Stabilization, volatility and the equilibrium real exchange rate

In a general equilibrium model. we show that the value of the equilibrium real exchange rate is affected by its own volatility. Risk averse exporters. that make their exporting decision before observing the realization of the real exchange rate. choose to export less the more volatile is the real exchange rate. Therefore the trude balance and the variance of the real exchange rate are negatively related. An increase in the volatility of the real exchange rate for instance deteriorates the trade balance and to restore equilibrium a real exchange rate depreciation has to take place. In the empirical part of the paper we use the traditional (unconditional) standard deviation of RER changes as our measure of RER volatility.We describe the behavior of the RER volatility for Brazil,Argentina and Mexico.Monthly data for the three countries are used. and also daily data for Bruzil. Interesting patterns of volatility could be associated to the nature of the several stabilization plans adopted in those countries and to changes in the exchange rate regimes .

A notion of subgame perfect nash equilibrium under knightian uncertainty

We define a subgame perfect Nash equilibrium under Knightian uncertainty for two players, by means of a recursive backward induction procedure. We prove an extension of the Zermelo-von Neumann-Kuhn Theorem for games of perfect information, i. e., that the recursive procedure generates a Nash equilibrium under uncertainty (Dow and Werlang(1994)) of the whole game. We apply the notion for two well known games: the chain store and the centipede. On the one hand, we show that subgame perfection under Knightian uncertainty explains the chain store paradox in a one shot version. On the other hand, we show that subgame perfection under uncertainty does not account for the leaving behavior observed in the centipede game. This is in contrast to Dow, Orioli and Werlang(1996) where we explain by means of Nash equilibria under uncertainty (but not subgame perfect) the experiments of McKelvey and Palfrey(1992). Finally, we show that there may be nontrivial subgame perfect equilibria under uncertainty in more complex extensive form games, as in the case of the finitely repeated prisoner's dilemma, which accounts for cooperation in early stages of the game .

Affiliation, equilibrium existence and the revenue ranking of auctions

We consider private value auctions where bidders’ types are dependent, a case usually treated by assuming affiliation. We show that affiliation is a restrictive assumption in three senses: topological, measure-theoretic and statistical (affiliation is a very restrictive characterization of positive dependence). We also show that affiliation’s main implications do not generalize for alternative definitions of positive dependence. From this, we propose new approaches to the problems of pure strategy equilibrium existence in first-price auctions (PSEE) and the characterization of the revenue ranking of auctions. For equilibrium existence, we slightly restrict the set of distributions considered, without loss of economic generality, and offer a complete characterization of PSEE. For revenue ranking, we obtain a characterization of the expected revenue differences between second and first price auctions with general dependence of types.

The effects of government deficit on equilibrium real exchange rates and stock prices

This paper studies the effect of government deficits on equilibrium real exchange rates and stock prices. The theoretical part modifies a two-country cash-in-advance model like used in Lucas(1982) and Sargent(1987) in order to accommodate an exchange rate market and a government that pursues fiscal and monetary policy targets. The implied result is that unanticipated shocks in government deficits raise expectations of both taxes and inflation and, therefore, are associated with real exchange rate devaluations and lower stock prices. This finding is strongly supported by empirical evidence for a group of 19 countries, representing 76% of world production

Existence of nash equilibrium in competitive nonlinear pricing games with adverse selection

We show that for a large class of competitive nonlinear pricing games with adverse selection, the property of better-reply security is naturally satisfied - thus, resolving via a result due to Reny (1999) the issue of existence of Nash equilibrium for a large class of competitive nonlinear pricing games.

Comparing equilibrium real interest rates : different approaches to measure Brazilian rates

Despite the difficulties involved in the precise determination of equilibrium real interest rates, it seems clear that nominal interest rates has been higher in Brazil than in similar emerging economies. This paper aims to shed light on the possible reasons for this feature of the Brazilian economy. We extend Miranda and Muinhos (2003) one-country study to a sample of 20 countries, using many methods to compare measures of the real interest: (i) extracting equilibrium interest rates from IS curves; (ii) extracting steady state interest rates from marginal product of capital; (iii) capturing relevant variables and the fixed effects having real interest rates as dependent variable in a panel for emerging countries; and (iv) extracting inflation expectation from the spread between fixed rate and inflation-indexed treasure notes.

