Do Households Have Rational Expectations on Future Consumption? Evidence from the Finnish Consumer Survey

Ever since its initial introduction some fifty years ago, the rational expectations paradigm has dominated the way economic theory handles uncertainty. The main assertion made by John F. Muth (1961), seen by many as the father of the paradigm, is that expectations of rational economic agents should essentially be equal to the predictions of relevant economic theory, since rational agents should use information available to them in an optimal way. This assumption often has important consequences on the results and interpretations of the models where it is applied. Although the rational expectations assumption can be applied to virtually any economic theory, the focus in this thesis is on macroeconomic theories of consumption, especially the Rational Expectations–Permanent Income Hypothesis proposed by Robert E. Hall in 1978. The much-debated theory suggests that, assuming that agents have rational expectations on their future income, consumption decisions should follow a random walk, and the best forecast of future consumption level is the current consumption level. Then, changes in consumption are unforecastable. This thesis constructs an empirical test for the Rational Expectations–Permanent Income Hypothesis using Finnish Consumer Survey data as well as various Finnish macroeconomic data. The data sample covers the years 1995–2010. Consumer survey data may be interpreted to directly represent household expectations, which makes it an interesting tool for this particular test. The variable to be predicted is the growth of total household consumption expenditure. The main empirical result is that the Consumer Confidence Index (CCI), a balance figure computed from the most important consumer survey responses, does have statistically significant predictive power over the change in total consumption expenditure. The history of consumption expenditure growth itself, however, fails to predict its own future values. This indicates that the CCI contains some information that the history of consumption decisions does not, and that the consumption decisions are not optimal in the theoretical context. However, when conditioned on various macroeconomic variables, the CCI loses its predictive ability. This finding suggests that the index is merely a (partial) summary of macroeconomic information, and does not contain any significant private information on consumption intentions of households not directly deductible from the objective economic variables. In conclusion, the Rational Expectations–Permanent Income Hypothesis is strongly rejected by the empirical results in this thesis. This result is in accordance with most earlier studies conducted on the topic.

Approximation of Internal Refractive Index Variation Improves Image Guided Diffuse Optical Tomography of Breast

Effective usage of image guidance by incorporating the refractive index (RI) variation in computational modeling of light propagation in tissue is investigated to assess its impact on optical-property estimation. With the aid of realistic patient breast three-dimensional models, the variation in RI for different regions of tissue under investigation is shown to influence the estimation of optical properties in image-guided diffuse optical tomography (IG-DOT) using numerical simulations. It is also shown that by assuming identical RI for all regions of tissue would lead to erroneous estimation of optical properties. The a priori knowledge of the RI for the segmented regions of tissue in IG-DOT, which is difficult to obtain for the in vivo cases, leads to more accurate estimates of optical properties. Even inclusion of approximated RI values, obtained from the literature, for the regions of tissue resulted in better estimates of optical properties, with values comparable to that of having the correct knowledge of RI for different regions of tissue.

High-precision diode-laser-based temperature measurement for air refractive index compensation

We present a laser-based system to measure the refractive index of air over a long path length. In optical distance measurements it is essential to know the refractive index of air with high accuracy. Commonly, the refractive index of air is calculated from the properties of the ambient air using either Ciddor or Edlén equations, where the dominant uncertainty component is in most cases the air temperature. The method developed in this work utilises direct absorption spectroscopy of oxygen to measure the average temperature of air and of water vapor to measure relative humidity. The method allows measurement of temperature and humidity over the same beam path as in optical distance measurement, providing spatially well matching data. Indoor and outdoor measurements demonstrate the effectiveness of the method. In particular, we demonstrate an effective compensation of the refractive index of air in an interferometric length measurement at a time-variant and spatially non-homogenous temperature over a long time period. Further, we were able to demonstrate 7 mK RMS noise over a 67 m path length using 120 s sample time. To our knowledge, this is the best temperature precision reported for a spectroscopic temperature measurement.

A reexamination of the permeability index of clays

The permeability index Ck, similar to the compression index, is the slope of the void ratio – coefficient of permeability relationship. Literature shows that, in general, for sensitive clays it can be related to initial void ratio by Ck = 0.5e0. The possibility of obtaining such a relationship for Cochin marine clays in terms of liquid limit void ratio is indicated in this paper. Analysis of permeability behaviour of Cochin marine clays and the test results available in published literature using generalized state parameter approach show that, in principle, these forms of equations for the permeability index are tenable, even though they were obtained based on experimental observation alone.

Tropical Clays .1. Index Properties And Microstructural Aspects

Soils showing changes in plasticity characteristics upon driving form an important group in tropical soils. These changes are attributed to the grouping of particles into aggregates either due to mineralogy or presence of cementing agents and/or pore fluid characteristics. These changes are found to be permanent. In this paper, the effect of these changes leading to changes in index properties is discussed. The coefficient of permeability has been found to be comparable at liquid limit water content for different soils of varying liquid limit values. Permeability is an indirect reflection of microstructure and indicates the flow rate, which depends upon pore geometry. Other mechanical properties like compressibility and shear strength also depend upon pore geometry. These microstructural aspects of liquid limit as a reference state for the analysis of engineering behavior of tropical soils are examined in detail.

Strength Symmetry Index: A measure of seizure adequacy in ECT

Seizure electroencephalography (EEG) was recorded from two channels-right (Rt) and left (Lt)-during bilateral electroconvulsive therapy (ECT) (n = 12) and unilateral ECT (n = 12). The EEG was also acquired into a microcomputer and was analyzed without knowledge of the clinical details. EEG recordings of both ECT procedures yielded seizures of comparable duration. The Strength Symmetry Index (SSI) was computed from the early- and midseizure phases using the fractal dimension of the EEG. The seizures of unilateral ECT were characterized by significantly smaller SSI in both phases. More unilateral than bilateral ECT seizures had a smaller than median SSI in both phases. The seizures also differed on other measures as reported in the literature. The findings indicate that SSI may be a potential measure of seizure adequacy that remains to be validated in future research.

Remote detection and distinction of ants using nest-site specific LISS-derived Normalised Difference Vegetation Index

This study in Western Ghats, India, investigates the relation between nesting sites of ants and a single remotely sensed variable: the Normalised Difference Vegetation Index (NDVI). We carried out sampling in 60 plots each measuring 30 x 30 m and recorded nest sites of 13 ant species. We found that NDVI values at the nesting sites varied considerably between individual species and also between the six functional groups the ants belong to. The functional groups Cryptic Species, Tropical Climate Specialists and Specialist Predators were present in regions with high NDVI whereas Hot Climate Specialists and Opportunists were found in sites with low NDVI. As expected we found that low NDVI values were associated with scrub jungles and high NDVI values with evergreen forests. Interestingly, we found that Pachycondyla rufipes, an ant species found only in deciduous and evergreen forests, established nests only in sites with low NDVI (range = 0.015 - 0.1779). Our results show that these low NDVI values in deciduous and evergreen forests correspond to canopy gaps in otherwise closed deciduous and evergreen forests. Subsequent fieldwork confirmed the observed high prevalence of P. rufipes in these NDVI-constrained areas. We discuss the value of using NDVI for the remote detection and distinction of ant nest sites.