Monetary Policy, Determinancy and Learnability in the Open Economy

We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country, New Keynesian framework.The two blocks may be viewed as the U.S. and Europe, or as regions within the euro zone.We seek to understand how monetary policy choices may interact across borders to help or hinder the creation of a unique rational expectations equilibrium worldwide which can be learned by market participants. We study cases in which optimal policies are being pursued country by country as well as some forms of cooperation.We find that open economy considerations may alter conditions for determinacy and learnability relative to closed economy analyses, and that new concerns can arise in the analysis of classic topics such as the desirability of exchange rate targeting and monetary policy cooperation. Keywords: Indeterminacy, learning, monetary policy rules, new open economy macroeconomics, exchange rate regimes, second generation policy coordination.learning;monetairy policy;open economy;macroeconomics;exchange rate;indeterminacy;second generation policy coordination

The Stability of Macroeconomic Systems with Bayesian Learners

We study abstract macroeconomic systems in which expectations play an important role. Consistent with the recent literature on recursive learning and expectations, we replace the agents in the economy with econometricians. Unlike the recursive learning literature, however, the econometricians in the analysis here are Bayesian learners. We are interested in the extent to which expectational stability remains the key concept in the Bayesian environment. We isolate conditions under which versions of expectational stability conditions govern the stability of these systems just as in the standard case of recursive learning. We conclude that Bayesian learning schemes, while they are more sophisticated, do not alter the essential expectational stability findings in the literature.Expectational stability, recursive learning, learnability of rational expectations equilibrium.

New Economy - New Policy Rules?

The U.S. economy appears to have experienced a pronounced shift toward higher productivity over the last five years or so. We wish to understand the implications of such shifts for the structure of optimal monetary policy rules in simple dynamic economies. Accordingly, we begin with a standard economy in which a version of the Taylor rule constitutes the optimal monetary policy for a given inflation target and a given level of productivity. We augment this model with regime switching in productivity, and calculate the optimal monetary policy rule in the altered environment. We find that in the altered environment, a rule that incorporates leading indicators about regimes significantly outperforms the Taylor rule. We use this result to comment on the "new economy" events of the 1990s and the "stagflation" events of the 1970s from the perspective of our model.inflation targets;strutural change;monetary policy rules;new economy;regime switching

Central bank design in general equilibrium

We study the effects of alternative institutional arrangements for the determination of monetary policy in the context of a capital-theoretic, general equilibrium economy. In the absence of an institutional arrangement, there is a continuum of steady state equilibria indexed by rates of inflation ranging from the Friedman rule to high a high level. The social optimum is associated with the Friedman rule.. We consider three institutional arrangements for determining monetary policy. The first, unconditional majority voting, always leads to a substantial inflation bias. The second, a simple form of bargaining which we interpret as a policy board, generally improves on the unconditional majority voting outcome. Finally, we consider a form of constitutional rule which always achieves the social optimum.Monetary theory ; Banks and banking, Central

Vortex Washboard Voltage Noise in Type-II Superconductors

In order to characterize flux flow through disordered type-II superconductors, we investigate the effects of columnar and point defects on the vortex velocity / voltage power spectrum in the driven non-equilibrium steady state. We employ three-dimensional Metropolis Monte Carlo simulations to measure relevant physical observables including the force-velocity / current-voltage (I-V) characteristics, vortex spatial arrangement and structure factor, and mean flux line radius of gyration. Our simulation results compare well to earlier findings and physical intuition. We focus specifically on the voltage noise power spectra in conjunction with the vortex structure factor in the presence of weak columnar and point pinning centers. We investigate the vortex washboard noise peak and associated higher harmonics, and show that the intensity ratios of the washboard harmonics are determined by the strength of the material defects rather than the type of pins present. Through varying columnar defect lengths and pinning strengths as well as magnetic flux density we further explore the effect of the material defects on vortex transport. It is demonstrated that the radius of gyration displays quantitatively unique features that depend characteristically on the type of material defects present in the sample.Comment: Latex, 17 pages, 14 figure

Nonequilibrium steady states of driven magnetic flux lines in disordered type-II superconductors

We investigate driven magnetic flux lines in layered type-II superconductors subject to various configurations of strong point or columnar pinning centers by means of a three-dimensional elastic line model and Metropolis Monte Carlo simulations. We characterize the resulting nonequilibrium steady states by means of the force-velocity / current-voltage curve, static structure factor, mean vortex radius of gyration, number of double-kink and half-loop excitations, and velocity / voltage noise spectrum. We compare the results for the above observables for randomly distributed point and columnar defects, and demonstrate that the three-dimensional flux line structures and their fluctuations lead to a remarkable variety of complex phenomena in the steady-state transport properties of bulk superconductors.Comment: 23 pages, IOP style, 18 figures include

Systemic risk and the financial crisis: a primer

How did problems in a relatively small portion of the home mortgage market trigger the most severe financial crisis in the United States since the Great Depression? Several developments played a role, including the proliferation of complex mortgage-backed securities and derivatives with highly opaque structures, high leverage, and inadequate risk management. These, in turn, created systemic risk - that is, the risk that a triggering event, such as the failure of a large financial firm, will seriously impair financial markets and harm the broader economy. This article examines the role of systemic risk in the recent financial crisis. Systemic concerns prompted the Federal Reserve and U.S. Department of the Treasury to act to prevent the bankruptcy of several large financial firms in 2008. The authors explain why the failures of financial firms are more likely to pose systemic risks than the failures of nonfinancial firms and discuss possible remedies for such risks. They conclude that the economy could benefit from reforms that reduce systemic risks, such as the creation of an improved regime for resolving failures of large financial firms.Financial crises ; Systemic risk

Haptoglobin-hemoglobin receptor independent killing of African trypanosomes by human serum and trypanosome lytic factors

The haptoglobin-hemoglobin receptor (HpHbR) of African trypanosomes plays a critical role in human innate immunity against these parasites. Localized to the flagellar pocket of the veterinary pathogen Trypanosoma brucei brucei this receptor binds Trypanosome Lytic Factor-1 (TLF-1), a subclass of human high-density lipoprotein (HDL) facilitating endocytosis, lysosomal trafficking and subsequent killing. Recently, we found that group 1 Trypanosoma brucei gambiense does not express a functional HpHbR. We now show that loss of the TbbHpHbR reduces the susceptibility of T. b. brucei to human serum and TLF-1 by 100- and 10,000-fold, respectively. The relatively high concentrations of human serum and TLF-1 needed to kill trypanosomes lacking the HpHbR indicates that high affinity TbbHpHbR binding enhances the cytotoxicity; however, in the absence of TbbHpHbR, other receptors or fluid phase endocytosis are sufficient to provide some level of susceptibility. Human serum contains a second innate immune factor, TLF-2, that has been suggested to kill trypanosomes independently of the TbbHpHbR. We found that T. b. brucei killing by TLF-2 was reduced in TbbHpHbR-deficient cells but to a lesser extent than TLF-1. This suggests that both TLF-1 and TLF-2 can be taken up via the TbbHpHbR but that alternative pathways exist for the uptake of these toxins. Together the findings reported here extend our previously published studies and suggest that group 1 T. b. gambiense has evolved multiple mechanisms to avoid killing by trypanolytic human serum factors

Boston City Hospital: Cases in the Service of Dr. Gay

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