Monetary dynamics in a general equilibrium version of the Baumol-Tobin model

I study the welfare cost of inflation and the effect on prices after a permanent increase in the interest rate. In the steady state, the real money demand is homogeneous of degree one in income and its interest-rate elasticity is approximately equal to −1/2. Consumers are indifferent between an economy with 10% p.a. inflation and one with zero inflation if their income is 1% higher in the first economy. A permanent increase in the interest rate makes the price level to drop initially and inflation to adjust slowly to its steady state level.

On uniqueness of equilibrium in the Kyle Model

A longstanding unresolved question is whether the one-period Kyle Model of an informed trader and a noisily informed market maker has an equilibrium that is different from the closed-form solution derived by Kyle (1985). This note advances what is known about this open problem.

Some notes about the determination of current account equilibrium real exchange rate and the relation between real exchange rate and productive specialization

The objective of these notes is to present a simple mathematical model of the determination of current account real exchange rate as defined by Bresser-Pereira (2010); i.e. the real exchange rate that guarantees the inter temporal equilibrium of balance of payments and to show the relation between Real Exchange rate and Productive Specialization at theoretical and empirical level.

CLINICAL EVALUATION of THE ASSOCIATION BETWEEN NONCARIOUS CERVICAL LESIONS and OCCLUSAL FORCES

Statement of problem. Noncarious cervical lesions (NCCLs) are a frequent challenge in clinical dental practice, given the variety of opinions regarding their etiology, diagnosis, and treatment.Purpose. The purpose of this study was to assess the potential relationship between occlusal forces and the occurrence of NCCLs.Material and methods. The participant population consisted of 111 volunteers (30 male and 81 female, mean age 23.6 years). General personal information was recorded, after which participants were examined for the presence and location of NCCLs, gingival recession, fracture lines, dental and restoration fractures, presence and location of tooth wear, type of occlusal guidance scheme for lateral mandibular movements, and existence of occlusal interference or premature contacts. The participants were divided according to the presence or absence of NCCLs, and data were statistically analyzed with the Independent t test, the Chi-square test, and the Fisher exact test (alpha=.05).Results. A significant association was found between the presence of NCCLs and age (P=.008), gingival recession (P<.001), occlusal trauma (P<.001), presence (P<.001) and location of tooth wear, and group function as occlusal guidance scheme in lateral excursive movements (P<.001).Conclusions. A strong relationship between the presence of NCCLs and occlusal overload was found. (J Prosthet Dent 2012;108:298-303)

Effect of occlusal splint thickness on electrical masticatory muscle activity during rest and clenching

The extent of separation between the maxillary and mandibular teeth in the fabrication of interocclusal splints designed to achieve efficiency and muscle relaxation is controversial and undefined in the literature. Based on this premise, the aim of this study was to evaluate the effect of interocclusal splint thicknesses of 3 and 6 millimeters on the electrical activity of the anterior temporal and masseter muscles during rest and dental clenching. Twenty asymptomatic individuals (10 males and 10 females) were selected using the Research Diagnostic Criteria (RDC). Electromyography (EMG) was performed both with and without the 3- and 6-mm splints using the Bio EMG software package, which recorded values given in microvolts (mu V). The results, which were assessed using analysis of variance (ANOVA) to a 5% significance level (p < 0.05), showed increased electrical activity of the masticatory muscles during dental clenching compared with at rest, with greater activity in the masseter muscle. The electrical activity did not differ according to the thickness of the splints or between males and females. We can conclude that both splint thicknesses are effective in treating muscle hyperactivity given their similar clinical behavior for asymptomatic individuals.