Debt and Deficit Fluctuations and the Structure of Bond Markets

We analyse the implications of optimal taxation for the stochastic behaviour of debt. We show that when a government pursues an optimal fiscal policy under complete markets, the value of debt has the same or less persistence than other variables in the economy and it declines in response to shocks that cause the deficit to increase. By contrast, under incomplete markets debt shows more persistence than other variables and it increases in response to shocks that cause a higher deficit. Data for US government debt reveals diametrically opposite results from those of complete markets and is much more supportive of bond market incompleteness.Complete vs incomplete markets, Debt Management, Fiscal

Debt and deficit fluctuations and the structure of bond markets

This paper tests for the market environment within which US fiscal policy operates, that is we test for the incompleteness of the US government bond market. We document the stochastic properties of US debt and deficits and then consider the ability of competing optimal tax models to account for this behaviour. We show that when a government pursues an optimal tax policy and issues a full set of contingent claims, the value of debt has the same or less persistence than other variables in the economy and declines in response to higher deficit shocks. By contrast, if governments only issue one-period risk free bonds (incomplete markets), debt shows more persistence than other variables and it increases in response to expenditure shocks. Maintaining the hypothesis of Ramsey behavior, US data conflicts.Optimal fiscal policy, complete vs incomlete markets, tax smoothing, government debt, persistence of debt

In Search of a Theory of Debt Management

A growing literature integrates debt management into models of optimal fiscal policy. One promising theory argues the composition of government debt should be chosen so that fluctuations in its market value offsets changes in expected future deficits. This complete market approach to debt management is valid even when governments only issue non-contingent bonds. Because bond returns are highly correlated it is known this approach implies asset positions which are large multiples of GDP. We show, analytically and numerically, across a wide range of model specifications (habits, productivity shocks, capital accumulation, persistent shocks, etc) that this is only one of the weaknesses of this approach. We find evidence of large fluctuations in positions, enormous changes in portfolios for minor changes in maturities issued and no presumption it is always optimal to issue long term debt and invest in short term assets. We show these extreme, volatile and unstable features are undesirable from a practical perspective for two reasons. Firstly the fragility of the optimal portfolio to small changes in model specification means it is frequently better for fear of model misspecification to follow a balanced budget rather than issue the optimal debt structure. Secondly we show for even miniscule levels of transaction costs governments would prefer a balanced budget rather than the large and volatile positions the complete market approach recommends. We conclude it is difficult to insulate fiscal policy from shocks using the complete markets approach. Due to the yield curve's limited variability maturities are a poor way to substitute for state contingent debt. As a result the recommendations of this approach conflict with a number of features we believe are integral to bond market incompleteness e.g. allowing for transaction costs, liquidity effects, robustness etc. Our belief is that market imperfections need to be explicitly introduced into the model and incorporated into the portfolio problem. Failure to do so means that the complete market approach applied in an incomplete market setting can be seriously misleading.Complete markets, debt management, government debt, maturity structure, yield curve

Probing Ultrafast Dynamics with Time-resolved Multi-dimensional Coincidence Imaging: Butadiene

Time-resolved coincidence imaging of photoelectrons and photoions represents the most complete experimental measurement of ultrafast excited state dynamics, a multi-dimensional measurement for a multi-dimensional problem. Here we present the experimental data from recent coincidence imaging experiments, undertaken with the aim of gaining insight into the complex ultrafast excited-state dynamics of 1,3-butadiene initiated by absorption of 200 nm light. We discuss photoion and photoelectron mappings of increasing dimensionality, and focus particularly on the time-resolved photoelectron angular distributions (TRPADs), expected to be a sensitive probe of the electronic evolution of the excited state and to provide significant information beyond the time-resolved photoelectron spectrum (TRPES). Complex temporal behaviour is observed in the TRPADs, revealing their sensitivity to the dynamics while also emphasising the difficulty of interpretation of these complex observables. From the experimental data some details of the wavepacket dynamics are discerned relatively directly, and we make some tentative comparisons with existing ab initio calculations in order to gain deeper insight into the experimental measurements; finally, we sketch out some considerations for taking this comparison further in order to bridge the gap between experiment and theory.Comment: 18 pages, 10 figures. Pre-print of JMO submissio

An orthogonal oriented quadrature hexagonal image pyramid

An image pyramid has been developed with basis functions that are orthogonal, self-similar, and localized in space, spatial frequency, orientation, and phase. The pyramid operates on a hexagonal sample lattice. The set of seven basis functions consist of three even high-pass kernels, three odd high-pass kernels, and one low-pass kernel. The three even kernels are identified when rotated by 60 or 120 deg, and likewise for the odd. The seven basis functions occupy a point and a hexagon of six nearest neighbors on a hexagonal sample lattice. At the lowest level of the pyramid, the input lattice is the image sample lattice. At each higher level, the input lattice is provided by the low-pass coefficients computed at the previous level. At each level, the output is subsampled in such a way as to yield a new hexagonal lattice with a spacing sq rt 7 larger than the previous level, so that the number of coefficients is reduced by a factor of 7 at each level. The relationship between this image code and the processing architecture of the primate visual cortex is discussed

The menstruating bladder, an unusual cause of haematuria

A 39 year old lady presented with flank pain and haematuria. Radiological investigations showed unilateral hydronephrosis and a serum creatinine of 102?mol/l. At cystoscopy, a soft tissue mass was found in the region of the left ureteric orifice and was causing obstruction of the ureter. A resection biopsy of this lesion was taken. A CT scan and DTPA renogram showed a non-functioning left kidney secondary to chronic obstruction by a soft tissue mass at the left vesico-ureteric junction. Histological analysis of the endoscopic resection specimen showed that the mass contained tubal-type epithelium compatible with a diagnosis of endosalpingiosis (a rare variant of Mullerianosis of the urinary tract). In view of persistent symptoms, it was decided to proceed to surgery. A hysterectomy, bilateral salpingo-oophorectomy and partial cystectomy were performed. The patient has recovered well and is currently asymptomatic. Formal histology of the resection specimen showed the presence of endometriosis.peer-reviewe

The viability of ADVANTG deterministic method for synthetic radiography generation

Time sensitive and high resolution image simulations are needed for synthetic radiography generation. The standard stochastic approach requires lengthy run times with poor statistics at higher resolutions. The investigation of the viability of a deterministic approach to synthetic radiography image generation was explored. The aim was to analyze a computational time decrease over the stochastic method. ADVANTG was compared to MCNP in multiple scenarios including a Benchtop CT prototype, to simulate high resolution radiography images. By using ADVANTG deterministic code to simulate radiography images the computational time was found to decrease over 10 times compared to the MCNP stochastic approach --Abstract, page iii