Incomplete cost pass-through under deep habits

A number of empirical studies document that marginal cost shocks are not fully passed through to prices at the firm level and that prices are substantially less volatile than costs. We show that in the relative-deep-habits model of Ravn, Schmitt-Grohe, and Uribe (2006), firm-specific marginal cost shocks are not fully passed through to product prices. That is, in response to a firm-specific increase in marginal costs, prices rise, but by less than marginal costs leading to a decline in the firm-specific markup of prices over marginal costs. Pass-through is predicted to be even lower when shocks to marginal costs are anticipated by firms. In our model, unanticipated firm-specific cost shocks lead to incomplete pass-through (or a decline in markups) of about 20 percent and anticipated cost shocks are associated with incomplete pass-through of about 50 percent. The model predicts that cost pass-through is increasing in the persistence of marginal cost shocks and U-shaped in the strength of habits. The relative-deep-habits model implies that conditional on marginal cost disturbances, prices are less volatile than marginal costs

The macroeconomics of subsistence points

This paper explores the macroeconomic consequences of preferences displaying a subsistence point. It departs from the existing related literature by assuming that subsistence points are specific to each variety of goods rather than to the composite consumption good. We show that this simple feature makes the price elasticity of demand for individual goods procyclical. As a result, markups behave countercyclically in equilibrium. This implication is in line with the available empirical evidence

The credit supply channel of monetary policy: evidence from a FAVAR model with sign restrictions

We test whether the credit channel of the monetary policy was present in the United States' economy from January 2001 to April 2016. To this end, we use a factor-augmented vector autoregression, and we impose sensible theoretical sign restrictions in our structural identification scheme. We use the expected substitution effect between bank commercial loans and commercial papers to identify the credit supply channel. We found that the credit channel appears to have operated in the US economy during the sample period. However, when we split the sample, we found that the credit channel did not operate after the subprime crisis (close to the Zero Lower Bound of the interest rate). This result is robust to changing the sign restriction horizons. It supports current views in the literature regarding the ineffectiveness of the credit channel as a means to foster real economic activity during crises episodes

Avoiding Liquidity Traps

Once the zero bound on nominal interest rates is taken into account, Taylor-type interest-rate feedback rules give rise to unintended self-fulfilling decelerating inflation paths and aggregate fluctuations driven by arbitrary revisions in expectations. These undesirable equilibria exhibit the essential features of liquidity traps, as monetary policy is ineffective in bringing about the government's goals regarding the stability of output and prices. This paper proposes several fiscal and monetary policies that preserve the appealing features of Taylor rules, such as local uniqueness of equilibrium near the inflation target, and at the same time rule out the deflationary expectations that can lead an economy into a liquidity trap.TAYLOR RULES; LIQUIDITY TRAPS; ZERO BOUND ON NOMINAL INTEREST RATES.

Tracing planet-induced structures in circumstellar disks using molecular lines

Circumstellar disks are considered to be the birthplace of planets. Specific structures like spiral arms, gaps, and cavities are characteristic indicators of planet-disk interaction. Investigating these structures can provide insights into the growth of protoplanets and the physical properties of the disk. We investigate the feasibility of using molecular lines to trace planet-induced structures in circumstellar disks. Based on 3D hydrodynamic simulations of planet-disk interactions, we perform self-consistent temperature calculations and produce N-LTE molecular line velocity-channel maps and spectra of these disks using our new N-LTE line radiative transfer code Mol3D. Subsequently, we simulate ALMA observations using the CASA simulator. We consider two nearly face-on inclinations, 5 disk masses, 7 disk radii, and 2 different typical pre-main-sequence host stars (T Tauri, Herbig Ae). We calculate up to 141 individual velocity-channel maps for five molecules/isotopoloques in a total of 32 rotational transitions to investigate the frequency dependence of the structures indicated above. We find that the majority of protoplanetary disks in our parameter space could be detected in the molecular lines considered. However, unlike the continuum case, gap detection is not straightforward in lines. For example, gaps are not seen in symmetric rings but are masked by the pattern caused by the global (Keplerian) velocity field. We identify specific regions in the velocity-channel maps that are characteristic of planet-induced structures. Simulations of high angular resolution molecular line observations demonstrate the potential of ALMA to provide complementary information about the planet-disk interaction as compared to continuum observations. In particular, the detection of planet-induced gaps is possible under certain conditions.(abridged)Comment: 19 pages, 19 figures, accepted for publication in A&

