Lessons from the heterodox stabilization programs

This paper draws lessons from the advantages and disadvantages of the heterodox stabilization approach in chronic high inflation countries. Heterodox stabilization programs make temporary use of some income policies - price and wage controls - to support orthodox policies. Heterodox programs were successfully tried in two chronic high inflation countries, Israel and Mexico. In both cases these programs were followed by a second, more orthodox stage and included the use of the exchange rate as the nominal anchor. While the programs succeeded, both experienced costs in the form of an appreciation of the real exchange rate and high real interest rates. The main lessons from the experiences as analyzed by the authors are : 1) the initial, rapid reduction in inflation at the beginning of heterodox programs is the easy part; the difficult part is to maintain price stability over time; 2) income policies in heterodox stabilization programs are only justified in high chronic inflation countries (with annual rates of inflation above 100 percent) where inflationary persistence is more pervasive and problematic; 3) there is a case for a larger fiscal adjustment in heterodox programs because of the risk that a government that starts with price controls could be confused with one that tries to achieve price stability without adjusting; and 4) a heterodox program that fails is likely to lead to a large amount of inflation instability.Economic Theory&Research,Environmental Economics&Policies,Economic Stabilization,Insurance&Risk Mitigation,Insurance Law

Exchange-rate-based stabilization in Argentina and Chile : a fresh look

Exchange-rate-based stabilization is designed to reduce inflation by using the exchange rate as the main nominal anchor. This does not necessarily mean a fixed exchange rate. A crawling peg with a low rate of depreciation or a pre-announced gradual reduction in the rate of devaluation are alternative ways to use the exchange rate as a nominal anchor. Exchange-rate-based stabilization (ERBS) has been widely used in the high-inflation economies of Latin America. Argentina, Chile, and Uruguay adopted a pre-announced crawling peg in the late 1970s (the famous tablitas) to bring down inflation, with mixed results. Israel and Mexico used the exchange rate as a nominal anchor, and inflation came down significantly. More recently, Argentina relied on a fixed and convertible exchange rate (the convertibility plan) to bring to an end four decades of inflation. So far, the outcomes have been good. The authors find that ERBS have generally been more effective than money-based programs in bringing down inflation in the high inflation economies. But when inflation was reduced gradually, the process resulted in continuous (sometimes significant) real appreciation. Even fixing the exchange rate in Chile in 1979 did not reduce the underlying rate of inflation. Argentina's recent convertibility plan has been more successful in bringing inflation down significantly than previous money-based programs (from monthly rates of about 10 percent to just 1.5 percent in a few months). One could argue that this is a special case, since Argentina was coming from full-blown hyperinflation, so the authors compared the fixed-exchange-rate periods in Argentina and Chile, and came up with useful insights. Argentina's greater success cannot be explained only by fiscal arguments. When Chile fixed its exchange rate in 1979, it wasalready enjoying a budget surplus. Argentina in 1991 was running a small deficit - smaller than in previous years, but a deficit. Perhaps a better explanation is the government's perceived strong commitment to the fixed exchange rate and the potential large costs of reneging on it. The convertibility law made devaluation far more difficult (requiring congressional approval) and reduced the chances of discretionary devaluation. And the government tied its own hands further by legalizing the use of the dollar as a unit of account and means of exchange. The costs of abandoning the fixed exchange rate were also perceived to be greater in Argentina. Devaluation was (and is) perceived as opening the door for renewed hyperinflation, a dreadful scenario. Chile did not face this threat so it was more difficult - and took longer - to convince the public that the government was determined to maintain the parity. Governments tend to stick to the fixed exchange rate longer than is prudent. It is now apparent that some flexibility at an earlier stage would have reduced the costs of the final failure of the tablitas. Why do governments find it so difficult to make exchange-rate policy more flexible? Why do they wait for a balance of payments crisis rather than anticipate it? Perhaps because they fear the public will equate flexibility with failure and a loss of credibility. The authors found, however - in the experience of Israel and Mexico - that inflation does not necessarily go up when the exchange rate is made more flexible. Countries must balance the need to maintain an exchange rate rule (for credibility) with the need to keep external balance.Economic Stabilization,Economic Theory&Research,Environmental Economics&Policies,Macroeconomic Management,Fiscal&Monetary Policy

Some implications of policy games for high inflation economies

The authors used the policy game approach to gain insight into a problem that has puzzled analysts of high inflation economies. Why are programs based on tight fiscal and monetary policies slow at reducing inflation in high inflation countries? Distinguishing between regimes of rule and discretion the authors explain that governments that cannot abide by policy rules and tend to use surprise inflation in a discretionary manner to achieve short term goals ( e.g. eroding the real wage or the real value of domestic debt ), raising the rational public's inflationary expectations. If policy makers can convince the public that they will not resort to surprise inflation tactics, the long term level of inflation may be reduced considerably. Another problem addressed is how should policymakers who are genuinely interested in disinflation react to adverse public expectations? The policymakers are faced with the dilemna of sticking to their announced policy and paying immediate costs in terms of unemployment and capital flight, or compromising their initial targets at the cost of renewed inflationary expectations. They conclude that lack of credibility generates disinflation costs. And if the source of a credibility problem is the inability of weak policymakers to honor their committment, strong policymakers may need to compromise to some extent.Environmental Economics&Policies,Economic Theory&Research,ICT Policy and Strategies,Inflation,Banks&Banking Reform

