Optimal Monetary Policy in a New Keynesian Model with Habits in Consumption

While consumption habits have been utilised as a means of generating a humpshaped output response to monetary policy shocks in sticky-price New Keynesian economies, there is relatively little analysis of the impact of habits (particularly,external habits) on optimal policy. In this paper we consider the implications of external habits for optimal monetary policy, when those habits either exist at the level of the aggregate basket of consumption goods (‘superficial’ habits) or at the level of individual goods (‘deep’ habits: see Ravn, Schmitt-Grohe, and Uribe (2006)). External habits generate an additional distortion in the economy, which implies that the flex-price equilibrium will no longer be efficient and that policy faces interesting new trade-offs and potential stabilisation biases. Furthermore, the endogenous mark-up behaviour, which emerges when habits are deep, can also significantly affect the optimal policy response to shocks, as well as dramatically affecting the stabilising properties of standard simple rules.

Technology shocks and aggregate fluctuations in an estimated hybrid RBC model

This paper contributes to the on-going empirical debate regarding the role of the RBC model and in particular of technology shocks in explaining aggregate fluctuations. To this end we estimate the model’s posterior density using Markov-Chain Monte-Carlo (MCMC) methods. Within this framework we extend Ireland’s (2001, 2004) hybrid estimation approach to allow for a vector autoregressive moving average (VARMA) process to describe the movements and co-movements of the model’s errors not explained by the basic RBC model. The results of marginal likelihood ratio tests reveal that the more general model of the errors significantly improves the model’s fit relative to the VAR and AR alternatives. Moreover, despite setting the RBC model a more difficult task under the VARMA specification, our analysis, based on forecast error and spectral decompositions, suggests that the RBC model is still capable of explaining a significant fraction of the observed variation in macroeconomic aggregates in the post-war U.S. economy.

Hysteresis in the fundamentals of macroeconomics

Two fundamental problems in economic analysis concern the deter mination of aggregate output, and the determination of market prices and quantities. The way economic adjustments are made at the micro level suggests that the history of shocks to the economic environment matters. This paper presents tractable approach for introducing hysteresis into models of how aggregate output and market prices and quantities are determined.

Inverted Haavelmo Effects in a General Equilibrium Analysis of the Impact of Implementing the Scottish Variable Rate of Income Tax.

The Scottish Parliament has the authority to make a balanced-budget expansion or contraction in public expenditure, funded by corresponding local changes in the basic rate of income tax of up to 3p in the pound. This fiscal adjustment is known as the Scottish Variable Rate of income tax, though it has never, as yet, been used. In this paper we attempt to identify the impact on aggregate economic activity in Scotland of implementing these devolved fiscal powers. This is achieved through theoretical analysis and simulation using a Computable General Equilibrium (CGE) model for Scotland. This analysis generalises the conventional Keynesian model so that negative balanced-budget multipliers values are possible, reflecting a regional “inverted Haavelmo effect”. Key parameters determining the aggregate economic impact are the extent to which the Scottish Government create local amenities valuable to the Scottish population and the extent to which this is incorporated into local wage bargaining.

International Evidence on the New Keynesian Phillips Curve Using Aggregate and Disaggregate Data

We present a unique empirical analysis of the properties of the New Keynesian Phillips Curve using an international dataset of aggregate and disaggregate sectoral in ation. Our results from panel time-series estimation clearly indicate that sectoral heterogeneity has important consequences for aggregate in ation behaviour. Heterogeneity helps to explain the overestimation of in ation persistence and underestimation of the role of marginal costs in empirical investigations of the NKPC that use aggregate data. We nd that combining disaggregate information with heterogeneous-consistent estimation techniques helps to reconcile, to a large extent, the NKPC with the data.

Okun’s law – A meta analysis

This paper seeks to identify whether there is a representative empirical Okun’s Law coefficient (OLC) and to measure its size. We carry out a meta regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both sub-samples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both sub-samples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are -0.25 for the unemployment sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.

‘Right Back Where We Started From’: From ‘The Classics’ To Keynes, And Back Again

The purpose of this paper is to highlight the curiously circular course followed by mainstream macroeconomic thinking in recent times. Having broken from classical orthodoxy in the late 1930s via Keynes’s General Theory, over the last three or four decades the mainstream conventional wisdom, regressing rather than progressing, has now come to embrace a conception of the working of the macroeconomy which is again of a classical, essentially pre-Keynesian, character. At the core of the analysis presented in the typical contemporary macro textbook is the (neo)classical model of the labour market, which represents employment as determined (given conditions of productivity) by the terms of labour supply. While it is allowed that changes in aggregate demand may temporarily affect output and employment, the contention is that in due course employment will automatically return to its ‘natural’ (full employment) level. Unemployment is therefore identified as a merely frictional or voluntary phenomenon: involuntary unemployment - in other words persisting demand-deficient unemployment - is entirely absent from the picture. Variations in aggregate demand are understood to have a lasting impact only on the price level, not on output and employment. This in effect amounts to a return to a Pigouvian conception such as targeted by Keynes in the General Theory. We take the view that this reversion to ideas which should by now be obsolete reflects not the discovery of logical or empirical deficiencies in the Keynes analysis, but results rather from doctrinaire blindness and failure of scholarship on account of which essential features of the Keynes theory have been overlooked or misrepresented. There is an urgent need for a critical appraisal of the current conventional macroeconomic wisdom.

