13,986 research outputs found
Quasi-Fiscal Policies of Independent Central Banks and Inflation
Recently, central banks expanded their balance sheets by unconventional actions, including credit easing operations. Although such quasi-?scal operations are signi?cant in size and assumed to be crucial for the economy?s recovery, little theory is available to explain the possible macroeconomic consequences of these operations. The main contribution of this paper is to show that quasi-?scal shocks may a¤ect in?ation in plausible cases by utilizing a simple DSGE model that embraces the budgetary inde- pendence of the central banks. In the active quasi-?scal policy regime, the shocks in the central bank?s earnings alter the private agent?s portfolio between consumption and the nominal money balance, thus a¤ecting in?ation. Conventional macroeconomic models have implicitly assumed policy regimes in which the aforementioned mechanism does not restrict equilibria; however, this paper shows that such assumptions generally are not guaranteed to hold. The extensions of the basic model show that quasi-?scal shocks may produce undesirable e¤ects, such as in?ation following de?ationary mone- tary policy during the implementation of exit strategy.
Solving Endogeneity in Assessing the Efficacy of Foreign Exchange Market Interventions
Sterilized foreign exchange market interventions have been suspected of being inefficient by many empirical studies, but they are plagued by endogeneity problems. To solve the problems, this paper identifies a system that depicts interactions between the interventions and the foreign exchange rate. The model shows that the interventions are effective when the interventions alter the market participants' conditional expectations of the rate without decreasing the conditional variances. This paper estimates Markov-switching type policy reaction functions by conditional MLE, and market demand/supply curves by IV estimation with generated regressors. The empirical results verify that the interventions of the Bank of Korea from 2001 to 2002 were indeed effective.Sterilized intervention, Endogeneity, Markov-switching policy function
Comments on "The Role of the Central Asian Mountains on the Midwinter Suppression of North Pacific Storminess" - Reply
We thank Chang and Lin for their thoughtful and
constructive comments on our study (Park et al. 2010).
In Park et al. (2010), we did not explicitly state that the
topography-forced stationary waves are the direct cause
for the reduced downstream transient eddy kinetic energy
(EKE). The response of stationary waves to topography
may saturate even with a relatively small mountain (Cook
and Held 1992); furthermore, their magnitudes are much
smaller than thermally forced stationary waves (Chang
2009; Held et al. 2002). Instead, we suggest that quasistationary waves generated by the central Asian mountains may strongly affect North Pacific storminess by
changing the year-to-year variability of westerly winds
over the eastern Eurasian continent. Observational analyses
indicate that the midwinter suppression of North
Pacific storminess does not occur every year. Some years
experience stronger and more meridionally confined
zonal winds over the western North Pacific, leading to
stronger midwinter suppression (Harnik and Chang
2004; Nakamura and Sampe 2002)
An emergent geometric description for a topological phase transition in the Kitaev superconductor model
Resorting to Wilsonian renormalization group (RG) transformations, we propose
an emergent geometric description for a topological phase transition in the
Kitaev superconductor model. An effective field theory consists of an emergent
bulk action with an extra dimension, an ultraviolet (UV) boundary condition for
an initial value of a coupling function, and an infrared (IR) effective action
with a fully renormalized coupling function. The bulk action describes the
evolution of the coupling function along the direction of the extra dimension,
where the extra dimension is identified with an RG scale and the resulting
equation of motion is nothing but a function. In particular, the IR
effective field theory turns out to be consistent with a Callan-Symanzik
equation which takes into account both the bulk and IR boundary contributions.
This derived Callan-Symanzik equation gives rise to a metric structure. Based
on this emergent metric tensor, we uncover the equivalence of the entanglement
entropy between the emergent geometric description and the quantum field theory
in the vicinity of the quantum critical point.Comment: Two figures adde
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