Simple and robust rules for monetary policy

This paper focuses on simple normative rules for monetary policy which central banks can use to guide their interest rate decisions. Such rules were first derived from research on empirical monetary models with rational expectations and sticky prices built in the 1970s and 1980s. During the past two decades substantial progress has been made in establishing that such rules are robust. They perform well with a variety of newer and more rigorous models and policy evaluation methods. Simple rules are also frequently more robust than fully optimal rules. Important progress has also been made in understanding how to adjust simple rules to deal with measurement error and expectations. Moreover, historical experience has shown that simple rules can work well in the real world in that macroeconomic performance has been better when central bank decisions were described by such rules. The recent financial crisis has not changed these conclusions, but it has stimulated important research on how policy rules should deal with asset bubbles and the zero bound on interest rates. Going forward the crisis has drawn attention to the importance of research on international monetary issues and on the implications of discretionary deviations from policy rules.Monetary policy

Measuring the Effects of Artificial Viscosity in SPH Simulations of Rotating Fluid Flows

A commonly cited drawback of SPH is the introduction of spurious shear viscosity by the artificial viscosity term in situations involving rotation. Existing approaches for quantifying its effect include approximate analytic formulae and disc-averaged be- haviour in specific ring-spreading simulations, based on the kinematic effects produced by the artificial viscosity. These methods have disadvantages, in that they typically are applicable to a very small range of physical scenarios, have a large number of simplifying assumptions, and often are tied to specific SPH formulations which do not include corrective (e.g., Balsara) or time-dependent viscosity terms. In this study we have developed a simple, generally applicable and practical technique for evaluating the local effect of artificial viscosity directly from the creation of specific entropy for each SPH particle. This local approach is simple and quick to implement, and it al- lows a detailed characterization of viscous effects as a function of position. Several advantages of this method are discussed, including its ease in evaluation, its greater accuracy and its broad applicability. In order to compare this new method with ex- isting ones, simple disc flow examples are used. Even in these basic cases, the very roughly approximate nature of the previous methods is shown. Our local method pro- vides a detailed description of the effects of the artificial viscosity throughout the disc, even for extended examples which implement Balsara corrections. As a further use of this approach, explicit dependencies of the effective viscosity in terms of SPH and flow parameters are estimated from the example cases. In an appendix, a method for the initial placement of SPH particles is discussed which is very effective in reducing numerical fluctuations.Comment: 15 pages, 9 figures, resubmitted to MNRA

Using Meta Analysis for Benefits Transfer: Theory and Practice

Meta-analysis, or the "study of studies", attempts to statistically measure systematic relationships between reported valuation estimates for an environmental good or service and attributes of the study that generated the estimates including valuation methods, human population and sample characteristics, and characteristics of the good or service itself. In this paper, we discuss the general theory behind and practice of the emerging use of meta-analysis for benefits transfer. If carefully conducted following systematic protocols for model development, data collection, and data analysis and interpretation, we believe that meta-analysis may prove to be a useful tool for benefits transfer in particular applications. However, before widespread application of this method, more convergent validity tests are needed. One of the greatest strengths of using meta-analysis for benefits transfer is the ability to combine and summarize large amounts of information from previous studies. This strength can also lead to one of the greatest weaknesses of this method which is the loss of important valuation details across time and space in the aggregation process. Thus, application of this method to policy questions and issues should always proceed with caution.