Banking and Currency Crises: How Common Are Twins?

The coincidence of banking and currency crises associated with the Asian financial crisis has drawn renewed attention to causal and common factors linking the two phenomena. In this paper, we analyze the incidence and underlying causes of banking and currency crises in 90 industrial and developing countries over the 1975-97 period. We measure the individual and joint ("twin") occurrence of bank and currency crises and assess the extent to which each type of crisis provides information about the likelihood of the other. We find that the twin crisis phenomenon is most common in financially liberalized emerging markets. The strong contemporaneous correlation between currency and bank crises in emerging markets is robust, even after controlling for a host of macroeconomic and financial structure variables and possible simultaneity bias. We also find that the occurrence of banking crises provides a good leading indicator of currency crises in emerging markets. The converse does not hold, however, as currency crises are not a useful leading indicator of the onset of future banking crises. We conjecture that the openness of emerging markets to international capital flows, combined with a liberalized financial structure, make them particularly vulnerable to twin crises.

Collateral Damage: Trade Disruption and the Economic Impact of War

Conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity, especially international trade. Yet nothing is known empirically about these effects in large samples. We study the effects of war on bilateral trade for almost all countries with available data extending back to 1870. Using the gravity model, we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals, controlling for other determinants of trade. We find large and persistent impacts of wars on trade, and hence on national and global economic welfare. A rough accounting indicates that such costs might be of the same order of magnitude as the """"direct"""" costs of war, such as lost human capital, as illustrated by case studies of World War I and World War II.trade

Collateral Damage: Trade Disruption and the Economic Impact of War

Conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity, especially international trade. We study the effects of war on bilateral trade with available data extending back to 1870. Using the gravity model, we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals, controlling for other determinants of trade as well as the possible effects of reverse causality. We find large and persistent impacts of wars on trade, on national income, and on global economic welfare. We also conduct a general equilibrium comparative statics exercise that indicates costs associated with lost trade might be at least as large as the conventionally measured "direct" costs of war, such as lost human capital, as illustrated by case studies of World War I and World War II.

Productivity, Tradability, and the Long-Run Price Puzzle

Long-run cross-country price data exhibit a puzzle. Today, richer countries exhibit higher price levels than poorer countries, a stylized fact usually attributed to the Balassa- Samuelson effect. But looking back fifty years, this effect virtually disappears from the data. What is often assumed to be a universal property is actually quite specific to recent times, emerging a half century ago and growing steadily over time. What might potentially explain this historical pattern? We develop an updated Balassa-Samuelson model inspired by recent developments in trade theory, where a continuum of goods are differentiated by productivity, and where tradability is endogenously determined. Firms experiencing productivity gains are more likely to become tradable and crowd out firms not experiencing productivity gains. As a result the usual Balassa-Samuelson assumption—that productivity gains be concentrated in the traded goods sector—emerges endogenously, and the Balassa-Samuelson effect on relative price levels likewise evolves gradually over time.Balassa-Samuelson theory,

Investigation of Intergroup Bias in Two Neuromaturationally Distinct Age Cohorts: An ERP Study

Currently, sociological investigation of adolescent behavior focuses on the intersection of biography, history, and structure to explain adolescent risk-taking, reward-seeking, impulsivity, novelty-seeking and peer-salience. However, the preponderance of the evidence points away from social ecology and to a significant neuromaturational restructuring event between the 12th and 25th years of life as the root of adolescent behavioral tendencies. As a result, sociological social psychology can benefit from engaging in basic research using neuroscience methods. The present study expands the dual systems model of brain development to account for maturational changes in the social brain network as a way to explain social cognitive differences between adolescents and adults specific to intergroup processing. Central questions driving this research are: why are adolescents disproportionately involved with ultra-tribalistic coalitions and why do they engage in higher rates of coalitional violence than at any other time period in the lifespan? Current social and behavioral evidence suggests that adolescents think about their social worlds very differently than do adults. However, traditional self-report methods and functional magnetic resonance imaging are unable to access early neural responses to intergroup stimuli that are largely unavailable to introspection and require techniques that offer high temporal resolution such as electroencephalography and the event related potential technique. To address these methodological concerns, the present study used notional groups based upon subjects’ political orientation and a complex memory and evaluation task to assess differences in adolescent (18 – 19 yr) and adult (30 – 35 yr) processing of ingroup versus outgroup stimuli on congruent and incongruent trials (5,000 milliseconds [ms]). The 2x2x2x3 design investigated the within-subjects variables of group (ingroup & outgroup), congruency (congruent & incongruent), and electrode (Fz,Cz,Pz) on the P2 and N2 ERP component amplitude. The study had two hypotheses: 1) that an age-mediated activation pattern would be discernable and 2) that N2 amplitude would be higher for adolescent ingroup members versus adult ingroup members due to increased emotional sensitivity to group membership. Neither hypothesis was supported due to statistical constraints arising from group size disparities, however, many interesting additional results were observed. These included different activation patterns predicted by social brain network maturation, as well as, different motivational drivers for adults versus adolescents

