Rethinking the implications of monetary policy: How a transactions role for money transforms the predictions of our leading models

Over the past several decades, economists have devoted ever-growing effort to developing economic models to help us understand how changes in interest rates brought about by monetary policy actions affect the production and provision of goods and services in the economy. Although New Keynesian models have broad appeal in explaining how changes in the money stock can affect business activity, these models generate results that are inconsistent with what we know about how interest rates move with policy-induced changes in the money stock. In "Rethinking the Implications of Monetary Policy: How a Transactions Role for Money Transforms the Predictions of Our Leading Models," Julia Thomas argues that by extending the New Keynesian model to reintroduce money's liquidity role, we can resolve some of the remaining divorce between economic theory and the patterns observed in the workings of actual economies.Monetary policy ; Keynesian economics

Endoscopic transfer of orbital integrals in large residual characteristic

This article constructs Shalika germs in the context of motivic integration, both for ordinary orbital integrals and kappa-orbital integrals. Based on transfer principles in motivic integration and on Waldspurger's endoscopic transfer of smooth functions in characteristic zero, we deduce the endoscopic transfer of smooth functions in sufficiently large residual characteristic.Comment: 33 page

Is lumpy investment relevant for the business cycle?

Previous research has suggested that discrete and occasional plant-level capital adjustments have significant aggregate implications. In particular, it has been argued that changes in plants? willingness to invest in response to aggregate shocks can at times generate large movements in total investment demand. In this study, I re-assess these predictions in a general equilibrium environment. Specifically, assuming nonconvex costs of capital adjustment, I derive generalized (S,s) adjustment rules yielding lumpy plant-level investment within an otherwise standard equilibrium business cycle model. In contrast to previous partial equilibrium analyses, model results reveal that the aggregate effects of lumpy investment are negligible. In general equilibrium, households? preference for relatively smooth consumption profiles offsets changes in aggregate investment demand implied by the introduction of lumpy plant-level investment. As a result, adjustments in wages and interest rates yield quantity dynamics that are virtually indistinguishable from the standard model.Business cycles ; Investments

Idiosyncratic shocks and the role of nonconvexities in plant and aggregate investment dynamics

We solve equilibrium models of lumpy investment wherein establishments face persistent shocks to common and plant-specific productivity. Nonconvex adjustment costs lead plants to pursue generalized (S, s) rules with respect to capital; thus, their investments are lumpy. In partial equilibrium, this yields substantial skewness and kurtosis in aggregate investment, though, with differences in plant-level productivity, these nonlinearities are far less pronounced. Moreover, nonconvex costs, like quadratic adjustment costs, increase the persistence of aggregate investment, yielding a better match with the data. In general equilibrium, aggregate nonlinearities disappear, and investment rates are very persistent, regardless of adjustment costs. While the aggregate implications of lumpy investment change substantially in equilibrium, the inclusion of fixed costs or idiosyncratic shocks makes the average distribution of plant investment rates largely invariant to market-clearing movements in real wages and interest rates. Nonetheless, we find that understanding the dynamics of plant-level investment requires general equilibrium analysis.Capital investments ; Business enterprises ; Investments

Inventories and the Business Cycle: An Equilibrium Analysis of (S,s) Policies

We develop an equilibrium business cycle model where nonconvex delivery costs lead producers of final goods to follow generalized (S,s) inventory policies with respect to intermediate goods. When calibrated to match the average inventory-to-sales ratio in postwar U.S. data, our model reproduces two-thirds of the cyclical variability of inventory investment. Moreover, inventory accumulation is strongly procyclical, and production is more volatile than sales, as in the data. The comovement between inventory investment and final sales is often interpreted as evidence that inventories amplify aggregate fluctuations. Our model contradicts this view. Despite the positive correlation between sales and inventory investment, we find that inventory accumulation has minimal consequence for the cyclical variability of GDP. In equilibrium, procyclical inventory investment diverts resources from the production of final goods; thus, it dampens cyclical changes in final sales, leaving GDP volatility essentially unaltered. Moreover, although business cycles arise solely from shocks to productivity and markets are perfectly competitive in our model, it nonetheless yields a countercyclical inventory-to-sales ratio.

Nonconvex factor adjustments in equilibrium business cycle models: Do nonlinearities matter?

Recent empirical analysis has found nonlinearities to be important in understanding aggregated investment. Using an equilibrium business cycle model, we search for aggregate nonlinearities arising from the introduction of nonconvex capital adjustment costs. We find that, while such costs lead to nontrivial nonlinearities in aggregate investment demand, equilibrium investment is effectively unchanged. Our finding, based on a model in which aggregate fluctuations arise through exogenous changes in total factor productivity, is robust to the introduction of shocks to the relative price of investment goods.Equilibrium (Economics) ; Business cycles ; Econometric models

Changes in the fledging success over time with increasing population size in the Northern Lapwing Vanellus vanellus on Wangerooge Island (Lower Saxony, Germany)

In this study, we report the results of a long-term investigation on changes in population size and fledging success of Northern Lapwing on Wangerooge, a German Wadden Sea island. This population is increasing over a period of 34 years in contrast to numerous populations in North-western Europe. The reproductive success however declines over time and also with population density. Both effects cannot be considered separately due to autocorrelation. However, it is noted that the population on Wangerooge is not sustained by local recruitment only. This outcome is even more alarming as coastal areas and islands are considered as rare high quality meadow bird habitats. According to the present results Wangerooge cannot be considered as a source habitat for Northern Lapwings in North-western Germany.Die vorliegende Langzeitstudie beschreibt die Bestandsentwicklung und den Reproduktionserfolg des Kiebitzes (Vanellus vanellus) auf der Nordseeinsel Wangerooge (Niedersachsen, Deutschland). In den vergangenen 34 Jahren hat der Kiebitzbestand hier kontinuierlich zugenommen. Diese Entwicklung unterscheidet sich damit deutlich von denen anderer Kiebitzpopulationen in Nord- und Westeuropa. Der Bruterfolg des Kiebitzes auf Wangerooge nahm im gleichen Zeitraum mehr und mehr ab. Er zeigte zudem einen negativen Trend mit steigender Populationsgröße. Leider können beide Effekte aufgrund von Autokorrelation statistisch nicht separiert werden. Der mittlere Bruterfolg ist allerdings keineswegs hoch genug, um die Population selbst zu tragen. Dies ist alarmierend, da die Nordseeinseln und angrenzende Küstengebiete als qualitativ hochwertige Wiesenvogellebensräume gelten. Da nach derzeitigem Kenntnisstand der Bruterfolg des Kiebitzes auf Wangerooge nicht bestandserhaltend ist, kann die Insel auch nicht als „source-Habitat“ für diese Limikolenart gelten