Essays in open economy macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. ^ The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. ^ The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. ^ The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend. ^

Lattice Boltzmann method for flow and heat transfer in microgeometries

Recent technological developments have made it possible to design various microdevices where fluid flow and heat transfer are involved. For the proper design of such systems, the governing physics needs to be investigated. Due to the difficulty to study complex geometries in micro scales using experimental techniques, computational tools are developed to analyze and simulate flow and heat transfer in microgeometries. However, conventional numerical methods using the Navier-Stokes equations fail to predict some aspects of microflows such as nonlinear pressure distribution, increase mass flow rate, slip flow and temperature jump at the solid boundaries. This necessitates the development of new computational methods which depend on the kinetic theory that are both accurate and computationally efficient. In this study, lattice Boltzmann method (LBM) was used to investigate the flow and heat transfer in micro sized geometries. The LBM depends on the Boltzmann equation which is valid in the whole rarefaction regime that can be observed in micro flows. Results were obtained for isothermal channel flows at Knudsen numbers higher than 0.01 at different pressure ratios. LBM solutions for micro-Couette and micro-Poiseuille flow were found to be in good agreement with the analytical solutions valid in the slip flow regime (0.01 < Kn < 0.1) and direct simulation Monte Carlo solutions that are valid in the transition regime (0.1 < Kn < 10) for pressure distribution and velocity field. The isothermal LBM was further extended to simulate flows including heat transfer. The method was first validated for continuum channel flows with and without constrictions by comparing the thermal LBM results against accurate solutions obtained from analytical equations and finite element method. Finally, the capability of thermal LBM was improved by adding the effect of rarefaction and the method was used to analyze the behavior of gas flow in microchannels. The major finding of this research is that, the newly developed particle-based method described here can be used as an alternative numerical tool in order to study non-continuum effects observed in micro-electro-mechanical-systems (MEMS).

An agent-based model of team coordination and performance

This research is based on the premises that teams can be designed to optimize its performance, and appropriate team coordination is a significant factor to team outcome performance. Contingency theory argues that the effectiveness of a team depends on the right fit of the team design factors to the particular job at hand. Therefore, organizations need computational tools capable of predict the performance of different configurations of teams. This research created an agent-based model of teams called the Team Coordination Model (TCM). The TCM estimates the coordination load and performance of a team, based on its composition, coordination mechanisms, and job’s structural characteristics. The TCM can be used to determine the team’s design characteristics that most likely lead the team to achieve optimal performance. The TCM is implemented as an agent-based discrete-event simulation application built using JAVA and Cybele Pro agent architecture. The model implements the effect of individual team design factors on team processes, but the resulting performance emerges from the behavior of the agents. These team member agents use decision making, and explicit and implicit mechanisms to coordinate the job. The model validation included the comparison of the TCM’s results with statistics from a real team and with the results predicted by the team performance literature. An illustrative 26-1 fractional factorial experimental design demonstrates the application of the simulation model to the design of a team. The results from the ANOVA analysis have been used to recommend the combination of levels of the experimental factors that optimize the completion time for a team that runs sailboats races. This research main contribution to the team modeling literature is a model capable of simulating teams working on complex job environments. The TCM implements a stochastic job structure model capable of capturing some of the complexity not capture by current models. In a stochastic job structure, the tasks required to complete the job change during the team execution of the job. This research proposed three new types of dependencies between tasks required to model a job as a stochastic structure. These dependencies are conditional sequential, single-conditional sequential, and the merge dependencies.

Essays in Open Economy Macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend.

