The Macroeconomic Effects of Fiscal Policy in a Small Open Economy under a Flexible Exchange Rate Regime

This licentiate's thesis analyzes the macroeconomic effects of fiscal policy in a small open economy under a flexible exchange rate regime, assuming that the government spends exclusively on domestically produced goods. The motivation for this research comes from the observation that the literature on the new open economy macroeconomics (NOEM) has focused almost exclusively on two-country global models and the analyses of the effects of fiscal policy on small economies are almost completely ignored. This thesis aims at filling in the gap in the NOEM literature and illustrates how the macroeconomic effects of fiscal policy in a small open economy depend on the specification of preferences. The research method is to present two theoretical model that are extensions to the model contained in the Appendix to Obstfeld and Rogoff (1995). The first model analyzes the macroeconomic effects of fiscal policy, making use of a model that exploits the idea of modelling private and government consumption as substitutes in private utility. The model offers intuitive predictions on how the effects of fiscal policy depend on the marginal rate of substitution between private and government consumption. The findings illustrate that the higher the substitutability between private and government consumption, (i) the bigger is the crowding out effect on private consumption (ii) and the smaller is the positive effect on output. The welfare analysis shows that the less fiscal policy decreases welfare the higher is the marginal rate of substitution between private and government consumption. The second model of this thesis studies how the macroeconomic effects of fiscal policy depend on the elasticity of substitution between traded and nontraded goods. This model reveals that this elasticity a key variable to explain the exchange rate, current account and output response to a permanent rise in government spending. Finally, the model demonstrates that temporary changes in government spending are an effective stabilization tool when used wisely and timely in response to undesired fluctuations in output. Undesired fluctuations in output can be perfectly offset by an opposite change in government spending without causing any side-effects.

Flight metabolic rate in the Glanville fritillary butterfly

Dispersal is a highly important life history trait. In fragmented landscapes the long-term persistence of populations depends on dispersal. Evolution of dispersal is affected by costs and benefits and these may differ between different landscapes. This results in differences in the strength and direction of natural selection on dispersal in fragmented landscapes. Dispersal has been shown to be a nonrandom process that is associated with traits such as flight ability in insects. This thesis examines genetic and physiological traits affecting dispersal in the Glanville fritillary butterfly (Melitaea cinxia). Flight metabolic rate is a repeatable trait representing flight ability. Unlike in many vertebrates, resting metabolic rate cannot be used as a surrogate of maximum metabolic rate as no strong correlation between the two was found in the Glanville fritillary. Resting and flight metabolic rate are affected by environmental variables, most notably temperature. However, only flight metabolic rate has a strong genetic component. Molecular variation in the much-studied candidate locus phosphoglucose isomerase (Pgi), which encodes the glycolytic enzyme PGI, has an effect on carbohydrate metabolism in flight. This effect is temperature dependent: in low to moderate temperatures individuals with the heterozygous genotype at the single nucleotide polymorphism (SNP) AA111 have higher flight metabolic rate than the common homozygous genotype. At high temperatures the situation is reversed. This finding suggests that variation in enzyme properties is indeed translated to organismal performance. High-resolution data on individual female Glanville fritillaries moving freely in the field were recorded using harmonic radar. There was a strong positive correlation between flight metabolic rate and dispersal rate. Flight metabolic rate explained one third of the observed variation in the one-hour movement distance. A fine-scaled analysis of mobility showed that mobility peaked at intermediate ambient temperatures but the two common Pgi genotypes differed in their reaction norms to temperature. As with flight metabolic rate, heterozygotes at SNP AA111 were the most active genotype in low to moderate temperatures. The results show that molecular variation is associated with variation in dispersal rate through the link of flight physiology under the influence of environmental conditions. The evolutionary pressures for dispersal differ between males and females. The effect of flight metabolic rate on dispersal was examined in both sexes in field and laboratory conditions. The relationship between flight metabolic rate and dispersal rate in the field and flight duration in the laboratory were found to differ between the two sexes. In females the relationship was positive, but in males the longest distances and flight durations were recorded for individuals with low flight metabolic rate. These findings may reflect male investment in mate locating. Instead of dispersing, males with high flight metabolic rate may establish territories and follow a perching strategy when locating females and hence move less on the landscape level. Males with low metabolic rate may be forced to disperse due to low competitive success or may show adaptations to an alternative strategy: patrolling. In the light of life history trade-offs and the rate of living theory having high metabolic rate may carry a cost in the form of shortened lifespan. Experiments relating flight metabolic rate to longevity showed a clear correlation in the opposite direction: high flight metabolic rate was associated with long lifespan. This suggests that individuals with high metabolic rate do not pay an extra physiological cost for their high flight capacity, rather there are positive correlations between different measures of fitness. These results highlight the importance of condition.