Inflationary rigidities and stabilization policies

Latin American countries provide the best living laboratory to study inflationary processes and stabilization programs. The purpose of this paper is to analyze the experience with orthodox stabilization policies, which are based on a tight fiscal stance and not supported by a system of price controls. The analysis of these policies is structured as follows. Part I analyzes in detail the question of why purely orthodox policies were especially effective in stopping hyperinflation as opposed to chronic inflation processes. Part II turns to chronic inflation countries and analyzes three basic types of stabilization. The first type is based almost exclusively on fiscal adjustment. The second considers programs which employ nominal anchors in conjunction with fiscal adjustments. The third type examines the exchange rate based stabilizations which often evolve out of a monetary-fiscal package. In the final part of the paper, the authors consider the long run view which extends beyond specific programs and emphasizes the importance of persistence in fiscal discipline and in adherence to nominal anchors.Environmental Economics&Policies,Inflation,Banks&Banking Reform,Economic Stabilization,Economic Theory&Research

String Theory Versus Black Hole Complementarity

It is argued that string theory on the Euclidean version of the Schwarzschild black hole -- the cigar geometry -- admits a zero mode that is localized at the tip of the cigar. The presence of this mode implies that in string theory, unlike in general relativity, the tip of the cigar is a special region. This is in tension with the Euclidean version of the black hole complementarity principle. We provide some qualitative arguments that link between this zero mode and the origin of the black hole entropy and firewall at the horizon.Comment: 8 page

Assessment by finite element analysis of the impact of osteoporosis and osteoarthritis on hip resurfacing

Hip resurfacing is proposed as an alternative to total hip replacement (THR) for treatment of osteoarthritis (OA), especially for younger, heavier and more active sufferers. There is however, concern with regards to the incidence of post operative femoral neck fractures. We have investigated, with finite element models, the changes in stress and strain in the femoral neck following hip resurfacing. We have included several different bone material property values representing normal, elderly, osteoarthritic and osteoporotic bone. We have also modelled two different hip implant orientations. We have shown that hip resurfacing may increase the magnitude of stress and strain in the femoral neck, especially in osteoporotic bone. We have also shown that the superolateral offset associated with the valgus orientation, not the valgus orientation itself, may be what reduces the stress and strain in the neck and leads to lower incidence of fracture

Specifiable biomimetic microsponges for timed release of crystal entrapped biomolecules useful in bone repair.

Most marine materials, by nature, contain crystals of inorganic matter with specific structures that allow the loading, release, and delivery of biomolecules that can be utilized in clinical applications. These structures can be biomimetically synthesized. Aggregates of inorganic particles generated by biomimetic microsponges may provide surfaces and structures for cell attachment, organization, and promotion of matrix synthesis. Biomimetic microsponges have been developed with tunable release profiles differing by the rate (speed over distance), velocity (rate of change in direction), and the quantity discharged over time, according to biomolecular species. Specifically, the types of proteins involved guide and regulate cells in physical contact with the microsponges, for instance, reprogramming somatic cells, the switching phenotypes, or specifying stem cell differentiation. Applications for these microsponges include gene transfection of localized cells and promotion of bone matrix synthesis by the externalized display of RGD cell adhesive peptides and the release of crystal entrapped, occluded, adsorbed and infused rhBMP-2 and plasmid. A requirement for de novo bone formation is a solid structure to enable osteocytes to lay new bone tissue. In this study, biomimetic microsponges highlight tremendous potential as osteoconductive packing material in bone repair with parallel influence on regeneration. Majorly, microsponges offer pronounced osteoinductivity, unlike many other bone particulates, by solid-state integration of active regenerative biological molecules through the prism of the biomineral crystalline structure

Design and Simulation of Two Stage Wideband CMOS Amplifier in 90 NM Technology

Design and simulation of 7 GHz CMOS wideband amplifier(CMOSWA) using a modified cascode circuit realized in  90-nm CMOS technology is presented here. The proposed system consists of two stages, namely a modified folded cascode and an inductively degenerated common source amplifier. The circuit is experimented with and without a feedback network. This work discusses the performance variation as a function of reactive components, and the initial stage results in 22 dB gain,2.6 GHz bandwidth, and 40GHz unity gain-bandwidth. The circuit without the feedback network exhibits 30.7dB gain,4.8GHz bandwidth(BW), and 10GHz unity-gain bandwidth(UGB). The reactive feedback network's inclusion helped to achieve 38.7 dB gain, 6.95GHz BW, 30GHz UGB, and 55o phase margin. The circuit consumes 1.4mW power from a 1.8V power supply. Simulation results of the proposed circuit are comparable and better than the reported wideband designs in the literature. Realization of our proposed circuit would add value to the area of wideband amplifier design

Recycling of Neodymium and Dysprosium from Permanent Magnets

This project seeks to recycle neodymium and dysprosium from used neodymium-iron-boron, NdFeB, permanent magnets. Our alternative recycling strategy is based on a method developed by Dr. Eric Schelter of the University of Pennsylvania Department of Chemistry and his research group. This process involves the use of a novel tripodal nitroxide ligand, H3TriNOX. The proposed process design converts used NdFeB magnets to neodymium and dysprosium. The goal production of neodymium oxide is 126,000 kg/year and of dysprosium oxide is 14,000 kg/year, which would cost $12,500,000 with the current price rate of neodymium and dysprosium. Based on the results of the economic analysis, this project would be unprofitable in the near future