Monetary Policy and Multiple Equilibria

In this paper, we characterize conditions under which interest rate feedback rules wherby the nominal interest rate is set as an increasing function of the inflation rate generate multiple equilibria. We show that these conditions depend not only on the fiscal regime (as emphasized in the fiscal theory of the price level) but also on the way in which money is assumed to enter preferences and technology. We analyze this issue in flexible and sticky price environments.MONETARY POLICY ; PRICES ; INTEREST RATE

Structural, magnetic and superconducting properties of pulsed-laser-deposition-grown La1.85Sr0.15CuO4/La2/3Ca1/3MnO3\rm{La_{1.85}Sr_{0.15}CuO_{4}/La_{2/3}Ca_{1/3}MnO_{3}} superlattices on (001)\rm{(001)}-oriented LaSrAlO4\rm{LaSrAlO_{4}} substrates

Epitaxial La1.85Sr0.15CuO4/La2/3Ca1/3MnO3 superlattices on (001)-oriented LaSrAlO4 substrates have been grown with pulsed laser deposition technique. Their structural, magnetic and superconducting properties have been determined with in-situ reflection high energy electron diffraction, x-ray diffraction, specular neutron reflectometry, scanning transmission electron microscopy, electric transport, and magnetization measurements. We find that despite the large mismatch between the in-plane lattice parameters of LSCO and LCMO these superlattices can be grown epitaxially and with a high crystalline quality. While the first LSCO layer remains clamped to the LSAO substrate, a sizeable strain relaxation occurs already in the first LCMO layer. The following LSCO and LCMO layers adopt a nearly balanced state in which the tensile and compressive strain effects yield alternating in-plane lattice parameters with an almost constant average value. No major defects are observed in the LSCO layers, while a significant number of vertical antiphase boundaries are found in the LCMO layers. The LSCO layers remain superconducting with a relatively high superconducting onset temperature of about 36 K. The macroscopic superconducting response is also evident in the magnetization data due to a weak diamagnetic signal below 10 K for H || ab and a sizeable paramagnetic shift for H || c that can be explained in terms of a vortex-pinning-induced flux compression. The LCMO layers maintain a strongly ferromagnetic state with a Curie temperature of about 190 K and a large low-temperature saturation moment of about 3.5(1) muB. These results suggest that the LSCO/LCMO superlattices can be used to study the interaction between the antagonistic ferromagnetic and superconducting orders and, in combination with previous studies on YBCO/LCMO superlattices, may allow one to identify the relevant mechanisms.Comment: 13 pages, 11 figure

Legendrian Distributions with Applications to Poincar\'e Series

Let $X$ be a compact Kahler manifold and $L\to X$ a quantizing holomorphic Hermitian line bundle. To immersed Lagrangian submanifolds $\Lambda$ of $X$ satisfying a Bohr-Sommerfeld condition we associate sequences $\{ |\Lambda, k\rangle \}_{k=1}^\infty$, where $\forall k$ $|\Lambda, k\rangle$ is a holomorphic section of $L^{\otimes k}$. The terms in each sequence concentrate on $\Lambda$, and a sequence itself has a symbol which is a half-form, $\sigma$, on $\Lambda$. We prove estimates, as $k\to\infty$, of the norm squares $\langle \Lambda, k|\Lambda, k\rangle$ in terms of $\int_\Lambda \sigma\overline{\sigma}$. More generally, we show that if $\Lambda_1$ and $\Lambda_2$ are two Bohr-Sommerfeld Lagrangian submanifolds intersecting cleanly, the inner products $\langle\Lambda_1, k|\Lambda_2, k\rangle$ have an asymptotic expansion as $k\to\infty$, the leading coefficient being an integral over the intersection $\Lambda_1\cap\Lambda_2$. Our construction is a quantization scheme of Bohr-Sommerfeld Lagrangian submanifolds of $X$. We prove that the Poincar\'e series on hyperbolic surfaces are a particular case, and therefore obtain estimates of their norms and inner products.Comment: 41 pages, LaTe