Optimal Monetary Policy with Asymmetric Targets

We investigate the derivation of optimal interest rate rules in a simple stochastic framework. The monetary authority chooses to minimise an asymmetric loss function made up of the sum of squared components, where the monetary authority places positive weight on squared negative (positive) deviations of output (inflation) and zero weight on squared positive (negative) deviations. Recent approaches to monetary policy under asymmetric preferences have emphasised the adoption of a linear exponential (linex) preference structure. This paper presents a new and different analytic methodology that is based on the explicit calculation of semi-variances. This approach can be used to derive precise coefficients of the optimal interest rate rules. We derive optimal interest rate rules based on two different informational assumptions. In the first case, which we call a fixed interest rate rule, the monetary authority knows only the structure of the economy and the variance of sectoral shocks so that interest rates must take a constant value. In the second case, which we call a flexible interest rate rule, the monetary also has access to additional information in that it can observe the contemporaneous inflation rate. In this second case, we restrict our analysis to the class of linear interest rate rules. The more standard approach in the literature derives optimal monetary policy rules using symmetric loss functions, where monetary policy is designed to minimise the sum of squared components. We also compare optimal interest rate rules under both symmetric and asymmetric loss functions.Monetary Economics; Interest Rate Rule; Inflation Target; Output Target; Asymmetric Loss Function; One-sided Target; Linex Preferences; Semi-Variance; Symmetric Loss Function.

Optimal Monetary Policy in an Open Economy

This paper analyzes the optimal intertemporal tradeoff between inflation and output in an open economy under perfect foresight. The announcement of the optimal plan may, or may not, generate an initial jump in the exchange rate. That depends upon the real adjustment costs, which such unanticipated changes impose on the economy. In the case that such jumps occur, the question of time consistency of the optimal policy arises. A time consistent solution is obtained provided: (i) the policy maker is not too myopic; (ii) the adjustment costs associated with the jump in the exchange rate are of an appropriate form. The optimal monetary rule is derived and properties of this rule, as well as the overall optimal adjustment of the economy are discussed.

Reverse-Shooting versus Forward-Shooting over a Range of Dimensionalities

This paper investigates the properties of dynamic solutions that have been derived using the well-known reverse-shooting and forwardshooting algorithms. Given an arbitrary large-scale model about which we have limited information, how successful are the algorithms likely to be in solving this model? We address this question using a range of investment models, both linear and non-linear. By extending the investment models to allow for multi-dimensional specifications of the capital stock, we are able to examine the computational efficiency of the competing algorithms as the dimensionality of the capital stock is allowed to increase. Our approach provides insights into how the complexity of the solutions to a broad range of macroeconomic models increases with the dimensionality of the models.Macroeconomics; Reverse-shooting; Forward-shooting; Saddlepath instability; Computational techniques; Investment models.

Solving Macroeconomic Models with "Off-the-Shelf" Software: An Example of Potential Pitfalls

When working with large-scale models or numerous small models, there can be a temptation to rely on default settings in proprietary software to derive solutions to the model. In this paper we show that, for the solution of non-linear dynamic models, this approach can be inappropriate. Alternative linear and non-linear specifications of a particular model are examined. One version of the model, expressed in levels, is highly non-linear. A second version of the model, expressed in logarithms, is linear. The dynamic solution of each model version has a combination of stable and unstable eigenvalues so that any dynamic solution requires the calculation of appropriate “jumps” in endogenous variables. We can derive a closed-form solution of the model, which we use as our "true" benchmark, for comparison with computational solutions of both linear and non-linear models. Our approach is to compare the "goodness of fit" of reverse-shooting solutions for both the linear and non-linear model, by comparing the computational solutions with the benchmark solution. Under the basic solution method with default settings, we show that there is significant difference between the computational solution for the non-linear model and the benchmark closed-form solution. We show that this result can be substantially improved using modifications to the solver and to parameter settings.Solving non-linear models, reverse-shooting, computational economics, computer software

