The Determinants of Realignment Expectations Under the EMS: Some Empirical Regularities

The stability of the EMS depends crucially on realignment expectations of the market participants. In this paper we discuss how to measure such expectations and how to relate them to economic fundamentals, central bank reputation, and institutional arrangements of the EMS. We find the following empirical regularities for FF/DM and IL/DM exchange rates: (1) expected devaluations are positively related to the current exchange rate deviation from the central parity; (2) expected devaluations are negatively related to the length of time since last realignment in the short and medium run; (3) the Basle-Nyborg agreements seem to have a stabilizing effect for both currencies examined, albeit through different channels; (4) large revaluation expectations occur immediately after devaluations. (1) and (4) are not inconsistent with the hypothesis of over-speculation or market inefficiency.

The LU-LC conjecture is false

The LU-LC conjecture is an important open problem concerning the structure of entanglement of states described in the stabilizer formalism. It states that two local unitary equivalent stabilizer states are also local Clifford equivalent. If this conjecture were true, the local equivalence of stabilizer states would be extremely easy to characterize. Unfortunately, however, based on the recent progress made by Gross and Van den Nest, we find that the conjecture is false.Comment: Added a new part explaining how the counterexamples are foun

Crash-Free Sequencing Strategies for Financial Development and Liberalization

This paper uses a stylized model of financial intermediation to characterize the exact circumstances along various paths of economic growth, financial development, and liberalization that can trigger a financial crisis. It shows how to avoid financial crises through proper sequencing of various financial development and liberalization measures. The results of the paper show that naive combinations of financial development and liberalization processes can give rise to financial crises. In some typical situations, in order to avoid a financial crisis, it is important that financial liberalization be accompanied by financial development, in the form of improvements in the financial sectorís efficiencies. In the case of fast growing economies, financial development becomes even more imperative. Copyright 2001, International Monetary Fund

Jamming Transition of Point-to-Point Traffic Through Cooperative Mechanisms

We study the jamming transition of two-dimensional point-to-point traffic through cooperative mechanisms using computer simulation. We propose two decentralized cooperative mechanisms which are incorporated into the point-to-point traffic models: stepping aside (CM-SA) and choosing alternative routes (CM-CAR). Incorporating CM-SA is to prevent a type of ping-pong jumps from happening when two objects standing face-to-face want to move in opposite directions. Incorporating CM-CAR is to handle the conflict when more than one object competes for the same point in parallel update. We investigate and compare four models mainly from fundamental diagrams, jam patterns and the distribution of cooperation probability. It is found that although it decreases the average velocity a little, the CM-SA increases the critical density and the average flow. Despite increasing the average velocity, the CM-CAR decreases the average flow by creating substantially vacant areas inside jam clusters. We investigate the jam patterns of four models carefully and explain this result qualitatively. In addition, we discuss the advantage and applicability of decentralized cooperation modeling.Comment: 17 pages, 14 figure