Central bank transparency and private information in a dynamic macroeconomic model

We investigate the role of economic transparency within the framework of one of Townsend’s models of ‘forecasting the forecasts of others’. The equilibrium has the property that ‘higher order beliefs’ are coordinated into a finite-dimensional setup that is amenable to address monetary policy issues. We focus here on the role of public information about the money supply, and find that it should be fully revealing

Indeterminacy with inflation-forecast-based rules in a two-bloc model

We examine the performance of forward-looking inflation-forecast-based rules in open economies. In a New Keynesian two-bloc model, a methodology first employed by Batini and Pearlman (2002) is used to obtain analytically the feedback parameters/horizon pairs associated with unique and stable equilibria. Three key findings emerge: first, indeterminacy occurs for any value of the feedback parameter on inflation if the forecast horizon lies too far into the future. Second, the problem of indeterminacy is intrinsically more serious in the open economy. Third, the problem is compounded further in the open economy when central banks respond to expected consumer, rather than pro- ducer price inflation. JEL Classification: E52, E37, E58in°ation-forecast-based rules, indeterminacy, open economy, Taylor rules

Quantifying and sustaining welfare gains from monetary commitment

The objectives of this paper are: first, to quantify the stabilization welfare gains from commitment; second, to examine how commitment to an optimal rule can be sustained as an equilibrium and third, to find a simple interest rate rule that closely approximates the optimal commitment one. We utilize an influential empirical micro-founded DSGE model, the euro area model of Smets and Wouters (2003), and a quadratic approximation of the representative household’s utility as the welfare criterion. Importantly, we impose the effect of a nominal interest rate zero lower bound. In contrast with previous studies, we find significant stabilization gains from commitment: our central estimate is a 0.4 - 0.5% equivalent permanent increase in consumption, but in a variant with a higher degree of price stickiness, gains of over 2% are found. We also find that a simple optimized commitment rule with the nominal interest rate responding to current inflation and the real wage closely mimics the optimal rule. JEL Classification: E52, E37, E58commitment, discretion, Monetary rules, welfare gains

Linear-quadratic approximation, external habit and targeting rules

We examine the linear-quadratic (LQ) approximation of non-linear stochastic dynamic optimization problems in macroeconomics, in particular for monetary policy. We make four main contributions: first, we draw attention to a general Hamiltonian framework for LQ approximation due to Magill (1977). We show that the procedure for the ‘large distortions’ case of Benigno and Woodford (2003, 2005) is equivalent to the Hamiltonian approach, but the latter is far easier to implement. Second, we apply the Hamiltonian approach to a Dynamic Stochastic General Equilibrium model with external habit in consumption. Third, we introduce the concept of target-implementability which fits in with the general notion of targeting rules proposed by Svensson (2003, 2005). We derive sufficient conditions for the LQ approximation to have this property in the vicinity of a zero-inflation steady state. Finally, we extend the Hamiltonian approach to a non-cooperative equilibrium in a two-country model. JEL Classification: E52, E37, E58dynamic stochastic general equilibrium models, Linear-quadratic approximation, utility-based loss function

Central bank transparency and private information in a dynamic macroeconomic model

We investigate the role of economic transparency within the framework of one of Townsend’s models of ‘forecasting the forecasts of others’. The equilibrium has the property that ‘higher order beliefs’ are coordinated into a finite-dimensional setup that is amenable to address monetary policy issues. We focus here on the role of public information about the money supply, and find that it should be fully revealing. JEL Classification: D82, E58Asymmetric information, central banks, public information, transparency

Risk Management in Action. Robust monetary policy rules under structured uncertainty.

Recent interest in ‘Risk Management’ has highlighted the relevance of Bayesian analysis for robust monetary- policy making. This paper sets out a comprehensive methodology for designing policy rules inspired by such considerations. We design rules that are robust with respect to model uncertainty facing both the policy-maker and private sector. We apply our methodology to three simple interest-rate rules: inflation-forecast- based (IFB) rules with a discrete forward horizon, one targeting a discounted sum of forward inflation, and a current wage inflation rule. We use an estimated DSGE model of the euro area and estimated measures of structured exogenous and parameter uncertainty for the exercise. We find that IFB rules with a long horizon perform poorly with or without robust design. Our discounted future targeting rule performs much better, indicating that policy can be highly forward-looking without compromising stabilization. The wage inflation rule dominates whether it is designed to have good robust properties or not. JEL Classification: E52, E37, E58Interest-rate rules, Robustness, structured uncertainty