REVERSE SHOOTING IN A MULTI-DIMENSIONAL SETTING

This paper investigates the properties of dynamic solutions that have been derived using the well-known reverse-shooting algorithm. Given an arbitrary large-scale model about which we have limited information, how successful is the algorithm likely to be in solving this model? We address this question using a range of investment models, both linear and non-linear. By extending the investment models to allow for multidimensional specifications of the capital stock, we are able to examine the computational efficiency of the reverse shooting algorithm as the dimensionality of the capital stock is allowed to increase. Our approach provides insights into how the complexity of the solutions to a broad range of macroeconomic models increases with the dimensionality of the models.Macroeconomics; Reverse shooting; Saddlepath instability; Computational techniques; Investment models

Unemployment, inflation and some relevant policy issues

This thesis is an attempt to consider in some detail a few of the important theoretical and policy issues associated with unemployment and inflation, using a fairly standard framework which many economists would accept as plausible. Part 1 is concerned with "The Role of Expectations and Deficit Financing." Here we introduce the rational expectations approach to economic modeling and also show how the short-run responses of endogenous variables can be calculated. We do this in conjunction with an examination of the stability properties associated with alternative forms of deficit financing. In Parts 2 and 3 of the thesis we use the techniques developed in Part 1 to examine some policy issues more closely. Frequently, a government policy maker may want to lower both inflation and unemployment in a manner which is as painless as possible. One solution to the policy maker's problem is presented in Part 2, entitled "Optimal Stabilization Policies Under Perfect Foresight." Here we formalize the policy maker's objective and discuss what policy instruments can be used to achieve that objective. We also spend some time discussing whether it is desirable for prices to jump and if this is the case what is the magnitude of the appropriate jump. Time consistency of the optimal solution is also considered. "Some Relevant Policy Issues" are discussed in Part 3. When unemployment becomes high, two issues that are frequently raised concern "easy" methods for lowering unemployment and ways of relieving the hardship of the unemployed. One method of lowering unemployment is by lowering the length of the standard working week and hence lowering the aggregate supply of labor. A way of making life more acceptable to those who are unemployed is by paying higher unemployment benefits to those without work. Both these "solutions" are examined in Part 3. An important part of this thesis is the way in which the issues mentioned above have been analysed within a consistent framework of models. This framework provides a common thread which, along with the common theme of the issues discussed, unifies the thesis into a coherent whole

Serum concentrations of the biomarkers CA125, CA15-3, PSA and PAPP-A in early pregnancy

Blood samples were collected serially from 14 women with healthy pregnancies, beginning in gestational week 4 at the time of a positive pregnancy test through to the identification of a foetal heart by ultrasound. Six biomarkers were measured in the serum retrospectively including two reproductive hormones (progesterone and human chorionic gonadotrophin (hCG)) and four additional biomarkers (prostate-specific antigen (PSA), cancer antigen 15-3 (CA15-3), cancer antigen 125 (CA125) and pregnancy-associated plasma protein A (PAPP-A)) measured on a Siemens Centaur XP and a Roche Cobas e411 automated analysers, respectively. The progesterone and hCG results were unremarkable following established patterns, but distinctive patterns of change were seen in the other four biomarkers during this period of early pregnancy. PAPP-A and PSA levels rose steadily as the pregnancies progressed, while CA125 levels rose until week 5.5 and then returned to baseline values. CA15-3 serum concentrations were observed to drop as the pregnancies progressed. These biomarker results suggest further investigation is warranted to allow a non-invasive correlation of the biomarkers with the various stages of embryogenesis, implantation and placentation

Serum concentrations of the biomarkers CA125, CA15-3, CA72-4, tPSA and PAPP-A in natural and stimulated ovarian cycles

