Monetary policy rules and financial stress: does financial instability matter for monetary

We examine whether and how main central banks responded to episodes of financial stress over the last three decades. We employ a new methodology for monetary policy rules estimation, which allows for time-varying response coefficients as well as corrects for endogeneity. This flexible framework applied to the U.S., U.K., Australia, Canada and Sweden together with a new financial stress dataset developed by the International Monetary Fund allows not only testing whether the central banks responded to financial stress but also detects the periods and type of stress that were the most worrying for monetary authorities and to quantify the intensity of policy response. Our findings suggest that central banks often change policy

The curvature of the conical intersection seam: an approximate second-order analysis

We present a method for analyzing the curvature (second derivatives) of the conical intersection hyperline at an optimized critical point. Our method uses the projected Hessians of the degenerate states after elimination of the two branching space coordinates, and is equivalent to a frequency calculation on a single Born-Oppenheimer potential-energy surface. Based on the projected Hessians, we develop an equation for the energy as a function of a set of curvilinear coordinates where the degeneracy is preserved to second order (i.e., the conical intersection hyperline). The curvature of the potential-energy surface in these coordinates is the curvature of the conical intersection hyperline itself, and thus determines whether one has a minimum or saddle point on the hyperline. The equation used to classify optimized conical intersection points depends in a simple way on the first- and second-order degeneracy splittings calculated at these points. As an example, for fulvene, we show that the two optimized conical intersection points of C2v symmetry are saddle points on the intersection hyperline. Accordingly, there are further intersection points of lower energy, and one of C2 symmetry - presented here for the first time - is found to be the global minimum in the intersection space

Inflation, political instability and stockmarket volatility in interwar Germany

What determined the volatility of asset prices in Germany between thewars? This paper argues that the influence of political factors has beenoverstated. The majority of events increasing political uncertainty hadlittle or no effect on the value of German assets and the volatility ofreturns on them. Instead, it was inflation (and the fear of it) that islargely responsible for most of the variability in asset returns.

Nonlinear Saffman-Taylor instability

We show, both theoretically and experimentally, that the interface between two viscous fluids in a Hele-Shaw cell can be nonlinearly unstable before the Saffman-Taylor linear instability point is reached. We identify the family of exact elastica solutions [Nye et al., Eur. J. Phys. 5, 73 (1984)] as the unstable branch of the corresponding subcritical bifurcation which ends up at a topological singularity defined by interface pinchoff. We devise an experimental procedure to prepare arbitrary initial conditions in a Hele-Shaw cell. This is used to test the proposed bifurcation scenario and quantitatively asses its practical relevance.

Model for curvature-driven pearling instability in membranes

A phase-field model for dealing with dynamic instabilities in membranes is presented. We use it to study curvature-driven pearling instability in vesicles induced by the anchorage of amphiphilic polymers on the membrane. Within this model, we obtain the morphological changes reported in recent experiments. The formation of a homogeneous pearled structure is achieved by consequent pearling of an initial cylindrical tube from the tip. For high enough concentration of anchors, we show theoretically that the homogeneous pearled shape is energetically less favorable than an inhomogeneous one, with a large sphere connected to an array of smaller spheres.

Interfacial instability induced by external fluctuations

The dynamics of an interface separating the two coexistent phases of a binary system in the presence of external fluctuations in temperature is studied. An interfacial instability is obtained for an interface that would be stable in the absence of fluctuations or in the presence of internal fluctuations. Analytical stability analysis and numerical simulations are in accordance with an explanation of these effects in terms of a quenchlike instability induced by fluctuations.

Lateral instability in normal viscous fingers

We study a low-amplitude, long-wavelength lateral instability of the Saffman-Taylor finger by means of a phase-field model. We observe such an instability in two situations in which small dynamic perturbations are overimposed to a constant pressure drop. We first study the case in which the perturbation consists of a single oscillatory mode and then a case in which the perturbation consists of temporal noise. In both cases the instability undergoes a process of selection.

External fluctuations in a pattern-forming instability

The effect of external fluctuations on the formation of spatial patterns is analyzed by means of a stochastic Swift-Hohenberg model with multiplicative space-correlated noise. Numerical simulations in two dimensions show a shift of the bifurcation point controlled by the intensity of the multiplicative noise. This shift takes place in the ordering direction (i.e., produces patterns), but its magnitude decreases with that of the noise correlation length. Analytical arguments are presented to explain these facts.

Dynamics of sweeping through an instability: Passage-time statistics for colored noise

A calculation of passage-time statistics is reported for the laser switch-on problem, under the influence of colored noise, when the net gain is continuously swept from below to above threshold. Cases of fast and slow sweeping are considered. In the weak-noise limit, asymptotic results are given for small and large correlation times of the noise. The mean first passage time increases with the correlation time of the noise. This effect is more important for fast sweeping than for slow sweeping.

