International Financial Instability in a World of Currencies Hierarchy

The 1990s have witnessed an increase of international financial turbulence. Indeed, the frequency, the size, the geographic extension, and the social costs of financial crises have made the topic a global policy issue. An array of policy actions have been advocated to prevent crises from happening again. A major controversial question is whether efforts should be directed towards national reforms in emerging markets or, rather, towards a new international design of international payments. After a critical review of the standing proposals, this paper contends that this debate has not yet fully explored one of the problems of international instability, that is to say, the problem raised by international payments in a world of currencies of diverse quality. As Keynes firmly contended, the monetary side of the (global) economy is not a neutral factor. In fact, it may be the problems posed by the different degrees of “international moneyness” that make currencies unequal that should be considered as one of the fundamental factors behind any model of international financial instability. Viewed in this light, a major re-design of international payments systems is warranted, and options seem limited to either world dollarization or the ‘bancor’ solution. Recent reformulations of Keynes’s original ‘bancor’ proposal seem to be a more viable alternative to either the status quo or world dollarization.Currency hierarchy; Currency crises; Banking crises; Capital flows; International monetary arrangements and institutions.

"The "Keynesian Moment" in Policymaking, the Perils Ahead, and a Flow-of-funds Interpretation of Fiscal Policy"

With the global crisis, the policy stance around the world has been shaken by massive government and central bank efforts to prevent the meltdown of markets, banks, and the economy. Fiscal packages, in varied sizes, have been adopted throughout the world after years of proclaimed fiscal containment. This change in policy regime, though dubbed the "Keynesian moment," is a "short-run fix" that reflects temporary acceptance of fiscal deficits at a time of political emergency, and contrasts with John Maynard Keynes’s long-run policy propositions. More important, it is doomed to be ineffective if the degree of tolerance of fiscal deficits is too low for full employment. Keynes’s view that outside the gold standard fiscal policies face real, not financial, constraints is illustrated by means of a simple flow-of-funds model. This shows that government deficits do not take financial resources from the private sector, and that demand for net financial savings by the private sector can be met by a rising trade surplus at the cost of reduced consumption, or by a rising government deficit financed by the monopoly supply of central bank credit. Fiscal deficits can thus be considered functional to the objective of supplying the private sector with a provision of financial wealth sufficient to restore demand. By contrast, tax hikes and/or spending cuts aimed at reducing the public deficit lower the available savings of the private sector, and, if adopted too soon, will force the adjustment by way of a reduction of demand and standard of living. This notion, however, is not applicable to the euro area, where constraints have been deliberately created that limit public deficits and the supply of central bank credit, thus introducing national solvency risks. This is a crucial flaw in the institutional structure of Euroland, where monetary sovereignty has been removed from all existing fiscal authorities. Absent a reassessment of its design, the euro area is facing a deflationary tendency that may further erode the economic welfare of the region.Government and the Monetary System; Fiscal Policy; Keynes; Euro Area

Stock-bond correlation and the bond quality ratio: Removing the discount factor to generate a “deflated” stock index

This paper investigates the cyclical co-movements between US stocks and interest rates by testing a simple model where divergence between stock and bond price behavior is explained by “stock market strength,” where the latter depends on the market climate about future corporate profits—as captured by the corporate bond quality ratio—and an unexplained stock market sentiment. Using two different regression techniques to check for robustness, we find evidence of a statistically significant cyclical correlation between stocks and bonds. On the basis of this finding, we then present a methodology to “deflate” a stock price index such that we can compare stock market strength over time. This is obtained by removing the effect of a changing discount rate—as measured by our regressions—on stock prices. For example, viewed in this light, the past five years in the US stock market reveal a wider fluctuation in stock market strength than we can observe on the basis of stock price indices alone.Stock-bond correlation, Market sentiment, Stock price.

