News Shocks or Correlated Sunspots? An Observational Equivalence Result in Linear Rational Expectations Model

This paper studies identification of linear rational expectations models under news shocks. Exploiting the general martingale difference solution approach, we show that news shocks models are observationally equivalent to a class of indeterminate equilibrium frameworks which are subject only, though arbitrarily, to i.i.d. fundamental shocks. The equivalent models are characterized by a lagged expectations structure, which arises typically when choice variables are predetermined or rather based on past information with respect to current observables. This particular feature creates room for serially correlated sunspot variables to arise in equilibrium reduced forms, whose dynamics can be equivalently induced by news shocks processes. This finding, which is inherent to the rational expectations theoretical construct, calls for carefully designing empirical investigations of news shocks in estimated DSGE models.Rational expectations; News shocks; Indeterminacy; Observational equivalence.

On the Empirical Separability of News Shocks and Sunspots

In this note we discuss the possibility of empirically evaluating the relative importance of different drivers of forecast errors in linear rational expectations frameworks, using the predictions generated by the theory. By means of a few simple examples, we show that, when accounting for indeterminate equilibria, empirical difficulties are likely to arise in distinguishing between determinate models driven by news shocks or rather by indeterminate ones under nonfundamental – or arbitrarily related to fundamentals – sunspot noise.

The Role of the Judiciary in the Public Decision Making Process

In this paper we investigate the role of judicial control of lobbying activities in an endogenous policy framework, focusing on two dimensions of quality of the judiciary, namely efficiency and integrity. We present a multi-layer lobbying model where a self-interested group is allowed to inuence a public decision maker – and possibly the judicial authority itself, which performs an anti-corruption task – with the payment of illegal contributions, and provide general conditions for the existence of a zero-contribution equilibrium. Furthermore, we study how sensitive the main findings are to different institutional arrangements as to judicial independence.Illegal lobbying, Endogenous policy making, Judicial control

On the Solution of Markov-switching Rational Expectations Models

This paper describes a method for solving a class of forward-looking Markov-switching Rational Expectations models under noisy measurement, by specifying the unobservable expectations component as a general-measurable function of the observable states of the system, to be determined optimally via stochastic control and filtering theory. Solution existence is proved by setting this function to the regime-dependent feedback control minimizing the mean-square deviation of the equilibrium path from the corresponding perfect-foresight autoregressive Markov jump state motion. As the exact expression of the conditional (rational) expectations term is derived both in finite and infinite horizon model formulations, no (asymptotic) stationarity assumptions are needed to solve forward the system, for only initial values knowledge is required. A simple sufficient condition for the mean-square stability of the obtained rational expectations equilibrium is also provided.Rational Expectations, Markov-switching dynamic systems, Dynamic programming, Time-varying Kalman filter

Remnants of Initial Anisotropic High Energy Density Domains in Nucleus-Nucleus Collisions

Anisotropic high energy density domains may be formed at early stages of ultrarelativistic heavy ion collisions, e.g. due to phase transition dynamics or non-equilibrium phenomena like (mini-)jets. Here we investigate hadronic observables resulting from an initially created anisotropic high energy density domain. Based on our studies using a transport model we find that the initial anisotropies are reflected in the freeze-out multiplicity distribution of both pions and kaons due to secondary hadronic rescattering. The anisotropy appears to be stronger for particles at high transverse momenta. The overall kaon multiplicity increases with large fluctuations of local energy densities, while no change has been found in the pion multiplicity.Comment: Submitted to PR

Elliptical flow -- a signature for early pressure in ultrarelativistic nucleus-nucleus collisions

Elliptical energy flow patterns in non-central Au(11.7AGeV) on Au reactions have been studied employing the RQMD model. The strength of these azimuthal asymmetries is calculated comparing the results in two different modes of RQMD (mean field and cascade). It is found that the elliptical flow which is readily observable with current experimental detectors may help to distinguish different reasonable expansion scenarios for baryon-dense matter. The final asymmetries are very sensitive to the pressure at maximum compression, because they involve a partial cancelation between early squeeze-out and subsequent flow in the reaction plane. This cancelation can be expected to occur in a broad energy region covered by the current heavy ion fixed-target programs at BNL and at CERN.Comment: 14 pages LaTeX including 3 postscript figure

Evidence of early multi-strange hadron freeze-out in high energy nuclear collisions

Recently reported transverse momentum distributions of strange hadrons produced in Pb(158AGeV) on Pb collisions and corresponding results from the relativistic quantum molecular dynamics (RQMD) approach are examined. We argue that the experimental observations favor a scenario in which multi-strange hadrons are formed and decouple from the system rather early at large energy densities (around 1 GeV/fm$^3$). The systematics of the strange and non-strange particle spectra indicate that the observed transverse flow develops mainly in the late hadronic stages of these reactions.Comment: 4 pages, 4 figure

Fusion of strings vs. percolation and the transition to the quark-gluon plasma

In most of the models of hadronic collisions the number of exchanged colour strings grows with energy and atomic numbers of the projectile and target. At high string densities interaction between them should melt them into the quark-gluon plasma state. It is shown that under certain assumptions about the the string interaction, a phase transition to the quark gluon plasma indeed takes place in the system of many colour strings. It may be of the first or second order (percolation), depending on the particular mechanism of the interaction. The critical string density is about unity in both cases. The critical density may have been already reached in central Pb-Pb collisions at 158 A GeV.Comment: 16 pages, 3 Postscript figure

Quark-Gluon-Plasma Formation at SPS Energies?

By colliding ultrarelativistic ions, one achieves presently energy densities close to the critical value, concerning the formation of a quark-gluon-plasma. This indicates the importance of fluctuations and the necessity to go beyond the investigation of average events. Therefore, we introduce a percolation approach to model the final stage ($\tau > 1$ fm/c) of ion-ion collisions, the initial stage being treated by well-established methods, based on strings and Pomerons. The percolation approach amounts to finding high density domains, and treating them as quark-matter droplets. In this way, we have a {\bf realistic, microscopic, and Monte--Carlo based model which allows for the formation of quark matter.} We find that even at SPS energies large quark-matter droplets are formed -- at a low rate though. In other words: large quark-matter droplets are formed due to geometrical fluctuation, but not in the average event.Comment: 7 Pages, HD-TVP-94-6 (1 uuencoded figure

Systematic Study of the Kaon to Pion Multiplicity Ratios in Heavy-Ion Collisions

We present a systematic study of the kaon to pion multiplicity ratios (K+/pi+ and K-/pi-) in heavy-ion collisions from AGS to RHIC energy using the Relativistic Quantum Molecular Dynamics (RQMD) model. The model satisfactorily describes the available experimental data on K+/pi+ and K-/pi-. Within the model, we find that the strong increase of the ratios with the number of participants is mainly due to hadronic rescattering of produced mesons with ingoing baryons and their resonances. The enhancement of K/pi in heavy-ion collisions with respect to elementary p+p interactions is larger at AGS energy than SPS energy, and decreases smoothly with bombarding energy. The total multiplicity ratios at RHIC energy are predicted by RQMD to be K+/pi+ = 0.19 and K-/pi- = 0.15.Comment: 10 pages, 8 figures, RevTeX style. A section is added to discuss effects of rope formatio