Exchange rate volatility and trade: a general equilibrium analysis.

In this paper, we use insights from the literature on financial options to analyze the effect of exchange rate volatility on the volume of trade between countries. In contrast to existing work, this analysis is carried out in a model where the exchange rate is determined endogenously, and the volatility of the exchange rate depends on the volatility of the amounts available for consumption of the traded and non-traded goods. Our main result is to show that, in a one-good world, and contrary to the popular conjecture, an increase in exchange rate volatility is associated with an increase in the volume of trade. If a non-traded good is added, the above remains true when the source of exchange rate volatiliy is the uncertainty in the traded goods sector. However, when the source of exchange rate volatility is the non-traded goods sector then the volume of trade may decline. Thus, our model offers at least a partial explanation for the results of empirical studies that find only a weak relation between exchange rate volatility and trade. A policy implication of the model is that the volatility of the real exchange rate can be reduced, and welfare increased, in two ways: by reducing the volatility of fundamentals and by reducing the barriers to trade. However, while a reduction in trade barriers is associated with an increase in trade, a reduction in the volatility of fundamentals leads to a reduction in trade. Thus, more trade does not always mean a higher welfare.Equilibrium; Trade; Volatility;

The equilibrium approach to exchange rates: theory and tests.

We characterize the equilibrium exchange rate in a general equilibrium economy without imposing strong restrictions on the output processes, preferences, or commodity market imperfections. The nomial exchange rate is determined by differences in initial wealths - the currencies of richer countries tend to be overvalued, by PPP standards - and by differences of marginal indirect utilities of total nominal spending. Changes in the exchange rate mirror differences in growth rates of real spending weighted by relative risk-aversion (which can be time-varying and can differ across countries), and, in the case of non-homothetic utility functions, differences in inflation rates computed from marginal spending weights. Thus, standard regression or cointegration tests of PPP suffer from missing-variables biases and ignore variations in risk aversions across countries and over time. We also present cointegration test of the homothecy/ CRRA version of the model. When nominal spending is given an independent role (next to prices) in the short-term dynamics, both PPP and the CRRA model become acceptable.Equilibrium; Theory; Trade;

Limiting punishment for default on sovereign debt and the London Club.

In this paper, we examine the role that institutions may play in enabling banks to write contracts whereby sovereign debt is not forgiven ex post. Our model provides a rationale for the emergence of a centralized forum for debt renegotiation, such as the London Club as well as for bank syndicates. These bank syndicates arise as part of a pre-commitment device rather than risk sharing. We propose a debt contract under which, only involuntary default is forgiven ex post. Our main findings are that under this contract, renegotiations take place only after involuntary default and debt forgiveness after voluntary (strategic) default is avoided. When voluntary default occurs, access to the credit market is denied only for a limited number of periods, rather than forever. In contrast to a voluntary default, involuntary default is renegotiated immediately.Default; Sovereign debt;

The exchange rate and purchasing power parity: extending the theory and tests.

This paper analyzes the exchange rate in a ``no-arbitrage' or ``real business cycle' equilibrium model and provides empirical evidence for this model vis-a-vis PPP. Our contribution is to show, based on a generalization of the equilibrium model of exchange rates, that (i) the test equation linking the exchange rate to fundamentals should allow for international heterogeneity in time preferences or risk attitudes, as well as noise---that is, the model should not be tested as an exact relation; (ii) empirical work should use levels of variables rather than first differences; (iii) tests on the existence of long-run relations should be complemented by tests on the signs of the coefficients; (iv) the specification of the regression should offer demonstrated advantages over alternatives, and the significance tests should not rely on asymptotic distributions; and (v) the tests should steer clear of countries that have imposed, for most of the period, capital restrictions or exchange controls, thus violating the integrated-markets assumption of the model. Our empirical work shows that, as a long-run relation, the generalized model outperforms PPP.Purchasing; Purchasing power; Theory; Equilibrium; Model; International; Risk; Variables; Advantages; Distribution;

Adaptive Filters Revisited - RFI Mitigation in pulsar observations

Pulsar detection and timing experiments are applications where adaptive filters seem eminently suitable tools for radio-frequency-interference (RFI) mitigation. We describe a novel variant which works well in field trials of pulsar observations centred on an observing frequency of 675 MHz, a bandwidth of 64 MHz and with 2-bit sampling. Adaptive filters have generally received bad press for RFI mitigation in radio astronomical observations with their most serious drawback being a spectral echo of the RFI embedded in the filtered signals. Pulsar observations are intrinsically less sensitive to this as they operate in the (pulsar period) time domain. The field trials have allowed us to identify those issues which limit the effectiveness of the adaptive filter. We conclude that adaptive filters can significantly improve pulsar observations in the presence of RFI.Comment: Accepted for publication in Radio Scienc

Smart integrated adaptive centralized controller for islanded microgrids under minimized load shedding

In this paper, a smart integrated adaptive centralized controller is proposed for monitoring and controlling integrated renewable energy sources (RESs), both for intentional and unintentional islanding modes of operation for microgrids, as well as, for a variable range of transient load shedding and fault scenarios corresponding to electrical power system outages. It is demonstrated that the proposed smart adaptive controller is capable of instructing fast frequency response by proper coordination of the dispatch of RESs units such as, mini-hydro, Photovoltaic (PV), Battery Energy Storage System (BESS) and standby diesel generators. In particular, the BESS used as power reserve, at the early stage of fault events can prevent detrimental and uncontrollable system frequency decline and the extent of load shedding. In summary, the performance of a centralized controller in terms of a fast frequency response recovery feature is validated for an actual microgrid distribution network of Malaysia. The demonstration of this intelligent control scheme highlights the advantage of utilizing the fast power recovery response of energy storage and standby generator, which fulfil the criteria for minimal load shedding from the main grid, during the unintentional microgrid islanding conditions

Hyperon Nonleptonic Weak Decays Revisited

We first review the current algebra - PCAC approach to nonleptonic octet baryon 14 weak decay B (\to) (B^{\prime})(\pi) amplitudes. The needed four parameters are independently determined by (\Omega \to \Xi \pi),(\Lambda K) and (\Xi ^{-}\to \Sigma ^{-}\gamma) weak decays in dispersion theory tree order. We also summarize the recent chiral perturbation theory (ChPT) version of the eight independent B (\to) (B^{\prime}\pi) weak (\Delta I) = 1/2 amplitudes containing considerably more than eight low-energy weak constants in one-loop order.Comment: 10 pages, RevTe

Nonfactorization in Hadronic Two-body Cabibbo-favored decays of D^0 and D^+

With the inclusion of nonfactorized amplitudes in a scheme with $N_c=3$, we have studied Cabibbo-favored decays of $D^0$ and $D^+$ into two-body hadronic states involving two isospins in the final state. We have shown that it is possible to understand the measured branching ratios and determined the sizes and signs of nonfactorized amplitudes required.Comment: 15 pages, Late

Weak radiative hyperon decays, Hara's theorem and the diquark

Weak radiative hyperon decays are discussed in the diquark-level approach. It is pointed out that in the general diquark formalism one may reproduce the experimentally suggested pattern of asymmetries, while maintaining Hara's theorem in the SU(3) limit. At present, however, no detailed quark-based model of parity-violating diquark-photon coupling exists that would have the necessary properties.Comment: 10 pages, LaTe