A T-shirt model of savings, debt, and private spending: lessons for the euro area

Notwithstanding the modified ECB practice that saved the day, the euro area is failing to restore economic prosperity. The problem is visibly political, yet an effective solution must be economically viable. This essay articulates the reason behind the prolonged deflationary bias of euro area policies by means of a simple ('T-shirt') model, where private spending depends on desired savings and sustainable indebtedness. This savings-debt constraint means that any policy that inhibits debt also inhibits financial savings, spending, and jobs. After providing a solution to the conundrum of the consequence of savings in a monetary economy, this essay makes a case for reclaiming the fiscal instrument. The EU Commission's belief that it is possible to create jobs without creating new debt underscores a serious conceptual fault and a delusion that the savings-debt constraint to spending can be ignored. As long as policy-makers defy the savings-debt constraint, the euro area will continue to live dangerously

Dynamic Analysis of the Lubrication in a Wet Clutch of a Hydromechanical Variable Transmission

The paper investigates the oil flow through a multi plate clutch for a hydro-mechanical variable transmission under actual operating conditions. The analysis focuses on the numerical approach for the accurate prediction of the transient behavior of the lubrication in the gear region: the trade-off between prediction capabilities of the numerical model and computational effort is addressed. The numerical simulation includes the full 3D geometry of the clutch and the VOF multi-phase approach is used to calculate the oil distribution in the clutch region under different relative rotating velocities. Furthermore, the lubrication of the friction disks is calculated for different clutch actuation conditions, i.e. not-engaged and engaged positions. The influence of different geometrical features of the clutch lubricating circuit on the oil distribution is also determined. The results show the areas where poor lubrication occurs and extend the experiments where measurements are difficult to carry out. The simulation highlights the regions where high thermal stresses are observed during tests

Three-graviton scattering and recoil effects in M-atrix theory

We study the scattering of three gravitons in M-atrix theory at finite N. With a specific choice of the background we obtain the complete result up to two loops. The contributions from three-body forces agree with the ones presented in recent papers. We extend the calculation and evaluate the two-body exchanges as well. Such terms, somewhat difficult to isolate and compute, had been neglected so far in the existing literature. We show that the result we have obtained from M-atrix theory precisely matches the result from one-particle reducible tree diagrams in eleven-dimensional supergravity .Comment: corrected reference to the second paper in ref [6] in which recoil effects were considered and comparative comments added. latex, 22 page

Energy recovery of the biomass from livestock farms in Italy: the case of Modena Province

The energy recovery from manure of different Italian livestock farms is analysed by means of numerical simulation using an in-house developed code. In particular, the animal farming in the province of Modena is taken into account and biomass is exploited in an integrated system including different waste to energy technologies. In the considered system, the manure of a number of types of animals is fed into an anaerobic digester, while the digested sludge is separated into the solid and liquid fractions. The former is employed as a fuel in a downdraft gasifier, while the latter is purified by means of both forward and inverse osmosis. Finally, the obtained bio-gas and syngas are used in a cogeneration system based on a spark ignition internal combustion engine to produce electric and thermal power. The potential power production of the considered territory is estimated and compared with the energy requirements of the animal farms. Different strategies for the distributed exploitation of the manure versus a centralized solution are investigated and the relating plant size and production of electric energy and thermal energy are evaluated

Long Term Wind Turbine Performance Analysis Through SCADA Data: A Case Study

Performance monitoring of horizontal-axis wind turbines is a complex task because they operate under nonstationary conditions. Furthermore, in real-world applications, there can be data quality issues because the free stream wind speed is reconstructed through a nacelle transfer function from cup anemometers measurements collected behind the rotor span. Given these matters of fact, one of the objectives of the present work is applying an innovative method for correcting the nacelle wind speed measurements, which is based on the manufacturer power curve and statistical considerations. Three operating wind turbines, having 2 MW of rated power and owned by the ENGIE Italia company, are contemplated as test cases. Operation data spanning ten years (2011–2020) are studied: actually, this work aims as well at contributing to the methods for estimating the performance decline with age of wind turbines, basing on long term SCADA data analysis. The raw and corrected wind speed measurements are fed as input to a Support Vector Regression for the power curve: by selecting appropriately the training and validation data sets, it is possible to estimate the average yearly rate of performance decline. Using the corrected wind speed, the estimate obtained in this study is compatible with the most recent findings in the literature, which indicate a -0.17% decline per year

Non abelian N=2 supersymmetric Born Infeld action

We present a N=2 supersymmetric action for the Born Infeld theory in the non abelian case. We quantize the theory in N=1 superspace and compute divergences at one-loop. The result is discussed in the N=4 case.Comment: reference adde