Spurious Welfare Reversals in International Business Cycle Models

Several papers on international business cycles have documented spurious welfare reversals, in that incomplete market economies can produce higher welfare than the complete market economy. This paper demonstrates how conventional linearization, as used in King, Plosser, and Rebelo (1988), can generate approximation errors that are large enough to result in such reversals. Using a two-country production economy without capital, we argue that spurious welfare reversals are not only possible but also plausible under reasonable parameter values. As a constructive alternative, this paper proposes an approximation method that modifies the conventional linearization method by a bias correction---the linear approximation around a 'stochastic' steady state. We show that this method can be easily implemented to accurately approximate the exact solution and therefore produce the correct welfare ordering. The accuracy of the proposed method is far better than that of the conventional linearization method and as good as that of a method involving a second-order expansion.Linearization, Stochastic steady state, Welfare, Risk sharing

Welfare Effects of Tax Policy in Open Economies: Stabilization and Cooperation

This paper studies optimal tax policy problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfare-improving active, contingent tax policies (under which tax rates respond to changes in productivity) on capital and labor income and consumption. Unlike the conventional wisdom regarding stabilization policies, procyclical factor-income tax policies in general improves welfare in open economies. Procyclical tax policies generate efficiency gains by correcting asset market incompleteness. Optimal tax policy under cooperative equilibrium is similar to that under the Nash equilibrium, and welfare gains from tax policy coordination is quite smalloptimal tax, procyclical, countercyclical, stabilization, cooperation

Patience, Persistence and Properties of Two-Country Incomplete Market Models

No abstract.

Previous Experiences Drive Attention

Traditionally, the allocation of attention was understood within goal-driven and stimulus-driven factors. However, the traditional approach cannot fully account for the mechanism of attentional orienting. Instead, a growing body of evidence shows that previous search experiences, irrelevant to both goal-driven and stimulus-driven factors, influence attentional allocation. For example, when contexts predict information of targets, the contexts guide attention toward the stimuli having the information predicted by the contexts: contextual cueing. In addition, more valuable stimuli attract more attention: value-driven attentional capture. However, two critical issues are present. First, contextual cueing has been found largely when the contexts and the target information predicted by the contexts are in the spatial dimension. Second, it is unclear how the values of the items are determined to guide attention. Accordingly, the dissertation investigates these issues to further understand the mechanism of attentional allocation beyond the traditional perspective. The results of the dissertation suggest that more attention is required for non-spatial context-driven search than spatial context-driven search and that value-driven attention is on the basis of prospect theory. In conclusion, the dissertation further clarifies the mechanism by which previous experiences affect the allocation of attention

A Relay Can Increase Degrees of Freedom in Bursty Interference Networks

We investigate the benefits of relays in multi-user wireless networks with bursty user traffic, where intermittent data traffic restricts the users to bursty transmissions. To this end, we study a two-user bursty MIMO Gaussian interference channel with a relay, where two Bernoulli random states govern the bursty user traffic. We show that an in-band relay can provide a degrees of freedom (DoF) gain in this bursty channel. This beneficial role of in-band relays in the bursty channel is in direct contrast to their role in the non-bursty channel which is not as significant to provide a DoF gain. More importantly, we demonstrate that for certain antenna configurations, an in-band relay can help achieve interference-free performances with increased DoF. We find the benefits particularly substantial with low data traffic, as the DoF gain can grow linearly with the number of antennas at the relay. In this work, we first derive an outer bound from which we obtain a necessary condition for interference-free DoF performances. Then, we develop a novel scheme that exploits information of the bursty traffic states to achieve them.Comment: submitted to the IEEE Transactions on Information Theor

Monitoring Newly Adopted Technologies Using Keyword Based Analysis of Cited Patents

This paper proposes a method that can reliably monitor the adoption of existing technology by term frequency-inverse document frequency (11-IDF) and K-means clustering using cited patents. 11-IDF and K-means clustering can extract patent information when the number of patents is sufficiently large. When the number of patents is too small for 11-IDF and K-means clustering to be reliable, the method considers patents that were cited by the originally set of patents. The mixed set of citing patents and cited patents is the new subject of analysis. As a case study, we have focused in agricultural tractor in which new technologies were adopted to achieve automated driving. TF-IDF and K-means clustering alone failed to monitor the adoption of new technology but the proposed method successfully monitored it. We anticipate that our method can ensure the reliability of patent monitoring even when the number of patents is small.11Ysciescopu