Rational expectations and the service of public debt: a recursive approach

This paper uses dynamic programming to study the time consistency of optimal macroeconomic policy in economies with recurring public deficits. To this end, a general equilibrium recursive model introduced in Chang (1998) is extended to include govemment bonds and production. The original mode! presents a Sidrauski economy with money and transfers only, implying that the need for govemment fmancing through the inflation tax is minimal. The extended model introduces govemment expenditures and a deficit-financing scheme, analyzing the SargentWallace (1981) problem: recurring deficits may lead the govemment to default on part of its public debt through inflation. The methodology allows for the computation of the set of alI sustainable stabilization plans even when the govemment cannot pre-commit to an optimal inflation path. This is done through value function iterations, which can be done on a computeI. The parameters of the extended model are calibrated with Brazilian data, using as case study three Brazilian stabilization attempts: the Cruzado (1986), Collor (1990) and the Real (1994) plans. The calibration of the parameters of the extended model is straightforward, but its numerical solution proves unfeasible due to a dimensionality problem in the algorithm arising from limitations of available computer technology. However, a numerical solution using the original algorithm and some calibrated parameters is obtained. Results indicate that in the absence of govemment bonds or production only the Real Plan is sustainable in the long run. The numerical solution of the extended algorithm is left for future research.

Economic recovery from the Argentine great depression : institutions, expectations, and the change of macroeconomic regime

This work explores how Argentina overcame the Great Depression and asks whether active macroeconomic interventions made any contribution to the recovery. In particular, we study Argentine macroeconomic policy as it deviated from gold-standard orthodoxy after the final suspension of convertibility in 1929. As elsewhere, fiscal policy in Argentina was conservative, and had little power to smooth output. Monetary policy became heterodox after 1929. The first and most important stage of institutional change took place with the switch from a metallic monetary regime to a fiduciary regime in 1931; the Caja de Conversión (Conversion Office, a currency board) began rediscounting as a means to sterilize gold outflows and avoid deflationary pressures, thus breaking from orthodox "mIes of the game." However, the actual injections of liquidity were small' and were not enough to fully offset the incipient monetary contractions: the "Keynes" effect was weak or negative. Rather, recovery derived from changes in beliefs and expectations surrounding the shift in the monetary and exchange-rate regime,and the delinking of gold flows and the money base. Agents perceivod a new regime, as shown by the path of consumption, investment, and estimated ex ante real interest rates: the "Mundell" effect was dominant. Notably, this change of regime predated a later, and supposedly more significant, stage of institutional reform, namely the creation of the central bank in 1935. Still, the extent of intervention was weak, and insufficient to fully offset externaI shocks to prices and money. Argentine macropolicy was heterodox in terms of the change of regime, but still conservative in terms of the tentative scope of the measures taken .

Demand expectations and the timing of stimulus policies

This paper proposes a simple macroeconomic model with staggered investment decisions. The model captures the dynamic coordination problem arising from demand externalities and fixed costs of investment. In times of low economic activity, a firm faces low demand and hence has less incentives for investing, which reinforces firms’ expectations of low demand. In the unique equilibrium of the model, demand expectations are pinned down by fundamentals and history. Owing to the beliefs that arise in equilibrium, there is no special reason for stimulus at times of low economic activity.

Joint rolling-horizon scheduling of materials processing and lot-sizing with sequence-dependent setups

A lot sizing and scheduling problem from a foundry is considered in which key materials are produced and then transformed into many products on a single machine. A mixed integer programming (MIP) model is developed, taking into account sequence-dependent setup costs and times, and then adapted for rolling horizon use. A relax-and-fix (RF) solution heuristic is proposed and computationally tested against a high-performance MIP solver. Three variants of local search are also developed to improve the RF method and tested. Finally the solutions are compared with those currently practiced at the foundry.

