The inflation-output nexus:empirical evidence from India, Brazil and South Africa

In this paper we study the relationship between output and inflation for India, Brazil, and South Africa using the EGARCH model. For India and South Africa, we find evidence for: (1) the Cukierman and Meltzer hypothesis that inflation volatility raises inflation; (2) the Friedman hypothesis that inflation raises inflation volatility; and (3) the Black hypothesis that output volatility raises output growth, and that output volatility reduces inflation. For Brazil, we do not find any evidence of a systematic relationship between inflation and output growth.Output, inflation, EGARCH model, volatility

Global dynamics of radiatively inefficient accretion flows: advection versus convection

We obtain global solutions of radiatively inefficiently accretion flows around black holes. Whether and where convection develops in a flow are self-consistently determined with the mixing-length theory. The solutions can be divided into three types according to the strength of normal viscosity. Type I solution corresponds to large viscosity parameter \alpha \ga 0.1, which is purely advection-dominated and with no convection, and has been extensively studied in the literature. Type II solution is for moderate $\alpha \sim 0.01$, which has a three-zone structure. The inner zone is advection-dominated, the middle zone is convection-dominated and ranges from a few tens to a few thousands of gravitational radii, and the outer zone is convectively stable and matches outward a Keplerian disc. The net energy flux throughout the flow is inward as in type I solution. Type III solution which is for small \alpha \la 0.001 consists of two zones as Abramowicz et al. suggested previously: an inner advection-dominated zone and an outer convection-dominated zone, separated at a radius of a few tens of gravitational radii. This type of solution has an outward net energy flux. In both type II and III solutions the radial density profile is between the 1/2 law of self-similar convection-dominated accretion flow model and the 3/2 law of self-similar advection-dominated accretion flow model, and the efficiency of energy release is found to be extremely low. Our results are in good agreement with those of recent numerical simulations.Comment: 13 pages, 2 figures, accepted for publication in MNRA

Has the structural break slowed down growth rates of stock markets?

In this paper, we use the common structural break test suggested by Bai et al. (1998) to test for a common structural break in the stock prices of the US, the UK, and Japan. On the basis of the structural break, we divide each country‟s stock price series into sub-samples and investigate whether or not the structural break had slowed down the growth of stock markets. Our main findings are that when stock markets are modeled in a trivariate sense the common structural break turns out to be 1990:02, with the confidence interval including several episodes, such as the asset price bubble when housing prices and stock prices in Japan reached a peak in 1988/1989, the early 1990s recession in the UK, the business cycle peak of July 1990, the August 1990 Iraqi invasion of Kuwait and the March 1991 business cycle trough. Annual average growth rates suggest that the structural break has slowed down the growth rate of the US, UK and Japanese stock markets.Common Structural Break Test, Stock Markets

Why Do AGN Lighthouses Switch Off?

Nearby galactic nuclei are observed to be very much dimmer than active galactic nuclei in distant galaxies. The Chandra X-ray Observatory has provided a definitive explanation for why this is so. With its excellent angular resolution, Chandra has imaged hot X-ray-emitting gas close to the gravitational capture radius of a handful of supermassive black holes, including Sgr A* in the nucleus of our own Galaxy. These observations provide direct and reliable estimates of the Bondi mass accretion rate in these nuclei. It is found that the Bondi accretion rate is significantly below the Eddington mass accretion rate, but this alone does not explain the dimness of the accretion flows. In all the systems observed so far, the accretion luminosity is orders of magnitude less than Mdot_{Bondi} times c^2, which means that the accretion must occur via a radiatively inefficient mode. This conclusion, which was strongly suspected for many years, is now inescapable. Furthermore, if the accretion in these nuclei occurs via either a Bondi flow or an advection-dominated accretion flow, the accreting plasma must be two-temperature at small radii, and the central mass must have an event horizon. Convection, winds and jets may play a role, but observations do not yet permit definite conclusions.Comment: Invited review, to appear in "Lighthouses of the Universe" eds. M. Gilfanov, R. Sunyaev et al., Springer-Verlag; 25 pages, 8 figure

Did the US macroeconomic conditions affect Asian stock markets?

The aim of this paper is to examine the impact of US macroeconomic conditions—namely, exchange rate and short-term interest rate—on the stocks of seven Asian countries (China,India, the Philippines, Malaysia, Singapore, Thailand, and South Korea). Using daily data for the period 2000 to 2010, we divide the sample into pre-crisis period (pre-August 2007) and crisis period (post-August 2007) we find that in the short-run interest rate has a statistically insignificant effect on returns for all countries except the Philippines in the crisis period,while except for China, regardless of the crisis, depreciation had a statistically significant negative effect on returns. When the long-run relationship among the variables is considered,for four of the seven countries (India, Malaysia, Philippines, Singapore, and Thailand) while there was cointegration in the pre-crisis period, in the crisis period there was no such relationship, implying that the financial crisis has actually weakened the link between stock prices and economic fundamentals.Interest Rate; Exchange Rate; Financial Crisis; Depreciation