Liquidity Shocks and the Business Cycle

This paper studies the properties of an economy subject to random liquidity shocks. As in Kiyotaki and Moore [2008], liquidity shocks affect the ease with which equity can be used as to finance the down-payment for new investment projects. We obtain a liquidity frontier which separates the state-space into two regions (liquidity constrained and unconstrained). In the unconstrained region, the economy behaves according to the dynamics of the standard real business cycle model. Below the frontier, liquidity shocks have the effects of investment shocks. In this region, investment is under-efficient and there is a wedge between the price of equity and the real cost of capital. As with investment shocks, we argue that liquidity shocks are not an important source of business cycle fluctuations in absence of other frictions affecting the labor market.Business Cycle, Asset Pricing, Liquidity

Monetary Policy under Balance Sheet Uncertainty

A group of developing countries bear high rates of financial dollarisation. Under this circumstance, monetary-policy makers are uncertain about the presence and scale of potentially harmful effects that might appear because of balance sheet mismatches arising from high and unexpected depreciations of the domestic currency. We build a setup whereby central bankers have two competing models in mind. Model A is a standard model for a small open economy whereas Model B has a builtin non-linear balance sheet effect. Whether the balance sheet mismatch problem exists or not, a Bayesian optimization procedure that assigns a positive probability to Model B, perpetuates model-indeterminacy. This happens because the optimal Bayesian regulator does not allow sizeable exchange rate swings (dirty floating), and therefore blurs the information to distinguish among models. We call this effect the Balance Sheet Trap. We show that, given the presence of the Balance Sheet Trap, introducing the learning dynamics into the central banker’s problem is optimal. Thus, we argue that intentional policy experimentation is highly desirable since it provides for an escape to the Balance Sheet Trap

Hygienic behaviour in honey bees

This thesis focuses on hygienic behaviour in honey bees. In beekeeping, brood diseases incur heavy economical and biological costs and are no longer effectively treated with chemicals. Previous research has shown how hygienic behaviour, a trait expressed by c. 10% of unselected colonies, can be effective in reducing the impact and presence of such diseases. Hygienic behaviour is experimentally measured using the freeze-killed brood (FKB) bioassay and can be increased by selective breeding, generating lines of hygienic colonies. Chapter 4 demonstrates that the relative rarity of hygienic behaviour in unselected colonies is not because it incurs a cost via the removal of healthy brood. Chapter 5 - 6 focus on the impact of external factors on hygienic behaviour. Specifically, we demonstrate that the presence of brood, amount of food, and strength of the colony affect hygienic levels (Chapter 5). Chapter 6 shows that hygienic behaviour does not correlate with agressiviness or agitated behaviour. When breeding honey bees, it is possible to exploit instrumental insemination to have complete control over the genetic composition of the resulting progeny. This technique is however laborious and requires particular equipment and training. In Chapter 7 we show that it is possible to obtain acceptable levels of hygienic behaviour without artificial insemination. Chapter 8 illustrates how we obtained the first breeing line of hygienic honey bees through a selective breeding program that saw its first milestone in autumn 2013 when we detected high levels of hygienic behaviour. The results obtained represent the foundation for future research projects. Chapter 9 presents a valid, minimal methodology to keep virgin queens. We tested a variety of methods and factors to determine the best, mos cost-effective way to maintain queens for the week prior their introduction into a queenless hive. The results obtained provide some insights on both basic and applied aspects of honey bee breeding for hygienic behaviour and represent the foundation of what will be an ongoing selection programme towards a disease-resistant honey bee

Rudall, Rose and Carte: The development of the flute in London, 1821-1939

From their establishment in the 1820s Rudall & Rose dominated the large and lucrative market for flutes, at first with instruments of the highest quality but of little technological innovation. In the 1840s they were advised and later joined in partnership by Richard Carte, whose business acumen guided the firm to an association with Theobald Boehm that led to the successful commercial exploitation first of Boehm's 1832 model flute and later of his final, cylindrical model of 1847. Carte's skill at understanding the market led him to develop models of flutes that would permit a player to benefit from many of the acoustical advantages of the Boehm flute without learning a new fingering system, and his understanding of his instrument led him to develop first his 1851 and later his 1867 patent flutes, which it may be argued were mechanically superior to the standard Boehm and which enjoyed considerable success well into the twentieth century. Rudall, Rose & Carte, later Rudall, Carte & Company, continued to be innovative flute makers, producing the first gold flutes, the first platinum flutes and the first flutes in Monel metal, as well as flutes to the individual designs of a number of flute players. This thesis examines the social and business trends and the market pressures that inform the flute manufacturing business in the nineteenth century, with detailed technical discussion and illustration of the firm's instruments. The firm's parallel activities in publishing, retailing, military instrument manufacture and concert promotion (under the management of Carte's son, Richard D'Oyly Carte) are considered as contributing to their success