Patients' Expectations of and Satisfaction with Implant-Supported Fixed Partial Dentures and Single Crowns

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

Expectations and final evaluation of complete dentures by patients, dentist and dental technician

There is a poor association between the dentist's evaluation of denture quality and patients' satisfaction with their dentures. Possible differences between dental professionals and patients' expectations might help explain differences in outcome evaluations. This study compared scores given by a dentist, a dental technician and patients for their expectations before and their final evaluation after complete dentures treatment. Twenty completely edentulous patients, a prosthodontist and a dental technician provided scores for the expected aesthetic and functional results of their dentures based on a visual analogue scale at baseline. Post-treatment completion ratings were given after adjustments, by dentist and patients. The dental technician provided post-treatment completion ratings after completing the dentures. The patients had higher expectations than the dental technician and the dentist perceived for both aesthetic and function (P < 0.001). The patients also presented higher post-treatment completion ratings than the dental professionals perceived for final aesthetics (P = 0.016, Kendall's W = 0.207). and function (P = 0.002, Kendall's W = 0.303). Only the dentist presented a statistically significant difference between expectations (lower) and final (higher) outcomes for aesthetics (P = 0.017) and function (P = 0.003). There was no correlation between expectations and post-treatment completion ratings according to the patients' age. There was also no correlation between the patients' gender and expectation scores. Patients presented higher expectations regarding their dentures than dental professionals. The dentist believed that dentures would bring fewer benefits than patients did, but his perception of denture benefits post-treatment was significantly higher than his expectations.

Patients' expectations and satisfaction of complete denture therapy and correlation with locus of control

P>Considering the importance of patients' satisfaction with complete denture therapy and the influence of psychosocial aspects and expectations regarding satisfaction with their dentures, the present study aimed to test for a correlation between locus of control profiles and expectations before and satisfaction after complete denture therapy. Sixty-four patients rated their expectations for aesthetic and functional results of complete denture therapy on a 10-cm visual analogue scale (VAS), using scores from 0 (worst results) to 10 (best results). A similar questionnaire was used regarding satisfaction after final denture adjustments. Patients also answered a locus of control questionnaire in the initial interview. anova and a chi-squared test were used to test for correlations among ratings, patient gender and locus of control profiles. The significance level adopted was 0 center dot 05. The expectation ratings before treatment were significantly lower than the post-treatment completion ratings, both for aesthetics (P < 0 center dot 001) and function (P = 0 center dot 004). There was no correlation between locus of control profiles and patients' ratings or between gender and VAS scores. No correlation was found between locus of control profiles and scores for expectations before and satisfaction after complete dentures.

Linear quadratic Gaussian control of discrete-time Markov jump linear systems with horizon defined by stopping times

The linear quadratic Gaussian control of discrete-time Markov jump linear systems is addressed in this paper, first for state feedback, and also for dynamic output feedback using state estimation. in the model studied, the problem horizon is defined by a stopping time τ which represents either, the occurrence of a fix number N of failures or repairs (T N), or the occurrence of a crucial failure event (τ δ), after which the system paralyzed. From the constructive method used here a separation principle holds, and the solutions are given in terms of a Kalman filter and a state feedback sequence of controls. The control gains are obtained by recursions from a set of algebraic Riccati equations for the former case or by a coupled set of algebraic Riccati equation for the latter case. Copyright © 2005 IFAC.

Necessary conditions of optimality for state constrained infinite horizon differential inclusions

This article presents and discusses necessary conditions of optimality for infinite horizon dynamic optimization problems with inequality state constraints and set inclusion constraints at both endpoints of the trajectory. The cost functional depends on the state variable at the final time, and the dynamics are given by a differential inclusion. Moreover, the optimization is carried out over asymptotically convergent state trajectories. The novelty of the proposed optimality conditions for this class of problems is that the boundary condition of the adjoint variable is given as a weak directional inclusion at infinity. This improves on the currently available necessary conditions of optimality for infinite horizon problems. © 2011 IEEE.

A priori reformulations for joint rolling-horizon scheduling of materials processing and lot-sizing problem

In many production processes, a key material is prepared and then transformed into different final products. The lot sizing decisions concern not only the production of final products, but also that of material preparation in order to take account of their sequence-dependent setup costs and times. The amount of research in recent years indicates the relevance of this problem in various industrial settings. In this paper, facility location reformulation and strengthening constraints are newly applied to a previous lot-sizing model in order to improve solution quality and computing time. Three alternative metaheuristics are used to fix the setup variables, resulting in much improved performance over previous research, especially regarding the use of the metaheuristics for larger instances. © 2013 Elsevier Ltd. All rights reserved.

A gender parity horizon in Latin America: the political representation of women

Includes bibliography