Why are Beveridge-Nelson and Unobserved-Component Decompositions of GDP so Different?

Two widely used methods of decomposing GDP into trend and cycle yield starkly different results. The unobserved component approach implies smooth trend with large, persistent cycle. In contrast, the Beveridge and Nelson (1981) approach implies most of the variation is attributable to trend. This conflict has been widely noted. It should surprise us that the two approaches produce very different trend-cycle decompositions since both are model-based. This paper attempts to find out why we do not, after decades of research, have a consistent picture of how variation in a series like real GDP should be allocated between trend and cycle.

Policy Briefings: Are Delays to the Foreclosure Process a Good Thing?

The United States faces a foreclosure crisis. The Mortgage Bankers Association reported that slightly more than four percent of the loans in the United States are in the foreclosure process as of the third quarter of 2010. RealtyTrac reported in January 2011 that nearly three million homes received foreclosure filings in 2010. In addition to the current foreclosures, there exist a substantial number of potential foreclosures that will occur in the next several years. Goodman (2010) estimates that there may be another seven million homes that will face foreclosure. CoreLogic estimated that nearly 23 percent of all mortgages are underwater as of the third quarter of 2010. This number spikes in the areas hardest hit by the mortgage crisis. The sheer volume of actual and pending foreclosures coupled with a slowdown in the foreclosure process due to legal and political wrangling has increased the time that a home is in foreclosure. The purpose of this policy briefing is to analyze the economics of delaying the resolution of the foreclosure process. We review the literature relating to the macroeconomic effects of delaying foreclosures. We begin by identifying four types of potential costs of delay. First, foreclosure delays inject uncertainty in the consumer balance sheet, which leads to unnecessary and economically damaging delays in consumption. This reverse-stimulus alone could dwarf any further plausible price effects of delaying foreclosures at this stage of the business cycle. Second, delaying foreclosures could impede new housing construction. Housing construction is predicated upon a positive and consistent upward price gradient in the housing market, which will not be established until the market is cleared of delinquent homes. Third, and similar to a consumer’s balance sheet, delaying foreclosures creates uncertainty in banks’ balance sheets, potentially blocking channels of credit and undermining lending. Fourth, delinquent homes that are heading to foreclosure have been shown to aggravate neighborhood blight.

Model based safety analysis for an Unmanned Aerial System

This paper aims at describing safety architectures of autonomous systems by using Event-B formal method. The autonomous systems combine various activities which can be organised in layers. The Event-B formalism well supports the rigorous design of this kind of systems. Its refinement mechanism allows a progressive modelling by checking the correctness and the relevance of the models by discharging proof obligations. The application of the Event-B method within the framework of layered architecture specification enables the emergence of desired global properties with relation to layer interactions. The safety objectives are derived in each layer and they involve static and dynamic properties such as an independence property, a redundant property or a sequential property. The originality of our approach is to consider a refinement process between two layers in which the abstract model is the model of the lower layer. In our modelling, we distinguish nominal behaviour and abnormal behaviour in order to well establish failure propagation in our architecture