Real wage rigidities and the new Keynesian model

Most central banks perceive a trade-off between stabilizing inflation and stabilizing the gap between output and desired output. However, the standard new Keynesian framework implies no such trade-off. In that framework, stabilizing inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new Keynesian framework, which we call the divine coincidence, is due to a special feature of the model: the absence of non trivial real imperfections.We focus on one such real imperfection, namely, real wage rigidities. When the baseline new Keynesian model is extended to allow for real wage rigidities, the divine coincidence disappears, and central banks indeed face a trade-off between stabilizing inflation and stabilizing the welfare-relevant output gap. We show that not only does the extended model have more realistic normative implications, but it also has appealing positive properties. In particular, it provides a natural interpretation for the dynamic inflation-unemployment relation found in the data.

Some hypothesis tests for the covariance matrix when the dimension is large compared to the sample size

This paper analyzes whether standard covariance matrix tests work whendimensionality is large, and in particular larger than sample size. Inthe latter case, the singularity of the sample covariance matrix makeslikelihood ratio tests degenerate, but other tests based on quadraticforms of sample covariance matrix eigenvalues remain well-defined. Westudy the consistency property and limiting distribution of these testsas dimensionality and sample size go to infinity together, with theirratio converging to a finite non-zero limit. We find that the existingtest for sphericity is robust against high dimensionality, but not thetest for equality of the covariance matrix to a given matrix. For thelatter test, we develop a new correction to the existing test statisticthat makes it robust against high dimensionality.

Secretion of an endogenous subtilisin by Pichia pastoris strains GS115 and KM71.

The methylotrophic yeast Pichia pastoris is widely used for the expression of heterologous enzymes. While the purity of the desired expression product is of major importance for many applications, we found that recombinant enzymes produced in methanol medium were contaminated by a 37-kDa endogenous yeast protease. This enzyme was completely inhibited by phenylmethanesulfonyl fluoride (PMSF) but not by 1,10-phenanthroline, EDTA, and pepstatin A, suggesting the nature of a serine protease. Its secretion was abolished in P. pastoris strains GS115 and KM71 by specific mutagenesis of a subtilisin gene (SUB2) but not by inactivation of the gene encoding vacuolar proteinase B (PRB). Bioinformatic comparisons of Sub2 protein with subtilisins from other fungal genomes and phylogenetic analyses indicated that this enzyme is not an orthologue of the vacuolar protease cerevisin generally present in yeasts but is more closely related to another putative subtilisin found in a small number of yeast genomes. During growth of P. pastoris, Sub2 was produced as a secreted enzyme at a concentration of 10 microg/ml of culture supernatant after overexpression of the full-length SUB2 gene. During fermentative production of recombinant enzymes in methanol medium, 1 ml of P. pastoris culture supernatant was found to contain approximately 3 ng of Sub2, while the enzyme was not detected during growth in a medium containing glycerol as a carbon source. The mutant strain GS115-sub2 was subsequently used as a host for the production of recombinant proteases without endogenous subtilisin contamination.

Labor markets and monetary policy: A new-Keynesian model with unemployement

We construct a utility-based model of fluctuations, with nominal rigidities andunemployment, and draw its implications for the unemployment-inflation trade-off and for the conduct of monetary policy.We proceed in two steps. We first leave nominal rigidities aside. We show that,under a standard utility specification, productivity shocks have no effect onunemployment in the constrained efficient allocation. We then focus on theimplications of alternative real wage setting mechanisms for fluctuations in un-employment. We show the role of labor market frictions and real wage rigiditiesin determining the effects of productivity shocks on unemployment.We then introduce nominal rigidities in the form of staggered price setting byfirms. We derive the relation between inflation and unemployment and discusshow it is influenced by the presence of labor market frictions and real wagerigidities. We show the nature of the tradeoff between inflation and unemployment stabilization, and its dependence on labor market characteristics. We draw the implications for optimal monetary policy.

Revision of the New World bee fly genus Heterostylum Macquart (Diptera, Bombyliidae, Bombyliinae)

The genus Heterostylum Macquart and five Neotropical species (H. ferrugineum (Fabricius, 1805), H. hirsutum (Thunberg, 1827), H. rufum (Olivier, 1789), H. haemorrhoicum (Loew, 1863) and H. pallipes Bigot, 1892) are redescribed. The other species, recently redescribed or described are only diagnosed, except for H. deani Painter, 1930, whose spermathecae are described and illustrated for the first time. The main characters of the external morphology were photographed and the male genitalia and female spermathecae illustrated. An identification key to all included species is also presented.

