What Is Optimal Financial Regulation?

The financial system is regulated to achieve a wide variety of purposes. However, the objective that distinguishes financial regulation from other kinds is that of safeguarding the economy against systemic risk. Concerns regarding systemic risk focus largely on banks, which traditionally have been considered to have a special role in the economy. The safety nets that have been rigged to protect banks from systemic risk have succeeded in preventing banking panics, but at the cost of distorting incentives for risk taking. Regulators have a variety of options to correct this distortion, but none can be relied upon to produce an optimal solution. Technological and conceptual advances may be ameliorating the problem, nonetheless. Banks are becoming less special. The US is leading the way, but the trends are apparent in other industrial countries as well. The challenge facing regulators is to facilitate these advances and hasten the end of the special status of banks. Once banks have lost their special status, financial safety nets may be dismantled thus ending the distortions they create. Ultimately, regulation for prudential purposes may be completely unnecessary. The optimal regulation for safety and soundness purposes may be no regulation at all.

Competitive partitioning of rotational energy in gas ensemble equilibration

A wide-ranging computational study of equilibration in binary mixtures of diatomic gases reveals the existence of competition between the constituent species for the orbital angular momentum and energy available on collision with the bath gas. The ensembles consist of a bath gas AB(v;j), and a highly excited minor component CD(v';j'), present in the ratio AB:CD = 10:1. Each ensemble contains 8000 molecules. Rotational temperatures (T(r)) are found to differ widely at equilibration with T(r)(AB)/T(r)(CD) varying from 2.74 to 0.92, indicating unequal partitioning of rotational energy and angular momentum between the two species. Unusually, low values of T(r) are found generally to be associated with diatomics of low reduced mass. To test effects of the equi-partition theorem on low T(r) we undertook calculations on HF(6;4) in N(2)(0;10) over the range 100-2000 K. No significant change in T(r)(N2)/T(r)(HF) was found. Two potential sources of rotational inequality are examined in detail. The first is possible asymmetry of -Δj and +Δj probabilities for molecules in mid- to high j states resulting from the quadratic dependence of rotational energy on j. The second is the efficiency of conversion of orbital angular momentum, generated on collision with bath gas molecules, into molecular rotation. Comparison of these two possible effects with computed T(r)(AB)/T(r)(CD) shows the efficiency factor to be an excellent predictor of partitioning between the two species. Our finding that T(r) values for molecules such as HF and OH are considerably lower than other modal temperatures suggests that the determination of gas ensemble temperatures from Boltzmann fits to rotational distributions of diatomics of low reduced mass may require a degree of caution

The Role of the Financial Sector in Economic Performance

What distinguished financial institutions from other firms is the relatively small share of real assets on their balance sheets. Thus, the direct impact of financial institutions on the real economy is relatively minor. The indirect impact of financial markets and institutions on economic performance is extraordinarily important. The financial sector mobilizes savings and allocates credit across space and time. It provides not only payment services, but also enables firms and households to cope with economic uncertainties by hedging, pooling, sharing and pricing risks. An efficient financial sector reduces the cost and risk of producing and trading goods and services and thus makes an important contribution to raising the standard of living. The authors begin their analysis by considering how an economy would perform without a financial sector and then proceed to introduce a simplified financial sector with direct financial transactions between savers and investors. Financial intermediaries are introduced which transform the direct obligations of investors into indirect obligations of financial intermediaries which have attributes that savers prefer. This approach emphasizes how the financial sector can improve both the quantity and quality of real investment and thereby increase income per capita. The authors then consider the role of government in supporting an efficient financial sector. However, the authors show that not all government intervention is beneficial. They demonstrate the potentially detrimental effects of regulation on both the financial structure and the real economy. They also emphasize the competitive forces that influence the ultimate impact of regulations. Technological trends in telecommunications and computation seem likely to increase the ease with which users and providers of financial services can circumvent burdensome regulations, according to the authors. This has led to calls for reduction in the overall restrictions on financial firms, as well as for international harmonization of regulations regarding safety and soundness, insider trading and taxation. The authors examine how to quantify the gains to the economy from improving the efficiency of the financial sector and the potential social gains and costs which may result from the formation of financial conglomerates. The authors then consider pressures for international harmonization of financial regulation, contrasting institutional regulation with functional regulation. The authors conclude that efficient financial markets require an infrastructure of laws, conventions and regulation. Most of all, an efficient financial system requires confidence. Confidence encourages investors to allocate their savings through financial markets and institutions rather than to buy non-productive assets as a store of value. The authors suggest that such confidence can be fostered by appropriate regulation of institutions and markets to ensure users of financial services that they will receive fair treatment. According to the authors, the challenge is to foster a static and dynamically efficient financial system while maintaining sufficient regulatory oversight to promote confidence in the safety and soundness of the financial system.

