Monetary Policy Committees and Interest Rate Smoothing

We extend the New Keynesian Monetary Policy literature relaxing the assumption that the decisions are taken by a single policymaker, considering instead that monetary policy decisions are taken collectively in a committee. We introduce a Monetary Policy Committee (MPC), whose members have different preferences between output and inflation variability and have to vote on the level of the interest rate. This paper helps to explain interest rate smoothing from a political economy point of view, in which MPC members face a bargaining problem on the level of the interest rate. In this framework, the interest rate is a non-linear reaction function on the lagged interest rate and the expected inflation. This result comes from a political equilibrium in which there is a strategic behaviour of the agenda setter with respect to the rest of the MPC's members. Our approach can also reproduce both features documented by the empirical evidence on interest rate smoothing: a) the modest response of the interest rate to inflation and output gap; and b) the dependence on lagged interest rate; features that are difficult to reproduce in standard New Keynesian models all together. It also provides a theoretical framework on how disagreement among policymakers can slow down the adjustment on interest rates and on "menu costs" in interest rate decisions. Furthermore, a numerical exercise shows that this inertial behaviour of the interest rate is internalised by the economic agents through an increase in expected inflation.Monetary Policy Committee, interest rate smoothing, New Keynesian Economics, political economy

Expectations and the behaviour of Spanish treasury bill rates

Rational Expectations models are tested here under the standard assumptions of the Expectations Hypothesis (EH) of interest rates. We examine the theoretical unbiasedness of the spread of interest rates by predicting changes in the shorter spot rates. Unit root tests are applied and VAR systems are specified as a framework to apply Johansen's Maximum Likelihood Cointegration Analysis. Homogeneity and exogeneity tests are also carried out. Finally, we provide some Vector Error Correction Models (VECM) to determine the significance of the main assertions of the EH. Our VECM are coherent with the EH. We conclude that, by providing stability and strengthening the monetary transmission mechanism, the Spanish Treasury bills played a very relevant role in the monetary policy applied in Spain in order to enter the EMU.

Hibridación in situ fluorescente (FISH)

Background: At the end of 80s, cloning technologies with the increase of the antibodies’ sensibility made easier the development of technologies based on Fluorescence in situ Hibridation (FISH). Nowadays, It’s widely used in the field of basic investigation as much as clinic diagnostic. Method: FISH is a technique that combines molecular biology with histochemistry way to detect specific nucleotide sequences so that chromosome’s section or even whole chromosome can be marked on metaphases cells (cell in division) and on attached cellular nucleus. This detection is realized using DNA fluorescence probes (marked with fluorophores), that can be different according to the structures manage to detect: large single-locus probes, small unique-sequence probes, chromosome- or region-specific “paints” or repetitive sequence probes and genomic DNA probes. Some of the applications of this technique is that can be so useful in the detection of numerical and structural chromosomal alterations such as polyploidies or genomic rearrangement, to mapping metaphases cells and even to detect bacteria or another type of microorganism. In addition, FISH allows us to monitoring diseases (antitumor therapies, quantification of genomic altered cells…) and the precise location of chromosomic broken spots on tumor searching for new genes involved in cancer and detect and map interested known genes. Conclusion: FISH has many advantages ahead of conventional cytogenetic techniques (bands G karyotype) overall at the time of establish a clinic diagnostic to detect tumors and chromosomic aberration, presenting a higher sensibility and specificity as well as being a relative quick technique (24 hours)

Inflation Premium and Oil Price Volatility

In this paper we establish a link between the volatility of oil price shocks and a positive expected value of inflation in equilibrium (inflation premium). In doing so, we implement the perturbation method to solve up to second order a benchmark New Keynesian model with oil price shocks. In contrast with log linear approximations, the second order solution relaxes certainty equivalence providing a link between the volatility of shocks and inflation premium. First, we obtain analytical results for the determinants of the level of inflation premium. Thus, we find that the degree of convexity of both the marginal cost and the phillips curve is a key element in accounting for the existence of a positive inflation premium. We further show that the level of inflation premium might be potentially large even when a central bank implements an active monetary policy. Second, we evaluate numerically the second order solution of the model to explain the episode of high and persistent inflation observed in the US during the 70's. We find, in contrast with Clarida, Gali and Gertler (QJE, 2000), that even when there is no difference in the monetary policy rules between the pre-Volcker and post-Volcker periods, oil price shocks can generate high inflation levels during the 70's through a positive high level of inflation premium. As by product, our analysis shows that oil price shocks along with a distorted steady state can generate a time-varying endogenous trade-off between inflation and deviations of output from its efficient level. The previous trade-off, once uncertainty is taking into account, implies that a positive level of inflation premium is an optimal response to oil price shocksPhillips Curve, Second Order Solution, Oil Price Shocks, Endogenous Trade-off

Monetary Policy in the presence of Informal Labour Markets

In this paper we analyse the effects of informal labour markets on the dynamics of inflation and on the transmission of aggregate demand and supply shocks. In doing so, we incorporate the informal sector in a modified New Keynesian model with labour market frictions as in the Diamond-Mortensen-Pissarides model. Our main results show that the informal economy generates a "buffer" effect that diminishes the pressure of demand shocks on aggregate wages and inflation. Finding that is consistent with the empirical literature on the e¤ects of informal labour markets in business cycle fluctuations. This result implies that in economies with large informal labour markets the interest rate channel of monetary policy is relatively weaker. Furthermore, the model produces cyclical flows from informal to formal employment consistent with the data.Monetary Policy, New Keynesian Model, Informal Economy, Labour Market Frictions.