Mutations as molecular tools : The metabolic-rate dependent molecular clock and DNA barcoding of allied species

Mutation and recombination are the fundamental processes leading to genetic variation in natural populations. This variation forms the raw material for evolution through natural selection and drift. Therefore, studying mutation rates may reveal information about evolutionary histories as well as phylogenetic interrelationships of organisms. In this thesis two molecular tools, DNA barcoding and the molecular clock were examined. In the first part, the efficiency of mutations to delineate closely related species was tested and the implications for conservation practices were assessed. The second part investigated the proposition that a constant mutation rate exists within invertebrates, in form of a metabolic-rate dependent molecular clock, which can be applied to accurately date speciation events. DNA barcoding aspires to be an efficient technique to not only distinguish between species but also reveal population-level variation solely relying on mutations found on a short stretch of a single gene. In this thesis barcoding was applied to discriminate between Hylochares populations from Russian Karelia and new Hylochares findings from the greater Helsinki region in Finland. Although barcoding failed to delineate the two reproductively isolated groups, their distinct morphological features and differing life-history traits led to their classification as two closely related, although separate species. The lack of genetic differentiation appears to be due to a recent divergence event not yet reflected in the beetles molecular make-up. Thus, the Russian Hylochares was described as a new species. The Finnish species, previously considered as locally extinct, was recognized as endangered. Even if, due to their identical genetic make-up, the populations had been regarded as conspecific, conservation strategies based on prior knowledge from Russia would not have guaranteed the survival of the Finnish beetle. Therefore, new conservation actions based on detailed studies of the biology and life-history of the Finnish Hylochares were conducted to protect this endemic rarity in Finland. The idea behind the strict molecular clock is that mutation rates are constant over evolutionary time and may thus be used to infer species divergence dates. However, one of the most recent theories argues that a strict clock does not tick per unit of time but that it has a constant substitution rate per unit of mass-specific metabolic energy. Therefore, according to this hypothesis, molecular clocks have to be recalibrated taking body size and temperature into account. This thesis tested the temperature effect on mutation rates in equally sized invertebrates. For the first dataset (family Eucnemidae, Coleoptera) the phylogenetic interrelationships and evolutionary history of the genus Arrhipis had to be inferred before the influence of temperature on substitution rates could be studied. Further, a second, larger invertebrate dataset (family Syrphidae, Diptera) was employed. Several methodological approaches, a number of genes and multiple molecular clock models revealed that there was no consistent relationship between temperature and mutation rate for the taxa under study. Thus, the body size effect, observed in vertebrates but controversial for invertebrates, rather than temperature may be the underlying driving force behind the metabolic-rate dependent molecular clock. Therefore, the metabolic-rate dependent molecular clock does not hold for the here studied invertebrate groups. This thesis emphasizes that molecular techniques relying on mutation rates have to be applied with caution. Whereas they may work satisfactorily under certain conditions for specific taxa, they may fail for others. The molecular clock as well as DNA barcoding should incorporate all the information and data available to obtain comprehensive estimations of the existing biodiversity and its evolutionary history.

Rate Control State-of-the-art Survey

The majority of Internet traffic use Transmission Control Protocol (TCP) as the transport level protocol. It provides a reliable ordered byte stream for the applications. However, applications such as live video streaming place an emphasis on timeliness over reliability. Also a smooth sending rate can be desirable over sharp changes in the sending rate. For these applications TCP is not necessarily suitable. Rate control attempts to address the demands of these applications. An important design feature in all rate control mechanisms is TCP friendliness. We should not negatively impact TCP performance since it is still the dominant protocol. Rate Control mechanisms are classified into two different mechanisms: window-based mechanisms and rate-based mechanisms. Window-based mechanisms increase their sending rate after a successful transfer of a window of packets similar to TCP. They typically decrease their sending rate sharply after a packet loss. Rate-based solutions control their sending rate in some other way. A large subset of rate-based solutions are called equation-based solutions. Equation-based solutions have a control equation which provides an allowed sending rate. Typically these rate-based solutions react slower to both packet losses and increases in available bandwidth making their sending rate smoother than that of window-based solutions. This report contains a survey of rate control mechanisms and a discussion of their relative strengths and weaknesses. A section is dedicated to a discussion on the enhancements in wireless environments. Another topic in the report is bandwidth estimation. Bandwidth estimation is divided into capacity estimation and available bandwidth estimation. We describe techniques that enable the calculation of a fair sending rate that can be used to create novel rate control mechanisms.