Formation of molecules from a Cs Bose-Einstein condensate

Conversion of an expanding Bose-Einstein condensate of Cs atoms to a molecular one with an efficiency of more than 30% was observed recently in experiments by M. Mark et al., Europhys. Lett. 69, 706 (2005). The theory presented here describes the experimental results. Values of resonance strength of 8 mG and rate coefficients for atom-molecule deactivation of $1\times 10^{-11}$ cm$^{3}/$s and molecule-molecule one of $1.5\times 10^{-9}$ cm$^{3}/$s are estimated by a fit of the theoretical results to the experimental data. Near the resonance, where the highest conversion efficiency was observed, the results demonstrate strong sensitivity to the magnetic field ripple and inhomogeneity. A conversion efficiency of about 60% is predicted by non-mean-field calculations for the densities and sweep rates lower than the ones used in the experiments.Comment: 9 pages, 10 figure

Distributed Approximation of Maximum Independent Set and Maximum Matching

We present a simple distributed $\Delta$-approximation algorithm for maximum weight independent set (MaxIS) in the $\mathsf{CONGEST}$ model which completes in $O(\texttt{MIS}(G)\cdot \log W)$ rounds, where $\Delta$ is the maximum degree, $\texttt{MIS}(G)$ is the number of rounds needed to compute a maximal independent set (MIS) on $G$, and $W$ is the maximum weight of a node. %Whether our algorithm is randomized or deterministic depends on the \texttt{MIS} algorithm used as a black-box. Plugging in the best known algorithm for MIS gives a randomized solution in $O(\log n \log W)$ rounds, where $n$ is the number of nodes. We also present a deterministic $O(\Delta +\log^* n)$-round algorithm based on coloring. We then show how to use our MaxIS approximation algorithms to compute a $2$-approximation for maximum weight matching without incurring any additional round penalty in the $\mathsf{CONGEST}$ model. We use a known reduction for simulating algorithms on the line graph while incurring congestion, but we show our algorithm is part of a broad family of \emph{local aggregation algorithms} for which we describe a mechanism that allows the simulation to run in the $\mathsf{CONGEST}$ model without an additional overhead. Next, we show that for maximum weight matching, relaxing the approximation factor to ($2+\varepsilon$) allows us to devise a distributed algorithm requiring $O(\frac{\log \Delta}{\log\log\Delta})$ rounds for any constant $\varepsilon>0$. For the unweighted case, we can even obtain a $(1+\varepsilon)$-approximation in this number of rounds. These algorithms are the first to achieve the provably optimal round complexity with respect to dependency on $\Delta$

Combating Global Climate Change: Why a Carbon Tax is a Better Response to Global Warming than Cap and Trade

Global climate change is the most significant environmental issue facing our nation and the world. There no longer is any question that global warming is occurring. Nor is there any serious debate about whether human activity is the root cause. If we fail to make significant reductions in greenhouse gas emissions over the next ten to twenty years, we face the possibility of catastrophic environmental harm by the end of this century.http://deepblue.lib.umich.edu/bitstream/2027.42/107456/1/28StanEnvtlLJ3.pd

