MAJOR THEMES IN OUR FOREIGN POLICY

International Relations/Trade,

INFLATION AND PRICE DISPERSION IN EQUITY MARKETS AND IN GOODS AND SERVICES MARKETS

An empirical link between inflation and price dispersion has been well established in goods and services markets – both across time periods and across countries. However, the economic interpretation of this link has been typically frustrated by the observational equivalence of the predictions of the prominent theories. This prompts us to take a new approach. Specifically, we examine the link between inflation and price dispersion in an empirical setting patently lacking the market characteristics central to these theories (i.e., menu costs, or relative/aggregate confusion). In particular, we benchmark the inflation-dispersion link in goods and services markets with a matched panel of equity market prices. Surprisingly, we find that a link – comparable to that found in markets for goods and services – does exist in the equity market. Moreover, we find that our results are not due to a potentially important, but generally overlooked, bias that is present in many existing studies. Our results suggest that the debate over the factors responsible for the inflation/price dispersion link should be broadened to account for the asset market links we document.relative price variability, stock markets, goods markets, inflation

Exchange Rate Pegs and Foreign Exchange Exposure in East Asia

This paper shows that many East Asian firms are significantly exposed to foreign exchange risk. Their exposure appears to be much more widespread than is typical for the large, western industrialized economies. The paper also shows that exchange rate pegs appear to do little to alleviate this widespread exposure against currencies other than the peg. The East Asian firms studied here are most exposed to fluctuations in the U.S. dollar, and the mark and yen are important in a few countries. The extent of their exchange rate exposure has varied, but not diminished, over the last decade. The most widespread exchange rate sensitivity (not just the most exchange rate fluctuation) occurred during the Asian Crisis period; this is evident even after accounting for the local macroeconomic conditions that affect aggregate local returns.foreign exchange exposure, exchange rate pegs, east asia

GDP Synchronicity and Risk Sharing Channels in a Monetary Union: Blue State and Red States

We examine state GDP comovement and consumption risk-sharing channels within the United States as a whole, and among states whose populations have voted consistently Democrat (Blue) or Republican (Red) in national elections. We document three facts: (1) state GDP growth is asynchronous, and Blue and Red states are particularly out of sync; (2) at the same time, interstate consumption risk-sharing is very high{it is high even across the political divide, and it is high even where the role of fiscal flows is minimal; and (3) the channels of risk sharing across Blue, Red, and Swing states are quite different

Distinct Quantum States Can Be Compatible with a Single State of Reality

Perhaps the quantum state represents information about reality, and not reality directly. Wave function collapse is then possibly no more mysterious than a Bayesian update of a probability distribution given new data. We consider models for quantum systems with measurement outcomes determined by an underlying physical state of the system but where several quantum states are consistent with a single underlying state---i.e., probability distributions for distinct quantum states overlap. Significantly, we demonstrate by example that additional assumptions are always necessary to rule out such a model.Comment: 5 pages, 2 figure

Dissecting interferon-induced transcriptional programs in human peripheral blood cells

Interferons are key modulators of the immune system, and are central to the control of many diseases. The response of immune cells to stimuli in complex populations is the product of direct and indirect effects, and of homotypic and heterotypic cell interactions. Dissecting the global transcriptional profiles of immune cell populations may provide insights into this regulatory interplay. The host transcriptional response may also be useful in discriminating between disease states, and in understanding pathophysiology. The transcriptional programs of cell populations in health therefore provide a paradigm for deconvoluting disease-associated gene expression profiles.We used human cDNA microarrays to (1) compare the gene expression programs in human peripheral blood mononuclear cells (PBMCs) elicited by 6 major mediators of the immune response: interferons alpha, beta, omega and gamma, IL12 and TNFalpha; and (2) characterize the transcriptional responses of purified immune cell populations (CD4+ and CD8+ T cells, B cells, NK cells and monocytes) to IFNgamma stimulation. We defined a highly stereotyped response to type I interferons, while responses to IFNgamma and IL12 were largely restricted to a subset of type I interferon-inducible genes. TNFalpha stimulation resulted in a distinct pattern of gene expression. Cell type-specific transcriptional programs were identified, highlighting the pronounced response of monocytes to IFNgamma, and emergent properties associated with IFN-mediated activation of mixed cell populations. This information provides a detailed view of cellular activation by immune mediators, and contributes an interpretive framework for the definition of host immune responses in a variety of disease settings

Understanding Real Exchange Rate Movements with Trade in Intermediate Products

We suggest it may be "too easy" to attribute real exchange rate movements to law of one price deviations. We show that it is immaterial whether one uses seemingly traded goods, nontraded goods, or even just a single, unimportant consumer good, say beer. The ease of attributing the variation to any such deviations is explained using a model with intermediate goods trade. In the model, the stage of production determines the traded/nontraded distinction. We find empirical substantiation for the model: law of one price deviations lose explanatory power; and - defined appropriately in terms of intermediate goods - relative prices matter

Understanding Real Exchange Rate Movements with Trade in Intermediate Products

We suggest it may be "too easy" to attribute real exchange rate movements to law of one price deviations. We show that it is immaterial whether one uses seemingly traded goods, nontraded goods, or even just a single, unimportant consumer good, say beer. The ease of attributing the variation to any such deviations is explained using a model with intermediate goods trade. In the model, the stage of production determines the traded/nontraded distinction. We find empirical substantiation for the model: law of one price deviations lose explanatory power; and - defined appropriately in terms of intermediate goods - relative prices matter

The Ithaca Interpretation of Quantum Mechanics

I list several strong requirements for what I would consider a sensible interpretation of quantum mechanics and I discuss two simple theorems. One, as far as I know, is new; the other was only noted a few years ago. Both have important implications for such a sensible interpretation. My talk will not clear everything up; indeed, you may conclude that it has not cleared anything up. But I hope it will provide a different perspective from which to view some old and vexing puzzles (or, if you believe nothing needs to be cleared up, some ancient verities.)Comment: 21 pages, plain TEX. Notes for a lecture given at the Golden Jubilee Workshop on Foundations of Quantum Theory, Tata Institute, Bombay, September 9-12, 199