\u3cem\u3eAnolis\u3c/em\u3e Sex Chromosomes Are Derived from A Single Ancestral Pair

To explain the frequency and distribution of heteromorphic sex chromosomes in the lizard genus Anolis, we compared the relative roles of sex chromosome conservation versus turnover of sex‐determining mechanisms. We used model‐based comparative methods to reconstruct karyotype evolution and the presence of heteromorphic sex chromosomes onto a newly generated Anolis phylogeny. We found that heteromorphic sex chromosomes evolved multiple times in the genus. Fluorescent in situ hybridization (FISH) of repetitive DNA showed variable rates of Y chromosome degeneration among Anolis species and identified previously undetected, homomorphic sex chromosomes in two species. We confirmed homology of sex chromosomes in the genus by performing FISH of an X‐linked bacterial artificial chromosome (BAC) and quantitative PCR of X‐linked genes in multiple Anolis species sampled across the phylogeny. Taken together, these results are consistent with long‐term conservation of sex chromosomes in the group. Our results pave the way to address additional questions related to Anolis sex chromosome evolution and describe a conceptual framework that can be used to evaluate the origins and evolution of heteromorphic sex chromosomes in other clades

Spray automated balancing of rotors: Methods and materials

The work described consists of two parts. In the first part, a survey is performed to assess the state of the art in rotor balancing technology as it applies to Army gas turbine engines and associated power transmission hardware. The second part evaluates thermal spray processes for balancing weight addition in an automated balancing procedure. The industry survey reveals that: (1) computerized balancing equipment is valuable to reduce errors, improve balance quality, and provide documentation; (2) slow-speed balancing is used exclusively, with no forseeable need for production high-speed balancing; (3) automated procedures are desired; and (4) thermal spray balancing is viewed with cautious optimism whereas laser balancing is viewed with concern for flight propulsion hardware. The FARE method (Fuel/Air Repetitive Explosion) was selected for experimental evaluation of bond strength and fatigue strength. Material combinations tested were tungsten carbide on stainless steel (17-4), Inconel 718 on Inconel 718, and Triballoy 800 on Inconel 718. Bond strengths were entirely adequate for use in balancing. Material combinations have been identified for use in hot and cold sections of an engine, with fatigue strengths equivalent to those for hand-ground materials

Wall Adhesion and Constitutive Modelling of Strong Colloidal Gels

Wall adhesion effects during batch sedimentation of strongly flocculated colloidal gels are commonly assumed to be negligible. In this study in-situ measurements of colloidal gel rheology and solids volume fraction distribution suggest the contrary, where significant wall adhesion effects are observed in a 110mm diameter settling column. We develop and validate a mathematical model for the equilibrium stress state in the presence of wall adhesion under both viscoplastic and viscoelastic constitutive models. These formulations highlight fundamental issues regarding the constitutive modeling of colloidal gels, specifically the relative utility and validity of viscoplastic and viscoelastic rheological models under arbitrary tensorial loadings. The developed model is validated against experimental data, which points toward a novel method to estimate the shear and compressive yield strength of strongly flocculated colloidal gels from a series of equilibrium solids volume fraction profiles over various column widths.Comment: 37 pages, 12 figures, submitted to Journal of Rheolog

Harmonic analysis of lossy piezoelectric composite transducers using the plane wave expansion method

Periodic composite ultrasonic transducers oer many advantages but the periodic pillar architecture can give rise to unwanted modes of vibration which interfere with the piston like motion of the fundamental thickness mode. In this paper, viscoelastic loss is incorporated into a three dimensional plane wave expansion model (PWE) of these transducers. A comparison with experimental and nite element data is conducted and a design to damp out these lateral modes is investigated. Scaling and regularisation techniques are introduced to the PWE method to reduceill-conditioning in the large matrices which can arise. The identication of the modes of vibration is aided by examining proles of the displacements, electrical potentialand Poynting vector. The dispersive behaviour of a 2-2 composite transducer with high shear attenuation in the passive phase is examined. The model shows thatthe use of a high shear attenuation ller material improves the frequency band gap surrounding the fundamental thickness mode

Reconstruction of the spatial dependency of dielectric and geometrical properties of adhesively bonded structures

An inverse problem motivated by the nondestructive testing of adhesively bonded structures used in the aircraft industry is studied. Using transmission line theory, a model is developed which, when supplied with electrical and geometrical parameters, accurately predicts the reflection coefficient associated with such structures. Particular attention is paid to modelling the connection between the structures and the equipment used to measure the reflection coefficient. The inverse problem is then studied and an optimization approach employed to recover these electrical and geometrical parameters from experimentally obtained data. In particular the approach focuses on the recovery of spatially varying geometrical parameters as this is paramount to the successful reconstruction of electrical parameters. Reconstructions of structure geometry using this method are found to be in close agreement with experimental observations