Indeterminacy with inflation-forecast-based rules in a two-bloc model

We examine the performance of forward-looking inflation-forecast-based rules in open economies. In a New Keynesian two-bloc model, a methodology first employed by Batini and Pearlman (2002) is used to obtain analytically the feedback parameters/horizon pairs associated with unique and stable equilibria. Three key findings emerge: first, indeterminacy occurs for any value of the feedback parameter on inflation if the forecast horizon lies too far into the future. Second, the problem of indeterminacy is intrinsically more serious in the open economy. Third, the problem is compounded further in the open economy when central banks respond to expected consumer, rather than pro- ducer price inflation

Inflation forecast-based-rules and indeterminacy: a puzzle and a resolution

We examine an interesting puzzle in monetary economics between what monetary authorities claim (namely to be forward-looking and pre-emptive) and the poor stabilization properties routinely reported for forecast-based rules. Our resolution is that central banks should be viewed as following ‘Calvo-type’ inflation-forecast-based (IFB) interest rate rules which depend on a discounted sum of current and future rates of inflation. Such rules might be regarded as both within the legal frameworks, and potentially mimicking central bankers’ practice. We find that Calvo-type IFB interest rate rules are first: less prone to indeterminacy than standard rules with a finite forward horizon. Second, for such rules in difference form, the indeterminacy problem disappears altogether. Third, optimized forms have good stabilization properties as they become more forward-looking, a property that sharply contrasts that of standard IFB rules. Fourth, they appear data coherent when incorporated into a well-known estimated DSGE model of the Euro-area

Perinatal aspects on the covid-19 pandemic: a practical resource for perinatal-neonatal specialists.

BackgroundLittle is known about the perinatal aspects of COVID-19.ObjectiveTo summarize available evidence and provide perinatologists/neonatologists with tools for managing their patients.MethodsAnalysis of available literature on COVID-19 using Medline and Google scholar.ResultsFrom scant data: vertical transmission from maternal infection during the third trimester probably does not occur or likely it occurs very rarely. Consequences of COVID-19 infection among women during early pregnancy remain unknown. We cannot conclude if pregnancy is a risk factor for more severe disease in women with COVID-19. Little is known about disease severity in neonates, and from very few samples, the presence of SARS-CoV-2 has not been documented in human milk. Links to websites of organizations with updated COVID-19 information are provided. Infographics summarize an approach to the pregnant woman or neonate with suspected or confirmed COVID-19.ConclusionsAs the pandemic continues, more data will be available that could lead to changes in current knowledge and recommendations

Conformational Determinants of Phosphotyrosine Peptides Complexed with the Src SH2 Domain

The inhibition of specific SH2 domain mediated protein-protein interactions as an effective chemotherapeutic approach in the treatment of diseases remains a challenge. That different conformations of peptide-ligands are preferred by different SH2 domains is an underappreciated observation from the structural analysis of phosphotyrosine peptide binding to SH2 domains that may aid in future drug design. To explore the nature of ligand binding, we use simulated annealing (SA) to sample the conformational space of phosphotyrosine-containing peptides complexed with the Src SH2 domain. While in good agreement with the crystallographic and NMR studies of high-affinity phosphopeptide-SH2 domain complexes, the results suggest that the structural basis for phopsphopeptide- Src SH2 interactions is more complex than the “two-pronged plug two-hole socket” model. A systematic study of peptides of type pYEEX, where pY is phosphotyrosine and X is a hydrophobic residue, indicates that these peptides can assume two conformations, one extended and one helical, representing the balance between the interaction of residue X with the hydrophobic hole on the surface of the Src SH2 domain, and its contribution to the inherent tendency of the two glutamic acids to form an α-helix. In contrast, a β-turn conformation, almost identical to that observed in the crystal structure of pYVNV bound to the Grb2 SH2 domain, predominates for pYXNX peptides, even in the presence of isoleucine at the third position. While peptide binding affinities, as measured by fluorescence polarization, correlate with the relative proportion of extended peptide conformation, these results suggest a model where all three residues C-terminal to the phosphotyrosine determine the conformation of the bound phosphopeptide. The information obtained in this work can be used in the design of specific SH2 domain inhibitors