Menu Costs and Inflation Asymmetries - Some Micro Data Evidence

The paper explains the observed asymmetric inflation response to value-added tax (VAT) changes in Hungary by calibrating a standard sectoral menu cost model on a new micro-level CPI data set. The model is able to reproduce important moments of the data, and finds that the asymmetry can be explained by the interaction of menu costs, (sectoral) trend inflation and forward looking firms, thereby it provides direct evidence to the argument of Ball and Mankiw (1994).Menu Cost, Inflation Asymmetry, Sectoral Heterogeneity, Value-Added Tax

Menu Costs and Inflation Asymmetries Some Micro Data Evidence

The paper explains the observed asymmetric inflation response to value-added tax (VAT) changes in Hungary by calibrating a standard sectoral menu cost model on a new micro-level CPI data set. The model is able to reproduce important moments of the data, and finds that the asymmetry can be explained by the interaction of menu costs, (sectoral) trend inflation and forward-looking firms, thereby it provides direct evidence to the argument of Ball and Mankiw (1994).Menu Cost, Inflation Asymmetry, Sectoral Heterogeneity, Value-Added Tax

Menu Costs and Inflation Asymmetries - Some Micro Data Evidence

The paper explains the observed asymmetric inflation response to value-added tax (VAT) changes in Hungary by calibrating a standard sectoral menu cost model on a new micro-level CPI data set. The model is able to reproduce important moments of the data, and finds that the asymmetry can be explained by the interaction of menu costs, (sectoral) trend inflation and forward looking firms, thereby it provides direct evidence to the argument of Ball and Mankiw (1994)

Functional dynamics of a single tryptophan residue in a BLUF protein revealed by fluorescence spectroscopy

Blue Light Using Flavin (BLUF) domains are increasingly being adopted for use in optogenetic constructs. Despite this, much remains to be resolved on the mechanism of their activation. The advent of unnatural amino acid mutagenesis opens up a new toolbox for the study of protein structural dynamics. The tryptophan analogue, 7-aza-Trp (7AW) was incorporated in the BLUF domain of the Activation of Photopigment and pucA (AppA) photoreceptor in order to investigate the functional dynamics of the crucial W104 residue during photoactivation of the protein. The 7-aza modification to Trp makes selective excitation possible using 310 nm excitation and 380 nm emission, separating the signals of interest from other Trp and Tyr residues. We used Förster energy transfer (FRET) between 7AW and the flavin to estimate the distance between Trp and flavin in both the light- and dark-adapted states in solution. Nanosecond fluorescence anisotropy decay and picosecond fluorescence lifetime measurements for the flavin revealed a rather dynamic picture for the tryptophan residue. In the dark-adapted state, the major population of W104 is pointing away from the flavin and can move freely, in contrast to previous results reported in the literature. Upon blue-light excitation, the dominant tryptophan population is reorganized, moves closer to the flavin occupying a rigidly bound state participating in the hydrogen-bond network around the flavin molecule

Inflation Asymmetry and Menu Costs New Micro Data Evidence ∗

The paper uses the natural experiment provided by a series of value-added tax (VAT) changes in Hungary to provide micro-data evidence on the asymmetry of inflation response to aggregate shocks. It shows that a sectoral menu cost model with multi-product firms and trend-inflation can quantitatively account for the inflation asymmetry observed in the data, thereby it provides direct evidence to the argument of Ball and Mankiw (1994). The model predicts that the effect of a positive monetary policy shock can have almost twice as large inflation effect as a negative shock

A Model of Unconventional Monetary Policy

We develop a quantitative monetary DSGE model with financial intermediaries that face endogenously determined balance sheet constraints. We then use the model to evaluate the effects of the central bank using unconventional monetary policy to combat a simulated financial crisis. We interpret unconventional monetary policy as expanding central bank credit intermediation to offset a disruption of private financial intermediation. The primary advantage the central bank has over private intermediaries is that it can elastically obtain funds by issuing riskless government debt. During the crisis, the balance sheet constraints on private intermediaries tighten, raising the net benefits from central bank intermediation. We find that the welfare benefits from this policy may be substantial if the relative efficiency costs of central bank intermediation are modest. Further, in a financial crisis there are benefits from credit policy even if the nominal interest has not reached the zero lower bound. In the event the zero lower bound constraint is binding, however, the next benefits from credit policy may be significantly enhanced. Much thanks to Bob Hall for comments on an earlier draft and to Luca Guerreri for computational help. 1