Monetary discretion, pricing complementarity and dynamic multiple equilibria

In a plain-vanilla New Keynesian model with two-period staggered price-setting, discretionary monetary policy leads to multiple equilibria. Complementarity between the pricing decisions of forward-looking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. Multiple equilibria also arise in other similar contexts where (i) a policymaker cannot commit, and (ii) forward-looking agents determine a state variable to which future policy respond. JEL Klassifikation: E5, E61, D7

D Branes and Textures

We examine the flavor structure of the trilinear superpotential couplings which can result from embedding the Standard Model within D brane sectors in Type IIB orientifold models, which are examples within the Type I string framework. We find in general that the allowed flavor structures of the Yukawa coupling matrices to leading order are given by basic variations on the "democratic" texture ansatz. In certain interesting cases, the Yukawa couplings have a novel structure in which a single right-handed fermion couples democratically at leading order to three left-handed fermions. We discuss the viability of such a ``single right-handed democracy'' in detail; remarkably, even though there are large mixing angles in the u,d sectors separately, the CKM mixing angles are small. The analysis demonstrates the ways in which the Type I superstring framework can provide a rich setting for investigating novel resolutions to the flavor puzzle.Comment: 23 pages, references adde

Monetary Discretion, Pricing Complementarity and Dynamic Multiple Equilibria

In a plain-vanilla New Keynesian model with two-period staggered price-setting, discretionary monetary policy leads to multiple equilibria. Complementarity between the pricing decisions of forward-looking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. We compute a traditional inflation bias equilibrium, in which price-setters are optimistic, rationally expecting small adjustments by other firms. But there is another steady-state equilibrium in which price setters are pessimistic and inflation is much higher. Further, we find that there are multiple equilibria at a point in time, not just in steady states. In a stochastic setting with equilibrium selection each period determined by an i.i.d. sunspot, there is greater inflation bias on average than if price-setters were always optimistic. The sunspot realization also has real effects: periods of higher than average inflation are accompanied by low output. Thus, increased real volatility may be an additional cost of discretion in monetary policy.

Inflation targeting in a St. Louis model of the 21st century

Federal Reserve Bank of St. Louis ; Inflation (Finance)

Monetary discretion, pricing complementarity and dynamic multiple equilibria

In a plain-vanilla New Keynesian model with two-period staggered price-setting, discretionary monetary policy leads to multiple equilibria. Complementarity between pricing decisions of forward-looking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. Multiple equilibria also arise in other similar contexts where (i) a policymaker cannot commit, and (ii) forward-looking agents determine a state variable to which future policy responds. JEL Classification: E5, E61, D78complementarity, discretion, monetary policy, Multiple Equilibria, time-consistency

Monetary Discretion, Pricing Complementarity and Dynamic Multiple Equilibria

In a plain-vanilla New Keynesian model with two-period staggered price-setting, discretionary monetary policy leads to multiple equilibria. Complementarity between the pricing decisions of forward-looking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. Multiple equilibria also arise in other similar contexts where (i) a policymaker cannot commit, and (ii) forward-looking agents determine a state variable to which future policy responds.Monetary Policy, Discretion, Time-Consistency, Multiple Equilibria, Complementarity

Multi-axis manual controllers: A state-of-the-art report

A literature search was carried out to examine the feasibility of a six degree of freedom hand controller. Factors addressed included related areas, approaches to manual control, applications of manual controllers, and selected studies of the human neuromuscular system. Results are presented

Design and development of a six degree of freedom hand controller

The design objectives of a six degree of freedom manual controller are discussed with emphasis on a space environment. Details covered include problems associated with a zero-g environment, the need to accommodate both 'shirt sleeve' and space suited astronauts, the combination of both manipulator operation and spacecraft flight control in a single device, and to accommodate restraints in space. A variable configuration device designed as a development tool in which rotational axes can be moved relative to one another, is described and its limitations discussed. Two additional devices were developed for concept testing. Each device combines the need for good quality with its ability achieve a wide range of adjustments