Objective: Biomarkers associated with cancer screening (CA125, CA15-3, CA72-4, total prostate specific antigen [tPSA]) and the monitoring of pregnancy (pregnancy associated plasma protein-A [PAPP-A]) were measured during natural and stimulated ovarian cycles in disease-free non-pregnant women to determine if they could reflect normal events relating to ovulation and/or endometrial changes. Methods: A total of 73 blood samples (10 women) collected throughout the natural menstrual cycle, and 64 blood samples (11 women) taken during stimulated ovarian cycles, were analysed on the Roche Cobas e411 automated analyser. Results: Detectable levels of tPSA were measured in at least one point in the cycle in 6/10 of women in the natural cycle and 10/11 of women in stimulated cycles, and CA72-4 was detected in only 12/21 women tested. Concentrations of CA125, tPSA, CA15-3 and CA72-4 showed no significant difference between the natural and stimulated ovarian cycle groups. On average the mean PAPP-A of the natural group was (2.41±0.58) mIU/L higher than the stimulated group (t=4.10, P\u3c 0.001). CA125 and CA15-3 results were both significantly influenced by the stage of the cycle (P\u3c0.0001), whereas tPSA and PAPP-A concentrations revealed no significant changes (P≥0.65). CA72-4 was not affected by the stage of the cycle nor ovarian stimulation. Conclusion: Ovarian stimulation reduced serum PAPP-A levels, CA125 and CA15-3 levels were generally unaffected by ovarian stimulation but displayed cyclical changes throughout both natural and stimulated cycles, whilst tPSA and CA72-4 were not affected by the stage of the cycle or ovarian stimulation

Old stones' song: Use-wear experiments and analysis of the Oldowan quartz and quartzite assemblage from Kanjera South (Kenya)

Evidence of Oldowan tools by w2.6 million years ago (Ma) may signal a major adaptive shift in hominin evolution. While tool-dependent butchery of large mammals was important by at least 2.0 Ma, the use of artifacts for tasks other than faunal processing has been difficult to diagnose. Here we report on use-wear analysis ofw2.0 Ma quartz and quartzite artifacts from Kanjera South, Kenya. A use-wear framework that links processing of specific materials and tool motions to their resultant use-wear patterns was developed. A blind test was then carried out to assess and improve the efficacy of this experimental use-wear framework, which was then applied to the analysis of 62 Oldowan artifacts from Kanjera South. Usewear on a total of 23 artifact edges was attributed to the processing of specific materials. Use-wear on seven edges (30%) was attributed to animal tissue processing,corroborating zooarchaeological evidence for butchery at the site. Use-wear on 16 edges (70%)was attributed to the processing of plant tissues, including wood, grit-covered plant tissues that we interpret asunderground storage organs (USOs), and stems of grass or sedges. These results expand our knowledge of the suite of behaviours carried out in the vicinity of Kanjera South to include the processing of materials that would be ‘invisible’ using standard archaeological methods. Wood cutting and scraping may represent the production and/or maintenance of wooden tools. Use-wear related to USO processing extends the archaeological evidence for hominin acquisition and consumption of this resource by over 1.5 Ma. Cutting of grasses, sedges or reeds may be related to a subsistence task (e.g., grass seed harvesting, cutting out papyrus culm for consumption) and/or a non-subsistence related task (e.g., production of ‘twine,’ simple carrying devices, or bedding). These results highlight the adaptive significance of lithic technology for hominins at Kanjera

Structure–activity study of N-((trans)-4-(2-(7-cyano-3,4-dihydroisoquinolin-2(1H)-yl)ethyl)cyclohexyl)-1H-indole-2-carboxamide (SB269652), a bitopic ligand that acts as a negative allosteric modulator of the dopamine D2 receptor

We recently demonstrated that SB269652 (1) engages one protomer of a dopamine D2 receptor (D2R) dimer in a bitopic mode to allosterically inhibit the binding of dopamine at the other protomer. Herein, we investigate structural deter- minants for allostery, focusing on modifications to three moieties within 1. We find that orthosteric “head” groups with small 7-substituents were important to maintain the limited negative cooperativity of analogues of 1, and replacement of the tetrahydroisoquinoline head group with other D2R “privileged structures” generated orthosteric antagonists. Additionally, replacement of the cyclohexylene linker with polymethylene chains conferred linker length dependency in allosteric pharma- cology. We validated the importance of the indolic NH as a hydrogen bond donor moiety for maintaining allostery. Replacement of the indole ring with azaindole conferred a 30-fold increase in affinity while maintaining negative cooperativity. Combined, these results provide novel SAR insight for bitopic ligands that act as negative allosteric modulators of the D2R