Lattice Boltzmann Method for Flow and Heat Transfer in Microgeometries

Recent technological developments have made it possible to design various microdevices where fluid flow and heat transfer are involved. For the proper design of such systems, the governing physics needs to be investigated. Due to the difficulty to study complex geometries in micro scales using experimental techniques, computational tools are developed to analyze and simulate flow and heat transfer in microgeometries. However, conventional numerical methods using the Navier-Stokes equations fail to predict some aspects of microflows such as nonlinear pressure distribution, increase mass flow rate, slip flow and temperature jump at the solid boundaries. This necessitates the development of new computational methods which depend on the kinetic theory that are both accurate and computationally efficient. In this study, lattice Boltzmann method (LBM) was used to investigate the flow and heat transfer in micro sized geometries. The LBM depends on the Boltzmann equation which is valid in the whole rarefaction regime that can be observed in micro flows. Results were obtained for isothermal channel flows at Knudsen numbers higher than 0.01 at different pressure ratios. LBM solutions for micro-Couette and micro-Poiseuille flow were found to be in good agreement with the analytical solutions valid in the slip flow regime (0.01 < Kn < 0.1) and direct simulation Monte Carlo solutions that are valid in the transition regime (0.1 < Kn < 10) for pressure distribution and velocity field. The isothermal LBM was further extended to simulate flows including heat transfer. The method was first validated for continuum channel flows with and without constrictions by comparing the thermal LBM results against accurate solutions obtained from analytical equations and finite element method. Finally, the capability of thermal LBM was improved by adding the effect of rarefaction and the method was used to analyze the behavior of gas flow in microchannels. The major finding of this research is that, the newly developed particle-based method described here can be used as an alternative numerical tool in order to study non-continuum effects observed in micro-electro-mechanical-systems (MEMS).

Computational evaluation of wind loads on low- and highrise buildings

Buildings and other infrastructures located in the coastal regions of the US have a higher level of wind vulnerability. Reducing the increasing property losses and causalities associated with severe windstorms has been the central research focus of the wind engineering community. The present wind engineering toolbox consists of building codes and standards, laboratory experiments, and field measurements. The American Society of Civil Engineers (ASCE) 7 standard provides wind loads only for buildings with common shapes. For complex cases it refers to physical modeling. Although this option can be economically viable for large projects, it is not cost-effective for low-rise residential houses. To circumvent these limitations, a numerical approach based on the techniques of Computational Fluid Dynamics (CFD) has been developed. The recent advance in computing technology and significant developments in turbulence modeling is making numerical evaluation of wind effects a more affordable approach. The present study targeted those cases that are not addressed by the standards. These include wind loads on complex roofs for low-rise buildings, aerodynamics of tall buildings, and effects of complex surrounding buildings. Among all the turbulence models investigated, the large eddy simulation (LES) model performed the best in predicting wind loads. The application of a spatially evolving time-dependent wind velocity field with the relevant turbulence structures at the inlet boundaries was found to be essential. All the results were compared and validated with experimental data. The study also revealed CFD's unique flow visualization and aerodynamic data generation capabilities along with a better understanding of the complex three-dimensional aerodynamics of wind-structure interactions. With the proper modeling that realistically represents the actual turbulent atmospheric boundary layer flow, CFD can offer an economical alternative to the existing wind engineering tools. CFD's easy accessibility is expected to transform the practice of structural design for wind, resulting in more wind-resilient and sustainable systems by encouraging optimal aerodynamic and sustainable structural/building design. Thus, this method will help ensure public safety and reduce economic losses due to wind perils.

Computational Evaluation of Wind Loads on Low- and High- Rise Buildings

Buildings and other infrastructures located in the coastal regions of the US have a higher level of wind vulnerability. Reducing the increasing property losses and causalities associated with severe windstorms has been the central research focus of the wind engineering community. The present wind engineering toolbox consists of building codes and standards, laboratory experiments, and field measurements. The American Society of Civil Engineers (ASCE) 7 standard provides wind loads only for buildings with common shapes. For complex cases it refers to physical modeling. Although this option can be economically viable for large projects, it is not cost-effective for low-rise residential houses. To circumvent these limitations, a numerical approach based on the techniques of Computational Fluid Dynamics (CFD) has been developed. The recent advance in computing technology and significant developments in turbulence modeling is making numerical evaluation of wind effects a more affordable approach. The present study targeted those cases that are not addressed by the standards. These include wind loads on complex roofs for low-rise buildings, aerodynamics of tall buildings, and effects of complex surrounding buildings. Among all the turbulence models investigated, the large eddy simulation (LES) model performed the best in predicting wind loads. The application of a spatially evolving time-dependent wind velocity field with the relevant turbulence structures at the inlet boundaries was found to be essential. All the results were compared and validated with experimental data. The study also revealed CFD’s unique flow visualization and aerodynamic data generation capabilities along with a better understanding of the complex three-dimensional aerodynamics of wind-structure interactions. With the proper modeling that realistically represents the actual turbulent atmospheric boundary layer flow, CFD can offer an economical alternative to the existing wind engineering tools. CFD’s easy accessibility is expected to transform the practice of structural design for wind, resulting in more wind-resilient and sustainable systems by encouraging optimal aerodynamic and sustainable structural/building design. Thus, this method will help ensure public safety and reduce economic losses due to wind perils.