Can Fiscal Policy Stimulus Boost Economic Recovery?

We assess the role played by fiscal policy in explaining the dynamics of asset markets. Using a panel of ten industrialized countries, we show that a positive fiscal shock has a negative impact in both stock and housing prices. However, while stock prices immediately adjust to the shock and the effect of fiscal policy is temporary, housing prices gradually and persistently fall. Consequently, the attempts of fiscal policy to mitigate stock price developments (e.g. via taxes on capital gains) may severely de-stabilize housing markets. The empirical findings also point to significant fiscal multiplier effects in the context of severe housing busts, which gives rise to the importance of the implementation of fiscal stimulus packages. In addition, our results suggest that when governments run a budget deficit, they place an upward pressure on real interest rates, which "crowds-out" private consumption and investment. In contrast, during bust periods, unexpected variation in the fiscal stance crowds-in private spending, which reflects the "direct" and "indirect" effects of policy actions impact arising from a downward movement in real interest rates and an upward revision in price level expectations.Fiscal policy, asset prices, panel VAR.

Scaling laws for weakly interacting cosmic (super)string and p-brane networks

In this paper we find new scaling laws for the evolution of $p$-brane networks in $N+1$-dimensional Friedmann-Robertson-Walker universes in the weakly-interacting limit, giving particular emphasis to the case of cosmic superstrings ($p=1$) living in a universe with three spatial dimensions (N=3). In particular, we show that, during the radiation era, the root-mean-square velocity is ${\bar v} =1/{\sqrt 2}$ and the characteristic length of non-interacting cosmic string networks scales as $L \propto a^{3/2}$ ($a$ is the scale factor), thus leading to string domination even when gravitational backreaction is taken into account. We demonstrate, however, that a small non-vanishing constant loop chopping efficiency parameter $\tilde c$ leads to a linear scaling solution with constant $L H \ll 1$ ($H$ is the Hubble parameter) and ${\bar v} \sim 1/{\sqrt 2}$ in the radiation era, which may allow for a cosmologically relevant cosmic string role even in the case of light strings. We also determine the impact that the radiation-matter transition has on the dynamics of weakly interacting cosmic superstring networks.Comment: 5 pages, 2 figure

Domain wall network evolution in (N+1)-dimensional FRW universes

We develop a velocity-dependent one-scale model for the evolution of domain wall networks in flat expanding or collapsing homogeneous and isotropic universes with an arbitrary number of spatial dimensions, finding the corresponding scaling laws in frictionless and friction dominated regimes. We also determine the allowed range of values of the curvature parameter and the expansion exponent for which a linear scaling solution is possible in the frictionless regime.Comment: 5 pages, 2 figure