On multigraded generalizations of Kirillov-Reshetikhin modules

We study the category of Z^l-graded modules with finite-dimensional graded pieces for certain Z+^l-graded Lie algebras. We also consider certain Serre subcategories with finitely many isomorphism classes of simple objects. We construct projective resolutions for the simple modules in these categories and compute the Ext groups between simple modules. We show that the projective covers of the simple modules in these Serre subcategories can be regarded as multigraded generalizations of Kirillov-Reshetikhin modules and give a recursive formula for computing their graded characters

Extended T-systems

We use the theory of q-characters to establish a number of short exact sequences in the category of finite-dimensional representations of the quantum affine groups of types A and B. That allows us to introduce a set of 3-term recurrence relations which contains the celebrated T-system as a special case.Comment: 36 pages, latex; v2: version to appear in Selecta Mathematic

Why farmers sometimes love risks: evidence from India

Using a unique data set collected among farmers in India’s semiarid tropics, we document the surprising prevalence of risk-taking behavior in the face of realistically framed high-stakes gambles. We hypothesize that this apparently anomalous behavior is due to a combination of credit constraints and nonconvexities in production. In particular, the high-stakes nature of the gambles creates the potential for a farmer to undertake a productive investment that would normally be unaffordable and thereby move to a permanently higher level of income. We show that the degree to which farmers are willing to accept risk in return for this opportunity appears to relate in an intuitive way to their current agricultural production technology as well as the demographic composition of their household

Sudden Stops and Output Drops

In recent financial crises and in recent theoretical studies of them, abrupt declines in capital inflows, or sudden stops, have been linked with large drops in output. Do sudden stops cause output drops? No, according to a standard equilibrium model in which sudden stops are generated by an abrupt tightening of a country's collateral constraint on foreign borrowing. In this model, in fact, sudden stops lead to output increases, not decreases. An examination of the quantitative effects of a well-known sudden stop, in Mexico in the mid-1990s, confirms that a drop in output accompanying a sudden stop cannot be accounted for by the sudden stop alone. To generate an output drop during a financial crisis, as other studies have done, the model must include other economic frictions which have negative effects on output large enough to overwhelm the positive effect of the sudden stop.

Extensions and block decompositions for finite-dimensional representations of equivariant map algebras

Suppose a finite group acts on a scheme $X$ and a finite-dimensional Lie algebra $\mathfrak{g}$. The associated equivariant map algebra is the Lie algebra of equivariant regular maps from $X$ to $\mathfrak{g}$. The irreducible finite-dimensional representations of these algebras were classified in previous work with P. Senesi, where it was shown that they are all tensor products of evaluation representations and one-dimensional representations. In the current paper, we describe the extensions between irreducible finite-dimensional representations of an equivariant map algebra in the case that $X$ is an affine scheme of finite type and $\mathfrak{g}$ is reductive. This allows us to also describe explicitly the blocks of the category of finite-dimensional representations in terms of spectral characters, whose definition we extend to this general setting. Applying our results to the case of generalized current algebras (the case where the group acting is trivial), we recover known results but with very different proofs. For (twisted) loop algebras, we recover known results on block decompositions (again with very different proofs) and new explicit formulas for extensions. Finally, specializing our results to the case of (twisted) multiloop algebras and generalized Onsager algebras yields previously unknown results on both extensions and block decompositions.Comment: 41 pages; v2: minor corrections, formatting changed to match published versio

Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?

The central puzzle in international business cycles is that real exchange rates are volatile and persistent. The most popular story for real exchange rate fluctuations is that they are generated by monetary shocks interacting with sticky goods prices. We quantify this story and find that it can account for some of the observed properties of real exchange rates. When prices are held fixed for at least one year, risk aversion is high and preferences are separable in leisure, the model generates real exchange rates that are as volatile as in the data. The model also generates real exchange rates that are persistent, but less so than in the data. If monetary shocks are correlated across countries, then the comovements in aggregates across countries are broadly consistent with those in the data. Making asset markets incomplete or introducing sticky wages does not measurably change the results.

Can sticky price models generate volatile and persistent real exchange rates?

The central puzzle in international business cycles is that fluctuations in real exchange rates are volatile and persistent. We quantity the popular story for real exchange rate fluctuations: they are generated by monetary shocks interacting with sticky goods prices. If prices are held fixed for at least one year, risk aversion is high, and preferences are separable in leisure, then real exchanage rates generated by the model are as volatile as in the data and quite persistent, but less so than in the data. The main discrepancy between the model and the data, the consumption—real exchange rate anomaly, is that the model generates a high correlation between real exchange rates and the ratio of consumption across countries, while the data show no clear pattern between these variables.Prices ; Econometric models ; Foreign exchange rates

Can sticky price models generate volatile and persistent real exchange rates?

The conventional wisdom is that monetary shocks interact with sticky goods prices to generate the observed volatility and persistence in real exchange rates. We investigate this conventional wisdom in a quantitative model with sticky prices. We find that with preferences as in the real business cycle literature, irrespective of the length of price stickiness, the model necessarily produces only a fraction of the volatility in exchange rates seen in the data. With preferences which are separable in leisure, the model can produce the observed volatility in exchange rates. We also show that long stickiness is necessary to generate the observed persistence. In addition, we show that making asset markets incomplete does not measurably increase either the volatility or persistence of real exchange rates. ; Replaced by Staff Report 277Prices ; Econometric models ; Foreign exchange rates