Greater Europe and the Euro A Window of Opportunity

Ao longo dos fins do Verão e do Outono de 1998 foi-se tomando cada vez mais evidente que as virtudes proclamadas aos quatro ventos do nascente Banco Central Europeu e seu esperado filho, o Euro, tinham sido enaltecidas um pouco para além do credível. Os cenários descritos pelos seus protagonistas pareceram ignorar as armadilhas que as circunstâncias económicas poderão fazer surgir. Circunstâncias essas que tomarão muito difícil aos governos nacionais cumprir os termos do Pacto de Estabilidade de Amesterdão. Este curto artigo apresentou um cenário que seria possível como resultado dum forte arranque inicial do Euro e, como alternativa, outro mais apropriado que surgiria menos robusto, por várias razões, algumas das quais poderiam facilmente ter sido imprevisívei

Economic Development and Social Cohesion At the Heart ofthe Matter

Without Economic Development there can be no freedom from the scourge of mass unemployment. There can be no freedom from want. There is no freedom from want unless there is a chance to earn a competency for a life that is worth while. Across Europe there are around 36 million souls who do not have any such chance. They are ‘The Unemployed”. Possibly 12 million ofthem are already called The Long Term Unemployed. More people will join them unless we can manage to generate economic development. Meanwhile, maybe it is reasonable for us to postulate that: 1. A stagnant economy will remain in that State until a dynamic force changes it. 2. The dynamic force provided by technical innovation is directly proportional to the economic growth it induces, the constant ofthe proportionality being the inertia ofthe stagnant economy, and 3. For every instance ofself-induced economic growth there will be a parallel positive multiplying effect on the creation ofplaces of employment. There is little or no economic progress when growth occurs without development. Economic Development only occurs when the underlying rate ofeconomic growth is both self-induced andself-sustaining, so that changes in the structures ofmanufacturing, technological and Services industries yield higher productivity and higherreal income per working person. To induce the desired kind of economic growth, there has to be a steady supply of new initiative, innovation and enterprise that accepts a hopefully properly calculated amount of risk. There have to be many such start-ups on a continued basis. Each European nation will have to make its own decisions and enact measures to cope with its own particular set of problems. Structural and Cohesion Funds may help but they do not bring an economy to life with the wave of a wand. The nations’ economies need to become vibrant as the result ofthe joint human endeavour oftheir young people. Their efforts have to be recognised, encouraged and properly rewarded on an ongoing basis

Development and a 3% Base Deposit Rate

O elemento básico para a determinação de um intervalo para as taxas de juro dos empréstimos bancários é aquilo a que se poderia chamar uma “Taxa Base de Depósito de 3%” (T.B.D. de 3%). Esta implicaria uma taxa de rendabilidade real de 3% para o depositante e uma taxa de empréstimo (taxa activa), calculada a partir da TBD, que geraria uma taxa de rendibilidade real para a entidade credora. A amplitude que esse intervalo das taxas de empréstimo deverá ter, irá gerar polémica e despertar vivo interesse. No entant, a fixação da TBD propriamente dita em 3% poderá revelar-se absolutamente crucial. Com base nessa TBD poder-se-á erigir um novo sistema financeiro cuja lógica poderá vir a constituir uma base sólida para um acordo mais vasto que poderá vir a manter-se e a servir as próximas gerações. Uma TBD de 3% poderá vir a afirmar-se como um dos alicerces desse novo sistema

EUnomics and Competition Strategy

EUnomics is a term I use to denote the art of devising Economic Strategies for European Cohesion. The practice ofthis art, as I envisage it, is based on three tenets: 1. Economic Policy is a strimgle to find one ’s way through chãos to a desired ohiective. It was Schumpeter’s view that any policy application has to allow for the unique historie situation in which it is to be applied. The economic situations pertaining in early XXIst century Europe are not only unique but are constantly taking on a new twist. We may well look on them as chaotic. 2. The desired objective is to achieve the cohesion ofEurope ’s widely disparate economies- not through the diktat ofuniform policies initiated and administered by a centralised bureaucracy. Rather it needs to be achieved through the ever renewedly voluntary development of coordinated approaches to dealing with specific situations as they emerge from the morass of previous mistakes

Putting on the New Man - The Underlying Implications

Definir este conceito não é tão difícil como pode parecer à primeira vista. Basta implantarmos, com toda a convicção, no nosso subconsciente o valor da primazia do indivíduo e da dignidade humana, reconhecendo que estes princípios são sempre mais importantes que os da geração que privilegia os lucros. Se acreditarmos nesta escolha e tomarmos decisões com estes valores em mente, manteremos, seguramente, o lado humano nos negócios que empreendermos e, pouco a pouco, iremos ajudar a transformar os comportamentos do dia-a-dia

The Kind of Institutíonal Reforms the EU Needs

O objectivo deste artigo é fazer o leitor reflectir sobre que tipo de reformas institucionais a União Europeia deverá optar, durante a Conferência Intergovernamental que terá lugar ainda este ano. Talvez seja pertinente salientar que o desembarque oficial em Porto Novo, Brasil, há 500 anos, por uma pequena frota de barcos comandada por Pedro Álvares Cabral, representou um ponto de viragem crucial na história do desenvolvimento comercial europeu. Quanto a mim, a União Europeia encontra-se numa encruzilhada igualmente crucial na história do seu desenvolvimento. E a escolha da «rota» a seguir poderá ser fundamental