The fiscal theory of the price level – identification and testing for the UK in the 1970s

We investigate whether the Fiscal Theory of the Price Level (FTPL) can explain UK in ation in the 1970s. We confront the identifcation problem involved by setting up the FTPL as a structural model for the episode and pitting it against an alternative Orthodox model; the models have a reduced form that is common in form but, because each model is over-identifed, numerically distinct. We use indirect inference to test which model could be generating the VECM approximation to the reduced form that we estimate on the data for the episode. Neither model is rejected, though the Orthodox model outperforms the FTPL. But the best account of the period assumes that expectations were a probability-weighted combination of the two regimes

Global shocks in the US economy: Effects on output and the real exchange rate

This is the final version. Available from Springer via the DOI in this record. This paper studies the effects of global shocks, relative to domestic shocks (productivity, mark-up, and demand shocks), in accounting for US business cycle fluctuations. We do this by developing and estimating a two-sector open economy dynamic stochastic general equilibrium model that features several real frictions and structural shocks. The central finding from the estimated model is that global shocks are the main driver of movements in many US macroeconomic aggregates. Particularly, we find that they explain around 40% of the variations in our main variables of interest—output and real exchange rate. This important quantitative contribution is achieved by using indirect inference estimation techniques to test the model. We identify exogenous world demand, oil price shocks, preference for exported energy-intensive goods, and the price of imported energy-intensive goods as the global shocks most prominent in causing the largest variations in economic outcomes. By contrast, foreign interest rates and preference for aggregate exported goods are found to be bystanders.Julian Hodge Institute of Applied MacroeconomicsPetroleum Trust Development Fun

Classical or Gravity? Which Trade Model Best Matches the UK Facts?

We examine the empirical evidence bearing on whether UK trade is governed by a Classical model or by a Gravity model, using annual data from 1965 to 2015 and the method of Indirect Inference which has very large power in this application. The Gravity model here differs from the Classical model in assuming imperfect competition and a positive effect of total trade on productivity. We found that the Classical model passed the test rather easily, and that the Gravity model did so too but at a rather lower level of probability. As the gravity elements are strengthened the model's probability falls and vice versa. The two models' policy implications are also similar

Experimental Observations of Frictional Heating in Fiber-Reinforced Ceramics

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/65540/1/j.1151-2916.1992.tb04162.x.pd

Frequency Dependence of Fatigue Life and Internal Heating of a Fiber-Reinforced/Ceramic-Matrix Composite

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/65943/1/j.1151-2916.1994.tb04587.x.pd

Europe - a default or a dream? European identity formation among Bulgarian and English children

This is the authors' accepted version of an article published in Ethnicities, 2014. http://online.sagepub.com/10.1177/1468796812465722This article examines the formation of European identity among children in two very different countries: the traditionally Eurosceptic United Kingdom and the enthusiastic EU newcomer, Bulgaria. The paper revisits existing debates about the relationships between European identity, knowledge and the political and historical context, paying particular attention to the meanings attached to Europe. It demonstrates that children who identify as European are more likely to see Europe in geographic terms, which facilitates the perception of the European identity as ‘default’. In contrast, children who refuse to describe themselves as European see Europe as an exclusive political entity, associated with high standards and distant elites. These perceptions are significantly more common among Bulgarian children, who often depict Europe as a dream, and perceive the European identity as an ideal they aspire to reach. The article also shows how ethnicity and the images of Europe influence the relationship between national and European identities

What Causes Banking Crises? An Empirical Investigation for the World Economy

We add the Bernanke-Gertler-Gilchrist model to a world model consisting of the US, the Euro-zone and the Rest of the World in order to explore the causes of the banking crisis. We test the model against linear-detrended data and reestimate it by indirect inference; the resulting model passes the Wald test only on outputs in the two countries. We then extract the model's implied residuals on unfiltered data to replicate how the model predicts the crisis. Banking shocks worsen the crisis but 'traditional' shocks explain the bulk of the crisis; the non-stationarity of the productivity shocks plays a key role. Crises occur when there is a 'run' of bad shocks; based on this sample Great Recessions occur on average once every quarter century. Financial shocks on their own, even when extreme, do not cause crises - provided the government acts swiftly to counteract such a shock as happened in this sample