsic volumes are valuable for understanding the behavior of random convex optimization problems. This paper develops a systematic technique for studying conic intrinsic volumes using methods from probability. At the heart of this approach is a general Steiner formula for cones. This result converts questions about the intrinsic volumes into questions about the projection of a Gaussian random vector onto the cone, which can then be resolved using tools from Gaussian analysis. The approach leads to new identities and bounds for the intrinsic volumes of a cone, including a near-optimal concentration inequality.Comment: This version corrects errors in Propositions 3.3 and 3.4 and in Lemma 8.3 that appear in the published versio

The achievable performance of convex demixing

Demixing is the problem of identifying multiple structured signals from a superimposed, undersampled, and noisy observation. This work analyzes a general framework, based on convex optimization, for solving demixing problems. When the constituent signals follow a generic incoherence model, this analysis leads to precise recovery guarantees. These results admit an attractive interpretation: each signal possesses an intrinsic degrees-of-freedom parameter, and demixing can succeed if and only if the dimension of the observation exceeds the total degrees of freedom present in the observation

A human performance modelling approach to intelligent decision support systems

Manned space operations require that the many automated subsystems of a space platform be controllable by a limited number of personnel. To minimize the interaction required of these operators, artificial intelligence techniques may be applied to embed a human performance model within the automated, or semi-automated, systems, thereby allowing the derivation of operator intent. A similar application has previously been proposed in the domain of fighter piloting, where the demand for pilot intent derivation is primarily a function of limited time and high workload rather than limited operators. The derivation and propagation of pilot intent is presented as it might be applied to some programs

ACOG Iowa Section Report, November 2013

The Iowa Section of (ACOG), The American College/Congress of Obstetricians and Gynecologists, the strengths of our membership are education, research, political advocacy and service to women including internationally

ACOG Iowa Section Report, November 2014

The Iowa Section of (ACOG), The American College/Congress of Obstetricians and Gynecologists, the strengths of our membership are education, research, political advocacy and service to women including internationally

Robust computation of linear models by convex relaxation

Consider a dataset of vector-valued observations that consists of noisy inliers, which are explained well by a low-dimensional subspace, along with some number of outliers. This work describes a convex optimization problem, called REAPER, that can reliably fit a low-dimensional model to this type of data. This approach parameterizes linear subspaces using orthogonal projectors, and it uses a relaxation of the set of orthogonal projectors to reach the convex formulation. The paper provides an efficient algorithm for solving the REAPER problem, and it documents numerical experiments which confirm that REAPER can dependably find linear structure in synthetic and natural data. In addition, when the inliers lie near a low-dimensional subspace, there is a rigorous theory that describes when REAPER can approximate this subspace.Comment: Formerly titled "Robust computation of linear models, or How to find a needle in a haystack