Monetary Policy and Data Uncertainty: A Case Study of Distribution, Hotels and Catering Growth

This paper is a case study of the real world monetary policy data uncertainty problem. The initial and the latest release for growth rates of the distribution, hotels and catering sector are combined with official data on household income and two surveys in a state-space model. Though important to the UK economy, the distribution, hotels and catering sector is apparently difficult to measure. One finding is that the initial release data is not important in predicting the latest release. It could be that the statistical office develop the initial release as a building block towards the final release rather than an estimate of it. Indeed, there is multicollinearity between the initial release and the retail sales survey, which would then contain the same early available information. A second finding is that the estimate of the later release is sensitive to the estimate of the average historical growth rate. This means that establishing priors for this parameter and testing for shift structural breaks should be very important.Data Uncertainty; Distribution Sector; Kalman Filter; Monetary Policy

Inflation Targets as a Stabilisation Device

Over 80% of countries using explicit inflation targets in 2000 were doing so either as part of a disinflation strategy, or when inflation was neither low nor stable. Our illustrative theoretical model suggests annual revisions to short-run targets are endogenous to inflation outcomes during disinflation as long as the policymaker cares about misses from both the short-run target and a long-run target. Furthermore, target revisions will are larger when the target is undershot compared to when the target is overshot. We confirm the result using cross-country panel estimates from a unique data-set of inflation target misses in 60 countries in the 1990s. During disinflation it is therefore relatively difficult to separate decisions about target-setting from implementation. Short-term targets on a disinflation path may be more akin to conditional forecasts than policy rules, but their publication may nevertheless increase transparency and hence help policymakers to achieve lower inflation.

Unit Root Testing in a Central Bank

Central bank economists have to understand and forecast macroeconomic time series. A serious problem that they face is that those series are often trended or a.ected by persistent innovations to the process. To try to get round this problem, or at least to understand its possible e.ects, it is common to test whether series are stationary. These tests are often called unit-root tests.1 In this handbook we discuss such testing. A model-builder should use appropriate econometric techniques. In order to choose between alternative estimators, the model-builder needs to think carefully about the relevant theory and the available data. But economic theory is rarely unambiguous in its implications for the data generating process. Subjecting the data to pre-estimation testing can help to gauge the relevance of different theories and possible data problems.Unit, Root, Testing, Central Bank

Aging as a consequence of misrepair -- A novel theory of aging

It is now increasingly realized that the underlying mechanisms which govern aging is a complex interplay of genetic regulation and damage accumulation. Aging as a result of accumulation of ‘faults’ on cellular and molecular levels, has been proposed in the damage (fault)-accumulation theory by Kirkwood 2006. However, this theory fails to explain some aging phenotypes such as fibrosis and premature aging, since terms such as ‘damage’ and ‘fault’ are not specified. Therefore we introduce here a specification of the underlying mechanism of aging and arrive at a novel theory: aging of the body is a result of the accumulation of Misrepair of tissue. It emphasizes: a) it is Misrepair, not the original damage, that accumulates and leads to aging; and b) aging can occur at different levels, however aging of the body takes place at least on the tissue level, but not necessarily on cellular/molecular level. The novel concept of Misrepair introduced here unifies the understanding of the roles of environmental damage, repair, gene regulation, and multicellular structure in the aging process. The Misrepair-accumulation theory introduced in the present paper gives explanations for the aging phenotypes, premature aging, and the difference of longevity in different species, and is consistent with the point of view of physical theory of complex systems

Testing a DSGE model and its partner database

There is now an impetus to apply dynamic stochastic general equilibrium models to forecasting. But these models typically rely on purpose-built data, for example on tradable and nontradable sector outputs. How then do we know that the model will forecast well, in advance? We develop an early warning test of the database-model match and apply that to a Colombian model. Our test reveals where the combination should work (consumption) and where not (in investment). The test can be adapted to look at many likely sources of DSGE model failure.Monetary Policy, Sectoral Model, DSGE, Forecast Performance, Kalman Filter. Classification JEL: F47; E01; C61

Revisiting the early BARC tritium results (1989-1996)

These slides supports the oral presentation by Mahadeva Srinivasan: Revisiting the Early BARC Tritium Results (1989-1996)

The way forward

PresentationThese slides support the oral presentation by Mahadeva Srinivasan for the oral presentation: "The Way Forward"

Arithmetic properties arising from Ramanujan’s theta functions

We prove some interesting arithmetic properties of theta function identities that are analogous to q-series identities obtained by Michael D. Hirschhorn. In addition, we find infinite family of congruences modulo powers of 2 for representations of a non-negative integer n as △1+4△2 and △+k□