Money in monetary policy design: monetary cross-checking in the New-Keynesian model

In the New-Keynesian model, optimal interest rate policy under uncertainty is formulated without reference to monetary aggregates as long as certain standard assumptions on the distributions of unobservables are satisfied. The model has been criticized for failing to explain common trends in money growth and inflation, and that therefore money should be used as a cross-check in policy formulation (see Lucas (2007)). We show that the New-Keynesian model can explain such trends if one allows for the possibility of persistent central bank misperceptions. Such misperceptions motivate the search for policies that include additional robustness checks. In earlier work, we proposed an interest rate rule that is near-optimal in normal times but includes a cross-check with monetary information. In case of unusual monetary trends, interest rates are adjusted. In this paper, we show in detail how to derive the appropriate magnitude of the interest rate adjustment following a significant cross-check with monetary information, when the New-Keynesian model is the central bank’s preferred model. The cross-check is shown to be effective in offsetting persistent deviations of inflation due to central bank misperceptions. Keywords: Monetary Policy, New-Keynesian Model, Money, Quantity Theory, European Central Bank, Policy Under Uncertaint

First activity and interactions in thalamus and cortex using raw single-trial EEG and MEG elicited by somatosensory stimulation

Introduction: One of the primary motivations for studying the human brain is to comprehend how external sensory input is processed and ultimately perceived by the brain. A good understanding of these processes can promote the identification of biomarkers for the diagnosis of various neurological disorders; it can also provide ways of evaluating therapeutic techniques. In this work, we seek the minimal requirements for identifying key stages of activity in the brain elicited by median nerve stimulation.Methods: We have used a priori knowledge and applied a simple, linear, spatial filter on the electroencephalography and magnetoencephalography signals to identify the early responses in the thalamus and cortex evoked by short electrical stimulation of the median nerve at the wrist. The spatial filter is defined first from the average EEG and MEG signals and then refined using consistency selection rules across ST. The refined spatial filter is then applied to extract the timecourses of each ST in each targeted generator. These ST timecourses are studied through clustering to quantify the ST variability. The nature of ST connectivity between thalamic and cortical generators is then studied within each identified cluster using linear and non-linear algorithms with time delays to extract linked and directional activities. A novel combination of linear and non-linear methods provides in addition discrimination of influences as excitatory or inhibitory.Results: Our method identifies two key aspects of the evoked response. Firstly, the early onset of activity in the thalamus and the somatosensory cortex, known as the P14 and P20 in EEG and the second M20 for MEG. Secondly, good estimates are obtained for the early timecourse of activity from these two areas. The results confirm the existence of variability in ST brain activations and reveal distinct and novel patterns of connectivity in different clusters.Discussion: It has been demonstrated that we can extract new insights into stimulus processing without the use of computationally costly source reconstruction techniques which require assumptions and detailed modeling of the brain. Our methodology, thanks to its simplicity and minimal computational requirements, has the potential for real-time applications such as in neurofeedback systems and brain-computer interfaces

Insight Report: Online public involvement session on proposed cardiovascular research programmes

A group of researchers across Imperial College London (some of whom are also part of the Imperial Biomedical Research Centre (BRC)) are applying for £5 million funding over 5 years from the British Heart Foundation (BHF) to fund a BHF Centre for Research Excellence at Imperial to support research on various aspects of cardiovascular medicine. The four research themes the funding proposal will cover are as follows: 1. Societal and Environmental Factors 2. Learning from Heart Patients 3. Vascular Ageing (Blood vessels) 4. Remote (at home) personal monitorin