A two-factor model of the U.K. yield curve

I model the forward premium in the U.K. gilt-edged market over the period 1982–96 using a two-factor general equilibrium model of the term structure of interest rates. The model permits the decomposition of the forward premium into separate components representing interest rate expectations, the risk premia associated with each of the underlying factors, and terms capturing the direct impact of the variances of the factors on the shape of the forward curve.

Biofuel subsidies and international trade

This paper explores optimal biofuel subsidies in a general equilibrium trade model. The focus is on the production of biofuels such as corn-based ethanol, which diverts corn from use as food. In the small-country case, when the tax on crude is not available as a policy option, a second-best biofuel subsidy may or may not be positive. In the large-country case, the twin objectives of pollution reduction and terms-of-trade improvement justify a combination of crude tax and biofuel subsidy for the food exporter. Finally, we show that when both nations engage in biofuel policies, the terms-of-trade effects encourage the Nash equilibrium subsidy to be positive (negative) for the food exporting (importing) nation. © 2013 John Wiley & Sons Ltd.

Why are aggregate equity payouts pro-cyclical?

We use two general equilibrium models to explain why changes in the external economic environment result in pro-cyclical aggregate dividend payout behavior. Both models that we consider endogenize low elasticity of investment. The first model incorporates capital adjustment costs, while the second one assumes that risk-averse managers maximize their own objective function rather than shareholder wealth. We show that, while both models generate pro-cyclical aggregate dividends, a feature consistent with the observed business-cycle pattern of payouts from well-diversified portfolios, the second model provides a more likely explanation for this effect. Our findings emphasize the importance of incorporating agency conflicts when considering the relationship between the external economic environment and the financial behavior of businesses.

Prediction of the equilibrium structures and photomagnetic properties of the Prussian blue analogue RbMn[Fe(CN)6] by density functional theory

A periodic density functional theory method using the B3LYP hybrid exchange-correlation potential is applied to the Prussian blue analogue RbMn[Fe(CN)6] to evaluate the suitability of the method for studying, and predicting, the photomagnetic behavior of Prussian blue analogues and related materials. The method allows correct description of the equilibrium structures of the different electronic configurations with regard to the cell parameters and bond distances. In agreement with the experimental data, the calculations have shown that the low-temperature phase (LT; Fe(2+)(t(6)2g, S = 0)-CN-Mn(3+)(t(3)2g e(1)g, S = 2)) is the stable phase at low temperature instead of the high-temperature phase (HT; Fe(3+)(t(5)2g, S = 1/2)-CN-Mn(2+)(t(3)2g e(2)g, S = 5/2)). Additionally, the method gives an estimation for the enthalpy difference (HT LT) with a value of 143 J mol(-1) K(-1). The comparison of our calculations with experimental data from the literature and from our calorimetric and X-ray photoelectron spectroscopy measurements on the Rb0.97Mn[Fe(CN)6]0.98 x 1.03 H2O compound is analyzed, and in general, a satisfactory agreement is obtained. The method also predicts the metastable nature of the electronic configuration of the high-temperature phase, a necessary condition to photoinduce that phase at low temperatures. It gives a photoactivation energy of 2.36 eV, which is in agreement with photoinduced demagnetization produced by a green laser.

Phase equilibrium studies at normal pressures

A total pressure apparatus has been developed to measure vapour-liquid equilibrium data on binary mixtures at atmospheric and sub-atmospheric pressures. The method gives isothermal data which can be obtained rapidly. Only measurements of total pressure are made as a direct function of composition of synthetic liquid phase composition, the vapour phase composition being deduced through the Gibbs-Duhem relationship. The need to analyse either of the phases is eliminated. As such the errors introduced by sampling and analysis are removed. The essential requirements are that the pure components be degassed completely since any deficiency in degassing would introduce errors into the measured pressures. A similarly essential requirement was that the central apparatus would have to be absolutely leak-tight as any leakage of air either in or out of the apparatus would introduce erroneous pressure readings. The apparatus was commissioned by measuring the saturated vapour pressures of both degassed water and ethanol as a function of temperature. The pressure-temperature data on degassed water measured were directly compared with data in the literature, with good agreement. Similarly the pressure-temperature data were measured for ethanol, methanol and cyclohexane and where possible a direct comparison made with the literature data. Good agreement between the pure component data of this work and those available in the literature demonstrates firstly that a satisfactory degassing procedure has been achieved and that secondly the measurements of pressure-temperature are consistent for any one component; since this is true for a number of components, the measurements of both temperature and pressure are both self-consistent and of sufficient accuracy, with an observed compatibility between the precision/accuracy of the separate means of measuring pressure and temperature. The liquid mixtures studied were of ethanol-water, methanol-water and ethanol-cyclohexane. The total pressure was measured as the composition inside the equilibrium cell was varied at a set temperature. This gave P-T-x data sets for each mixture at a range of temperatures. A standard fitting-package from the literature was used to reduce the raw data to yield y-values to complete the x-y-P-T data sets. A consistency test could not be applied to the P-T-x data set as no y-values were obtained during the experimental measurements. In general satisfactory agreement was found between the data of this work and those available in the literature. For some runs discrepancies were observed, and further work recommended to eliminate the problems identified.