Physical considerations on discrepancies in target volume delineation.

BACKGROUND AND PURPOSE: To compare the delineations and interpretations of target volumes by physicians in different radio-oncology centers. MATERIALS AND METHODS: Eleven Swiss radio-oncology centers delineated volumes according to ICRU 50 recommendations for one prostate and one head and neck case. In order to evaluate the consistency of the volume delineations, the following parameters were determined: 1) the target volumes (GTV, CTV and manually expanded PTV) and their extensions in the three main axes and 2) the correlation of the volume delineated by each pair of centers using the ratio of the intersection to the union (called proximity index). RESULTS: The delineated prostate volume was 105+/-55cm(3) for the CTV and 218+/-44cm(3) for the PTV. The delineated head and neck volume was 46+/-15cm(3) for the GTV, 327+/-154cm(3) for the CTV and 528+/-106cm(3) for the PTV. The mean proximity index for the prostate case was 0.50+/-0.13 for the CTV and 0.57+/-0.11 for the PTV. The proximity index for the head and neck case was 0.45+/-0.09 for the GTV, 0.42+/-0.13 for the CTV and 0.59+/-0.06 for the PTV. CONCLUSIONS: Large discrepancies between all the delineated target volumes were observed. There was an inverse relationship between the CTV volume and the margin between CTV and PTV, leading to less discrepancies in the PTV than is the CTV delineations. There was more spread in the sagittal and frontal planes due to CT pixel anisotropy, which suggests that radiation oncologists should delineate the target volumes not only in the transverse plane, but also in the sagittal and frontal planes to improve the delineation by allowing a consistency check.

Honey, I shrunk the sample covariance matrix

The central message of this paper is that nobody should be using the samplecovariance matrix for the purpose of portfolio optimization. It containsestimation error of the kind most likely to perturb a mean-varianceoptimizer. In its place, we suggest using the matrix obtained from thesample covariance matrix through a transformation called shrinkage. Thistends to pull the most extreme coefficients towards more central values,thereby systematically reducing estimation error where it matters most.Statistically, the challenge is to know the optimal shrinkage intensity,and we give the formula for that. Without changing any other step in theportfolio optimization process, we show on actual stock market data thatshrinkage reduces tracking error relative to a benchmark index, andsubstantially increases the realized information ratio of the activeportfolio manager.

Comparison of information structures

We introduce two ways of comparing information structures, say ${\cal I}$ and${\cal J}$. First we say that ${\cal I}$ is richer than ${\cal J}$ when forevery compact game $G$, all correlated equilibrium distributions of $G$ inducedby ${\cal J}$ are also induced by ${\cal I}$. Second, we say that ${\cal J}$is faithfully reproducable from ${\cal I}$ when all the players can computefrom their information in ${\cal I}$ ``new information'' that they could havereceived from ${\cal J}$. We prove that ${\cal I}$ is richer than ${\cal J}$if and only if ${\cal J}$ is faithfully reproducable from ${\cal I}$.

Évaluation de la Pensée Constructive chez les adolescents délinquants: une approche pour comprendre les réponses inadaptées au stress

Objective: This pilot study aims at assessing Constructive Thinking in a sample of adolescent offenders and in a normative sample of adolescents. Method: 66 adolescent offenders (12-18 years) were compared to 540 control adolescents on the different subscales of the "Constructive Thinking Inventory". Results and Conclusion: Adolescent offenders show a less efficient Constructive Thinking: they show cognitive styles that may hamper their ability to take appropriate decisions when facing stressful situations, increasing self-defeating behaviors. Interventions may focus on improving adequate coping with stress.

Improved estimation of the covariance matrix of stock returns with an application to portofolio selection

This paper proposes to estimate the covariance matrix of stock returnsby an optimally weighted average of two existing estimators: the samplecovariance matrix and single-index covariance matrix. This method isgenerally known as shrinkage, and it is standard in decision theory andin empirical Bayesian statistics. Our shrinkage estimator can be seenas a way to account for extra-market covariance without having to specifyan arbitrary multi-factor structure. For NYSE and AMEX stock returns from1972 to 1995, it can be used to select portfolios with significantly lowerout-of-sample variance than a set of existing estimators, includingmulti-factor models.