Growth and melting of the nematic phase: sample thickness dependence of the Mullins-Sekerka instability

In this article we report our systematic studies of the dependence on the sample thickness of the onset parameters of the instability of the nematic-isotropic interface during directional growth and melting, in homeotropic or planar anchoring.

A subcritical instability of wave-driven alongshore currents

The development of shear instabilities of a wave-driven alongshore current is investigated. In particular, we use weakly nonlinear theory to investigate the possibility that such instabilities, which have been observed at various sites on the U.S. coast and in the laboratory, can grow in linearly stable flows as a subcritical bifurcation by resonant triad interaction, as first suggested by Shrira eta/. [1997]. We examine a realistic longshore current profile and include the effects of eddy viscosity and bottom friction. We show that according to the weakly nonlinear theory, resonance is possible and that these linearly stable flows may exhibit explosive instabilities. We show that this phenomenon may occur also when there is only approximate resonance, which is more likely in nature. Furthermore, the size of the perturbation that is required to trigger the instability is shown in some circumstances to be consistent with the size of naturally occurring perturbations. Finally, we consider the differences between the present case examined and the more idealized case of Shrira et a/. [ 1997]. It is shown that there is a possibility of coupling between triads, due to the richer modal structure in more realistic flows, which may act to stabilize the flow and act against the development of subcritical bifurcations. Extensive numerical tests are called for.

Full instability behavior of N-dimensional dynamical systems with a one-directional nonlinear vector field

We show how certain N-dimensional dynamical systems are able to exploit the full instability capabilities of their fixed points to do Hopf bifurcations and how such a behavior produces complex time evolutions based on the nonlinear combination of the oscillation modes that emerged from these bifurcations. For really different oscillation frequencies, the evolutions describe robust wave form structures, usually periodic, in which selfsimilarity with respect to both the time scale and system dimension is clearly appreciated. For closer frequencies, the evolution signals usually appear irregular but are still based on the repetition of complex wave form structures. The study is developed by considering vector fields with a scalar-valued nonlinear function of a single variable that is a linear combination of the N dynamical variables. In this case, the linear stability analysis can be used to design N-dimensional systems in which the fixed points of a saddle-node pair experience up to N21 Hopf bifurcations with preselected oscillation frequencies. The secondary processes occurring in the phase region where the variety of limit cycles appear may be rather complex and difficult to characterize, but they produce the nonlinear mixing of oscillation modes with relatively generic features

Firm Size and Short-Term Dynamics in Aggregate Entry and Exit

Much of the research on industry dynamics focuses on the interdependence between the sectorial rates of entry and exit. This paper argues that the size of firms and the reaction-adjustment period are important conditions missed in this literature. I illustrate the effects of this omission using data from the Spanish manufacturing industries between 1994 and 2001. Estimates from systems of equations models provide evidence of a conical revolving door phenomenon and of partial adjustments in the replacement-displacement of large firms. KEYWORDS: aggregation, industry dynamics, panel data, symmetry, simultaneity. JEL CLASSIFICATION: C33, C52, L60, L11

Chaotic dynamics in credit constrained emerging economies

This paper analyzes the role of financial development as a source of endogenous instability in small open economies. By assuming that firms face credit constraints, our model displays a complex dynamic behavior for intermediate values of the parameter representing the level of financial development of the economy. The basic implication of our model is that economies experiencing a process of financial development are more unstable than both very underdeveloped and very developed economies. Our instability concept means that small shocks have a persistent effect on the long run behavior of the model and also that economies can exhibit cycles with a very high period or even chaotic dynamic patterns.

Some things couples always wanted to know about stable matchings (but were afraid to ask)

It is well-known that couples that look jointly for jobs in the same centralized labor market may cause instabilities. We demonstrate that for a natural preference domain for couples, namely the domain of responsive preferences, the existence of stable matchings can easily be established. However, a small deviation from responsiveness in one couple's preference relation that models the wish of a couple to be closer together may already cause instability. This demonstrates that the nonexistence of stable matchings in couples markets is not a singular theoretical irregularity. Our nonexistence result persists even when a weaker stability notion is used that excludes myopic blocking. Moreover, we show that even if preferences are responsive there are problems that do not arise for singles markets. Even though for couples markets with responsive preferences the set of stable matchings is nonempty, the lattice structure that this set has for singles markets does not carry over. Furthermore we demonstrate that the new algorithm adopted by the National Resident Matching Program to fill positions for physicians in the United States may cycle, while in fact a stable matchings does exist, and be prone to strategic manipulation if the members of a couple pretend to be single.