241 research outputs found

    Forecasting with measurement errors in dynamic models

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    This paper explores the effects of measurement error on dynamic forecasting models. The paper sets out to illustrate a trade off that confronts forecasters and policymakers when they use data that are measured with error. On the one hand, observations on recent data give valuable clues as to the shocks that are hitting the system and will be propagated into the variables to be forecast (and which ultimately will inform monetary policy). But on the other, those recent observations are likely to be those least well measured. Two broad classes of results are illustrated. The first relates to cases where it is imagined that the forecaster takes the coefficients in the data generating process as a given, and has to choose how much of the historical time series of data to use to form a forecast. It is shown that if recent data is sufficiently badly measured, relative to older data, that it can be optimal in this case not to use old data at all. The second class of results is more general. Here, it is shown that for a general class of linear autoregressive forecasting models, the optimal weight to place on a data observation of some age, relative to the weight in the true data generating process, will depend on the measurement error in that data. The gains to be had in forecasting are illustrated using a model of UK business investment growth.measurement error, forecasting, signal-extraction

    How uncertain are the welfare costs of inflation?

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    This paper quantifies some of the general equilibrium costs of inflation for the UK using a shopping-time model. It tests whether money balances tend to a finite number as nominal interest rates tend to zero, and explores how uncertainties about the shape of the money demand curve translate into uncertainties about these welfare costs of inflation. A key uncertainty is the existence of a satiation point for money balances. We show that without observations at nominal interest rates close to zero, the power of satiation tests can be low.

    Using time-varying VARs to diagnose the source of ‘Great Moderations’: a Monte Carlo analysis

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    In this paper, we assess the ability of time-varying VAR models to correctly diagnose the source of ‘Great Moderations’ generated in simulations of a learning model. We find that, in general, they can. For example, in data sets with Great Moderations generated by good policy, the VAR correctly identifies a downward shift in the policy disturbance. And it shows that if the policy behaviour associated with the latter part of the sample (during which policy is conducted well) are applied to the earlier part of the sample, the implied variances of output, inflation and interest rates would have been much lower. An important caveat to our results is that they appear to be sensitive to the method used to identification of monetary policy shocks. When we identify monetary policy shocks using a Cholesky decomposition, the VAR provides quite clear evidence in favour of the correct explanation for our simulated Great Moderations When sign restrictions are used to identify the monetary policy shocks, conclusions from the counterfactual experiments are less precise. The contrast between our results and previous work based on Monte Carlo evidence using RE models suggests that the ability of VARs to correctly diagnose the source of the Great Moderation may be dependent on the nature of the expectations-formation process in the private sector.

    Self-confirming Inflation Persistence

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    In this paper we simulate a central bank subject to the misperception that prices are indexed to past inflation in periods when firms are unable to re-optimise. It thinks, in other words, that inflation is intrinsically persistent. The central bank sets monetary policy optimally subject to this belief. The central bank updates its beliefs about in¬dexation using a constant gain learning scheme. The data generated by such policy lead to beliefs about inflation persistence being effectively self-confirming in a wide variety of setttings. These results offer a tentative answer to why it appears that inflation is persistent at some times and in some countries, and at others not. The answer is that policymakers sometimes believe inflation to be persistent, and sometimes do not.

    Monetary policy and the zero bound to interest rates: a review

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    This paper reviews the literature on what the zero bound to nominal interest rates implies for the conduct of monetary policy. The aim is to evaluate the risks of hitting the zero bound; and to evaluate policies that are said to be able to reduce that risk, or policies that are proposed as means of helping the economy escape if it is in a zero bound 'trap'. I conclude that policies aimed at 'cure' are arguably more uncertain tools than those aimed at 'prevention', so prevention is a less risky strategy for policymakers. But since the risks of hitting the zero bound seem quite small anyway, and the risks of encountering a deflationary spiral smaller still, it is conceivable that inflation objectives that typify modern monetary regimes already have more than enough insurance built into them to deal with the zero bound problem. JEL Classification: E52, E3, F41liquidity trap

    Good lives, self-regulation, and risk management : an integrated model of sexual offender assessment and treatment

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    The treatment of offenders : current practice and new developments with an emphasis on sex offenders

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    Despite some dissenting views, most recent comprehensive reviews of what works in the correctional domain agree that some types of rehabilitation programmes are particularly effective in reducing the reoffending rate. In this paper, we review rehabilitation and treatment approaches utilized historically and presently, with a specific focus on ‘what works’. We examine the most widespread and successfully used rehabilitation principles (e.g., the Risk/Need/Responsibity Model), and then we turn our focus to specific treatment methods that are effective in reducing recidivism with sex offenders, paying particular attention to the relapse prevention model, and recent adaptations to this model (e.g., the self-regulation model). </jats:p

    Student Acquisition of Biological Evolution-Related Misconceptions: The Role of Public High School Introductory Biology Teachers

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    In order to eliminate student misconceptions concerning biological evolution, it is important to identify their sources. The purposes of this study were to: (a) identify biological evolution-related misconceptions held by Oklahoma public high school Biology I teachers; (b) identify biological evolution-related misconceptions held by Oklahoma public high school students prior to and following instruction in Biology I course curriculum; and (c) identify which, if any, biological evolution-related misconceptions held by Oklahoma public high school Biology I teachers were being transmitted to their students by way of instruction in biological evolution curriculum. Seventy-six teachers and 993 of their students participated in this study. To identify participants' misconceptions, calculate conception index scores, and collect demographic data, the Biological Evolution Literacy Survey (BEL Survey) was developed. The BEL Survey presents 23 biological misconception statements grouped into five categories. Analysis revealed teacher participants possessed a 72.9% mean rate of understanding of evolution concepts coupled with a 23.0% mean misconception rate whereas student participants possessed a pre-instruction 43.9% mean rate of understanding combined with a 39.1% mean misconception rate. Students exited the Biology I classroom more confident in their evolution knowledge but holding greater numbers of misconceptions than they possessed prior to entering the course. Significant relationships were revealed between students' acquisition of misconceptions and teachers' bachelor's degree field, terminal degree, and hours dedicated to instruction. One student misconception was revealed to be significantly more common following instruction as opposed to prior to instruction
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