Constitutional Review of Federal Tax Legislation

What does the Constitution mean when it says that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States” (US Const. Article I, Section 8, Clause 1)? The definition of “tax” for constitutional purposes has become important in light of the Supreme Court’s 2012 decision in NFIB v. Sebelius, in which Chief Justice Roberts for the Court upheld the constitutionality of the individual mandate of the Affordable Care Act under the taxing power. This has led to commentators questioning the utility of Roberts’ distinction between a “tax” (where Congress’ power is almost unlimited) and a “regulation” (where Congress’ power under the Commerce Cause is limited). We should make a very clear note at the outset: Tax law is a too broad term. It includes both provisions intended at raising revenue and provisions intended to regulate behavior. Personal income tax (PIT), corporate income tax (CIT) and even value added tax (VAT) laws include both type of provisions. Using the distinction that Prof. Stanley Surrey has proposed about 60 years ago, tax legislation includes both types of provisions; those that aimed at raising revenue in accordance with the tax base, and regulatory provisions as well ( tax expenditures ). In other words, almost any tax legislation includes both aspects. Hence referring to PIT means its base, and not necessarily all its code provisions. The purpose of this article is to draw this distinction and to use it for basic guidelines for constitutional judicial review over tax legislation. We would propose a different distinction. A “tax” for purposes of the Taxing Clause is a pure tax, namely a tax implemented “to pay the Debts and provide for the common Defence and general Welfare of the United States”, i.e., a tax intended primarily to raise revenues in order to finance the elected government’s policy and its implementation. In addition, a progressive “income tax” for purposes of the Sixteenth Amendment is a tax intended for redistribution of wealth from the rich to the poor. We do not address redistributive tax provisions (like the progressivity feature of PIT or a wealth tax) further, beyond noting that they are inherently political and therefore their distributive function (reducing inequality) should not be subject to judicial review. Even a pure tax has constitutional limits, but they are relatively few. It should be emphasized though, that the traditional basses for constitutional judicial review - such as discrimination on the basis of gender, race, or sexual orientation, are applied to tax legislation in a very limited way. As noted already, one could detect the Supreme Court’s significant reluctance to review tax legislation in the US on constitutional grounds, although one could also argue that a tax provision that has disparate impact on racial or gender grounds (or other protected category) should be evaluated using struct scrutiny (as some provisions involving gender have in fact been evaluated by lower courts). This should be distinguished from a regulatory tax legislation, i.e., tax legislation whose main purpose is not to raise revenue but to change taxpayer behavior. Regulatory taxes include Pigouvian taxes (e.g., tobacco taxes and carbon taxes) designed to reduce negative externalities and tax expenditures (deviations from a normative tax base, which we name negative Pigouvian taxes, since their purpose is to treat favorably taxpayers who create positive externalities). Regulatory Tax legislation should be subject to constitutional review under various clauses of the Constitution including the Due Process Clause, the Equal Protection Clause, the Establishment Clause, and the limits on the Commerce Clause. The penalty imposed by the individual mandate of the ACA, which was repealed in 2017, was a regulatory tax (i.e., not a pure tax) and therefore (contrary to Chief Justice Roberts’ view) subject to the limits on Congressional power under the Commerce Clause (although in our opinion the individual mandate should have been upheld as consistent with these limits, per Justice Ginsburg’s dissenting opinion). Any actual tax rule/legislation has more than one purpose. All tax rules influence behavior, and therefore come within our definition of regulatory taxes, and all taxes produce some revenue, and therefore come within our definition of pure taxes. But some taxes are primarily regulatory (e.g., Pigouvian taxes aimed to deal with negative externalities) and tax expenditures (deviation from a normative tax base which we name them Negative piguvian taxes since their purpose is to treat favorably taxpayers who create positive externalities) while others are primarily for revenue (e.g., VAT) . Other taxes have multiple purposes (e.g., corporate income tax, CIT, which has revenue and (as well as regulatory aims). Moreover, any given tax may have multiple provisions with different aims (e.g., the many tax expenditures embedded within PIT and CIT). When evaluating the constitutionality of any given tax provision, a court should first classify it as either a pure tax provision or a regulatory tax provision. If it is the former, the court should generally hold that it is constitutional under the Taxing Clause. If it is the latter, the court should evaluate it against the limits imposed by the rest of the Constitution

Efficient Immunization Strategies for Computer Networks and Populations

We present an effective immunization strategy for computer networks and populations with broad and, in particular, scale-free degree distributions. The proposed strategy, acquaintance immunization, calls for the immunization of random acquaintances of random nodes (individuals). The strategy requires no knowledge of the node degrees or any other global knowledge, as do targeted immunization strategies. We study analytically the critical threshold for complete immunization. We also study the strategy with respect to the susceptible-infected-removed epidemiological model. We show that the immunization threshold is dramatically reduced with the suggested strategy, for all studied cases.Comment: Revtex, 5 pages, 4 ps fig