Price Stability and The ECB's Monetary Policy Strategy

This paper focuses on the price stability objective within the framework of the single monetary policy strategy. It starts by reviewing what this objective, which is common to all central banks, means. Secondly, this paper will focus exclusively on the anchoring of short- to medium-term inflation expectations (Part 2). Several measures show that this anchoring is effective. Modern New Keynesian theory is an appropriate framework for analysing the impact that this anchoring of expectations has on the determination of the short- to medium-term inflation rate. From this point of view, observed inflation in the euro area seems to be in line with the theory and the ECB's action seems to be very effective. Thirdly, we will focus on the other aspect of monetary stability: the degree of price-level uncertainty and the anchoring of inflation expectations in the medium to long term. Even though this assessment is more difficult than it is in the short to medium term, since we only have a track record covering five years, various indicators from the theoretical analysis paint a fairly reassuring picture of the effectiveness of the device used by the ECB.Monetary policy ; European Central Bank ; Inflation

On localized vegetation patterns, fairy circles and localized patches in arid landscapes

We investigate the formation of localized structures with a varying width in one and two-dimensional systems. The mechanism of stabilization is attributed to strong nonlocal coupling mediated by a Lorentzian type of Kernel. We show that, in addition to stable dips found recently [see, e.g., C. Fernandez-Oto, M. G. Clerc, D. Escaff, and M. Tlidi, Phys. Rev. Lett. {\bf{110}}, 174101 (2013)], exist stable localized peaks which appear as a result of strong nonlocal coupling, i.e. mediated by a coupling that decays with the distance slower than an exponential. We applied this mechanism to arid ecosystems by considering a prototype model of a Nagumo type. In one-dimension, we study the front that connects the stable uniformly vegetated state with the bare one under the effect of strong nonlocal coupling. We show that strong nonlocal coupling stabilizes both---dip and peak---localized structures. We show analytically and numerically that the width of localized dip, which we interpret as fairy circle, increases strongly with the aridity parameter. This prediction is in agreement with filed observations. In addition, we predict that the width of localized patch decreases with the degree of aridity. Numerical results are in close agreement with analytical predictions

Plant clonal morphologies and spatial patterns as self-organized responses to resource-limited environments

We propose here to interpret and model peculiar plant morphologies (cushions, tussocks) observed in the Andean altiplano as localized structures. Such structures resulting in a patchy, aperiodic aspect of the vegetation cover are hypothesized to self-organize thanks to the interplay between facilitation and competition processes occurring at the scale of basic plant components biologically referred to as 'ramets'. (Ramets are often of clonal origin.) To verify this interpretation, we applied a simple, fairly generic model (one integro-differential equation) emphasizing via Gaussian kernels non-local facilitative and competitive feedbacks of the vegetation biomass density on its own dynamics. We show that under realistic assumptions and parameter values relating to ramet scale, the model can reproduce some macroscopic features of the observed systems of patches and predict values for the inter-patch distance that match the distances encountered in the reference area (Sajama National Park in Bolivia). Prediction of the model can be confronted in the future to data on vegetation patterns along environmental gradients as to anticipate the possible effect of global change on those vegetation systems experiencing constraining environmental conditions.Comment: 14 pages, 6figure

The art of central banking of the ECB and the separation principle.

This paper examines the art of central banking as practised by the European Central Bank (ECB) through the prism of Goodfriend's (2009) determination of the three policies that fall within the remit of a central bank: monetary policy, which consists in varying the size of the balance sheet, credit policy, which consists in modifying the credit structure, and interest rate policy, which consists in adjusting the interest rates of the marginal lending and deposit facilities. The theoretical literature emphasises the existence of a separation principle between the first policy, which seeks to ensure monetary stability and the other two policies, which are intended to ensure financial stability through the smooth functioning of the interbank money market. This paper shows in particular that a central bank not only has the capacity but indeed must strive to separate the conduct of its monetary policy, which must seek to ensure medium and long-term price stability, from that of its credit policy, which is driven by short-term imperatives and consists in supplying the banking system with liquidity in the event of temporary money demand shocks. During the first part of the crisis, the ECB acted in accordance with the separation principle. However, it became increasingly difficult to apply as interest rates approached the zero-lower-bound. In effect, the unconventional measures adopted by the ECB created interference between its monetary policy, its credit policy and its interest rate policy.Monetary Policy ; operational framework ; Eurosystem ; separation principle.

Spontaneous exciton condensation in 1T-TiSe2: a BCS-like approach

Recently strong evidence has been found in favor of a BCS-like condensation of excitons in 1\textit{T}-TiSe$_2$. Theoretical photoemission intensity maps have been generated by the spectral function calculated within the excitonic condensate phase model and set against experimental angle-resolved photoemission spectroscopy data. Here, the calculations in the framework of this model are presented in detail. They represent an extension of the original excitonic insulator phase model of J\'erome \textit{et al.} [Phys. Rev. {\bf 158}, 462 (1967)] to three dimensional and anisotropic band dispersions. A detailed analysis of its properties and further comparison with experiment are also discussedComment: Submitted to PRB, 11 pages, 7 figure

Is there a structural break in equilibrium velocity in the euro area?

We investigate the stability of M3 income velocity in the euro area. We apply a set of breakpoint procedures to examine this issue and conclude that at least one structural change occurred around 2000-2001. We also find evidence of another structural break around 1992-1993. These two breaks seem to affect both the level and the slope of the income velocity of M3. We then estimate a model of equilibrium velocity that factors in the opportunity cost of M3, along the lines suggested by Orphanides and Porter (2000). Here again, we find some evidence of instability in equilibrium velocity. Given the importance of the assumption of stable velocity trends for both the derivation of the reference value and the two-pillar strategy of the Eurosystem, these findings question the relevance of some excess liquidity indicators directly computed from the reference value and may call for some adjustments in the conduct of the ECB's monetary policy.M3 velocity ; Breakpoint tests; ECB.

An island based hybrid evolutionary algorithm for optimization

This is a post-print version of the article - Copyright @ 2008 Springer-VerlagEvolutionary computation has become an important problem solving methodology among the set of search and optimization techniques. Recently, more and more different evolutionary techniques have been developed, especially hybrid evolutionary algorithms. This paper proposes an island based hybrid evolutionary algorithm (IHEA) for optimization, which is based on Particle swarm optimization (PSO), Fast Evolutionary Programming (FEP), and Estimation of Distribution Algorithm (EDA). Within IHEA, an island model is designed to cooperatively search for the global optima in search space. By combining the strengths of the three component algorithms, IHEA greatly improves the optimization performance of the three basic algorithms. Experimental results demonstrate that IHEA outperforms all the three component algorithms on the test problems.This work was supported by the Engineering and Physical Sciences Research Council (EPSRC) of UK under Grant EP/E060722/1