Arbitrage and the Price of Oil

The model simulated in this paper shows that falling interest rates contribute to rising oil prices. This occurs because oil producers treat oil in the ground as an asset and attempt to arbitrage differences between its rate of return and the interest rate. When calibrated to match observed data over the last two decades, model results indicate that this arbitrage behaviour may have made the largest contribution to the pre-crisis boom in oil prices. Productivity driven growth shocks raise the oil price by about 70 percent, but this rises to 150 percent when falling interest rates are included.

Asset Value, Interest Rates and Oil Price Volatility

Simulations from a standard two-region model where producers respond to changes in interest rates are better able to match observed data than an identical model without supply-side responses. This indicates that incorporating the supply-side behaviour of oil producers is quantitatively important when endogenously modeling oil prices. These results have two implications. First, adding supply-side responses can change the oil price/output relationship, which is a continuing topic of research interest. Second, if production is unable to adjust to interest rate changes, an important explanatory factor of oil price volatility may be missing.

How important are real interest rates for oil prices?

Using a recursive vector autoregression (VAR), this paper considers the relation between the U.S. real interest rate and the real oil price. Theoretically, as outlined in Hotelling (1931) and Working (1949), a lower real interest rate results in reduced production and increased storage, implying a higher oil price. The results presented here show that the robustness of this relationship depends crucially on how the real interest rate is calculated, and the time-frame of the sample. Consistent with earlier studies, the oil price falls with an innovation to the ex-ante U.S. real interest rate. However, this is not true if the real interest rate is calculated ex-post. In this case, the oil price only falls in response to an innovation in short-term U.S. real interest rates (three months or less). Additionally, the response of the oil price to longer-term ex-ante U.S. real interest rates must include the period through 2006 for this relationship to appear. The oil price consistently responds to innovations in short-term rates throughout the entire sample. We draw two conclusions from the results. The first is that the oil price is consistently responsive to short-term U.S. real interest rates, underlying the importance of storage. Second, oil prices have become more responsive to longer-term U.S. real interest rates. The reasons behind this change are unclear and require further study.Oil price, Real interest rate, VAR, Hotelling, Storage

A Repayment Model of House Prices Oil Price Dynamics in a Real Business Cycle Model

We show the importance of endogenous oil prices and production in the real business cycle framework. Endogenising these variables improves the model's predictions of business cycle statistics, oil related and non-oil related, relative to a situation where either is exogenous. This result is robust to the standard extensions (variable capacity utilisation and monopolistic competition) used in the literature. In particular, we first show that with either exogenous oil prices or production the standard real business cycle model and variants cannot match the oil-related and business cycle facts. In contrast, when both of these variables are endogenous, we can substantially improve the corresponding co-movements and slightly improve standard business cycle properties for consumption and investment.Oil price, two regions, variable capacity utilization

UML Modeling of Network Topologies for Distributed Computer System

Nowadays distributed computer systems have become very popular approach due to its availability at low cost and high performance computers, which are connected through a communication network. For connection of the distributed computer systems, network topologies are must for the communication lines. In the present paper a detailed study of network topologies is done for the distributed computer systems. A most popular Unified Modeling Language (UML) is used for designing the different network topologies. A comparative study is done for 2D Mesh, Torus, and Hypercube topologies and performance is evaluated after designing the UML Class, Sequence, and Activity diagrams for these topologies

Testing for Explosive Behaviour in Relative Inflation Measures: Implications for Monetary Policy

In this paper we test for large deviations in headline measures of the price level relative to core measures using the recently proposed test of Phillips et al. (2011a). We find evidence of explosive behaviour in the headline price index of personal consumption expenditures (PCE) relative to the core PCE (less food and energy prices) on three occasions from 1982-2010. Two of these episodes correspond to energy supply shocks (OPEC price collapse of 1986 and Hurricane Katrina). The third one is during March 2008 through September 2008 which seems to be driven by both food and energy prices as these indices exhibit explosive behaviour. We also find evidence suggesting that inflation expectations behave differently under normal and explosive periods. In particular, unemployment and interest rates also help predict inflation expectations during explosive episodes relative to normal times. Furthermore, explosive episodes in the relative measure between headline and core inflation is found to be more important than the relative volatile periods implied by a Markov-switching model when studying inflation expectations. The findings of this paper suggest that explosive behaviour of headline versus core PCE should be taken into account when conducting monetary policy as it is a key determinant in consumers’ inflation expectations.Explosive behaviour, core inflation, relative measure, inflation expectations

Evaluating Information Technology (IT) Integration Risk Prior to Mergers and Acquisitions (M&A)

Corporate mergers and acquisitions (M&A) are considered significant, from both a strategic and an economic point of view, across almost all sectors of the economy.1 M&A is a complex process involving risk that ranges from financial and legal matters to sales and marketing challenges and everything in between. Despite well-established benefits of strategically driven expansion and integration of businesses through M&A, the consolidated organization exposes itself to a number of anticipated, unknown and unintended risk factors. The risk concerns the overall organizational integration of some or all of the previously distinct and interdependent assets, structures, business processes, technologies, systems, people and cultures of the two firms into a unified whole.

Sense of Place in Virtual Learning Environments

Drawing on existing research from the fields of human geography and environmental psychology, we define the term sense of place (SOP) and point out the subtle differences between the various uses of the term in respect of different technology capabilities associated with Virtual Learning Environments (VLEs). We also identify the attributes of a place that affect a user’s perceived sense of place. Finally, we provide an analysis of the dimensions of the sense of place construct as it relates to the different technology capabilities associated with VLEs. The paper lays a foundation for further empirical research on the notion of SOP, its impact on learning outcomes and design of VLEs

Test Sequence Generation for Java7 Fork/Join Using Interference Dependence

Test sequence generation through code is mainly done by using some sort of a flow graph viz. Control Flow Graph (CFG), Concurrent Control Flow Graph (CCFG), Event Graph etc. Approaches that use UML also need flow graph as an intermediate representation for final test sequence generation. In the present approach, a Flow Graph for a new concept i.e. Java7 Fork/Join is constructed and hence, by traversing the graph, test sequences are generated on the basis of all path and all node coverage criteria considering interference dependence. Further, interference dependencies are also represented in the form of a directed graph to aid the analysis of Java7 fork/join programs

Comparisons of Chinese and Indian Energy Consumption Forecasting Models

I evaluate the out-of-sample forecasting performance of five models of Chinese and Indian energy consumption. The results are mixed, but in general the auto-regressive distributed lag and unobserved components models perform the best over multiple evaluation criteria. I then use these two models and generate long-term forecasts [2010-2040] for comparison with the International Energy Outlook of the U.S. Energy Information Administration and other similar publications. For both countries the forecasting models predict higher levels and growth rates of energy consumption than the published estimates