Signal Extraction and Rational Inattention

In this paper we examine the implications of two theories of informational frictions, signal extraction (SE) and rational inattention (RI), for optimal decisions and economic dynamics within the linear-quadratic-Gaussian (LQG) setting. We first show that if the variance of the noise and channel capacity (or marginal information cost) are fixed exogenously in the SE and RI problems, respectively, the two environments lead to di¤erent policy and equilibrium asset pricing implications. Second, we find that if the signal-to-noise ratio and capacity in the SE and RI problems are fixed, respectively, the two theories generate the same policy implications in the univariate case, but different policy implications in the multivariate case. We also show that our results do not depend on the presence of correlation between fundamental and noise shocks. We then discuss the applications to macroeconomic models of permanent income and price-setting.preprin

Model Uncertainty and Intertemporal Tax Smoothing

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Robust Control, Informational Frictions, and International Consumption Correlations

In this paper we examine the effects of model misspecification (robustness or RB) on international consumption correlations in an otherwise standard small open economy model with endogenous capital accumulation. We show that in the presence of capital mobility in financial markets, RB lowers the international consumption correlations by generating heterogeneous responses of consumption to productivity shocks across countries facing different macroeconomic uncertainty. In addition, we show that RB can also improve the model's predictions in three other moments of consumption dynamics: the relative volatility of consumption to income, the persistence of consumption, and the correlation between consumption and output. After calibrating the RB parameter using the detection error probabilities, we show that the model can explain the observed international consumption correlations as well as the other consumption moments quantitatively. Finally, we show that the main conclusions of our benchmark model do not change in an extension in which the agent cannot observe the state perfectly due to finite information-processing capacity.postprin

Non Mean-Field Quantum Critical Points from Holography

We construct a class of quantum critical points with non-mean-field critical exponents via holography. Our approach is phenomenological. Beginning with the D3/D5 system at nonzero density and magnetic field which has a chiral phase transition, we simulate the addition of a third control parameter. We then identify a line of quantum critical points in the phase diagram of this theory, provided that the simulated control parameter has dimension less than two. This line smoothly interpolates between a second-order transition with mean-field exponents at zero magnetic field to a holographic Berezinskii-Kosterlitz-Thouless transition at larger magnetic fields. The critical exponents of these transitions only depend upon the parameters of an emergent infrared theory. Moreover, the non-mean-field scaling is destroyed at any nonzero temperature. We discuss how generic these transitions are.Comment: 15 pages, 7 figures, v2: Added reference

Whirling Hexagons and Defect Chaos in Hexagonal Non-Boussinesq Convection

We study hexagon patterns in non-Boussinesq convection of a thin rotating layer of water. For realistic parameters and boundary conditions we identify various linear instabilities of the pattern. We focus on the dynamics arising from an oscillatory side-band instability that leads to a spatially disordered chaotic state characterized by oscillating (whirling) hexagons. Using triangulation we obtain the distribution functions for the number of pentagonal and heptagonal convection cells. In contrast to the results found for defect chaos in the complex Ginzburg-Landau equation and in inclined-layer convection, the distribution functions can show deviations from a squared Poisson distribution that suggest non-trivial correlations between the defects.Comment: 4 mpg-movies are available at http://www.esam.northwestern.edu/~riecke/lit/lit.html submitted to New J. Physic

Brans-Dicke Gravity from Entropic Viewpoint

We interpret the Brans-Dicke gravity from entropic viewpoint. We first apply the Verlinde's entropic formalism in the Einstein frame, then perform the conformal transformation which connects the Einstein frame to the Jordan frame. The transformed result yields the equation of motion of the Brans-Dicke theory in the Jordan frame.Comment: Title changed, minor changes to match the published versio

Spin texture on the Fermi surface of tensile strained HgTe

We present ab initio and k.p calculations of the spin texture on the Fermi surface of tensile strained HgTe, which is obtained by stretching the zincblende lattice along the (111) axis. Tensile strained HgTe is a semimetal with pointlike accidental degeneracies between a mirror symmetry protected twofold degenerate band and two nondegenerate bands near the Fermi level. The Fermi surface consists of two ellipsoids which contact at the point where the Fermi level crosses the twofold degenerate band along the (111) axis. However, the spin texture of occupied states indicates that neither ellipsoid carries a compensating Chern number. Consequently, the spin texture is locked in the plane perpendicular to the (111) axis, exhibits a nonzero winding number in that plane, and changes winding number from one end of the Fermi ellipsoids to the other. The change in the winding of the spin texture suggests the existence of singular points. An ordered alloy of HgTe with ZnTe has the same effect as stretching the zincblende lattice in the (111) direction. We present ab initio calculations of ordered Hg_xZn_1-xTe that confirm the existence of a spin texture locked in a 2D plane on the Fermi surface with different winding numbers on either end.Comment: 8 pages, 8 figure

Non-equilibrium Relations for Spin Glasses with Gauge Symmetry

We study the applications of non-equilibrium relations such as the Jarzynski equality and fluctuation theorem to spin glasses with gauge symmetry. It is shown that the exponentiated free-energy difference appearing in the Jarzynski equality reduces to a simple analytic function written explicitly in terms of the initial and final temperatures if the temperature satisfies a certain condition related to gauge symmetry. This result is used to derive a lower bound on the work done during the non-equilibrium process of temperature change. We also prove identities relating equilibrium and non-equilibrium quantities. These identities suggest a method to evaluate equilibrium quantities from non-equilibrium computations, which may be useful to avoid the problem of slow relaxation in spin glasses.Comment: 8 pages, 2 figures, submitted to JPS