Ecological-economic modelling of interactions between wild and commercial bees and pesticide use

The decline in extent of wild pollinators in recent years has been partly associated with changing farm practices and in particular with increase of pesticide use. In this paper we combine ecological modelling with economic analysis of a single farm output under the assumption that both pollination and pest control are essential inputs. We show that the drive to increase farm output can lead to a local decline in the wild bee population. Commercial bees are often considered an alternative to wild pollinators, but we show that their introduction can lead to further decline and finally local extinction of wild bees. The transitions between different outcomes are characterised by threshold behaviour and are potentially difficult to predict and detect in advance. Small changes in economic (input prices) and ecological (wild bees carrying capacity and effect of pesticides on bees) can move the economic-ecological system beyond the extinction threshold. We also show that increasing the pesticide price or decreasing the commercial bee price might lead to reestablishment of wild bees following their local extinction. Thus, we demonstrate the importance of combining ecological modelling with economics to study the provision of ecosystem services and to inform sustainable management of ecosystem service providers.

A cohort-based analysis of the evolution of lifetime prevalence of recourse to prostitution by men in the general population of Switzerland, 1987-2000

Background: Despite their relevance to the prevention of sexually transmitted infections, there are few data on the frequency of recourse to prostitution in the male population in Switzerland. Using data gathered for the evaluation of the Swiss AIDS prevention strategy, we analysed net aggregate change and cohort-based change in lifetime prevalence of recourse to prostitution. Methods: Seven repeated cross-sectional telephone surveys of the general population aged 17-45 years (17-30 years only for the 1987 and 1988 surveys) were undertaken from 1987 to 2000 providing information on sexual behaviour including men's recourse to prostitution (total n¼9318). Age categories were: 17-20, 21-25, 26-30, 31-35, 36-40 and 41-45 years. Prevalence at 17-30 years was available in all surveys and prevalence at 41-45 was available for 1989-2000, though not for the same cohorts. Intra-cohort increase in prevalence over 10 years was analysed using truncated information for cohorts aged 21-25 and 26-30 years in 1987 and 1990. Population estimates were computed with 95% confidence intervals (CI). Results: No net change occurred in the 17-45 years male population prevalence between 1989 (17.6%, CI ¼ 15.4; 20.0) and 2000 (17.7%, CI ¼ 15.6; 20.0). The median starting prevalence of recourse to prostitution at age 17-20 was 4.8% (in 1989, CI ¼ 2.0; 9.7) and the range was from 1.8 (in 1994) to 10.4% (in 1990). The median ending prevalence at age 41-45 was 21.9% (in 1994, CI 16.7; 27.9) and the range was from 17.9 (in 2000) to 26.1% (in 1992). No clear trend was observed in either starting or ending prevalence. Intra-cohort evolution of the 1997 and 1990 cohorts was very similar. Conclusions: Based on available data, there was no net (aggregate) change in the prevalence of recourse to prostitution by males in Switzerland between 1989 and 2000. Within the time frame available, intra-cohort evolution was also very similar.

Assessing the quality of alternative energy sources: Energy Return On the Investment (EROI), the metabolic pattern of societies and energy statistics

This paper presents an initial challenge to tackle the every so "tricky" points encountered when dealing with energy accounting, and thereafter illustrates how such a system of accounting can be used when assessing for the metabolic changes in societies. The paper is divided in four main sections. The first three, present a general discussion on the main issues encountered when conducting energy analyses. The last section, subsequently, combines this heuristic approach to the actual formalization of it, in quantitative terms, for the analysis of possible energy scenarios. Section one covers the broader issue of how to account for the relevant categories used when accounting for Joules of energy; emphasizing on the clear distinction between Primary Energy Sources (PES) (which are the physical exploited entities that are used to derive useable energy forms (energy carriers)) and Energy Carriers (EC) (the actual useful energy that is transmitted for the appropriate end uses within a society). Section two sheds light on the concept of Energy Return on Investment (EROI). Here, it is emphasized that, there must already be a certain amount of energy carriers available to be able to extract/exploit Primary Energy Sources to thereafter generate a net supply of energy carriers. It is pointed out that this current trend of intense energy supply has only been possible to the great use and dependence on fossil energy. Section three follows up on the discussion of EROI, indicating that a single numeric indicator such as an output/input ratio is not sufficient in assessing for the performance of energetic systems. Rather an integrated approach that incorporates (i) how big the net supply of Joules of EC can be, given an amount of extracted PES (the external constraints); (ii) how much EC needs to be invested to extract an amount of PES; and (iii) the power level that it takes for both processes to succeed, is underlined. Section four, ultimately, puts the theoretical concepts at play, assessing for how the metabolic performances of societies can be accounted for within this analytical framework.

Use of levosimendan as rescue therapy in children with low cardiac output syndrome.

Objective: Aim of post operative treatments after cardiac surgery is to avoid low cardiac output syndrome (LCOS). Levosimendan, a new inotrope agent, has been demonstrated in adult patient to be an effective treatment for this purpose when classical therapy is not effective. It shows a positive effect on cardiac output, with fewer adverse effects and lower mortality than with dopamine. There is very few data on its benefit in the paediatric population. The aim of this study is to evaluate the effect of levosimendan in cardiac children with LCOS.Methods: Retrospective analysis of 25 children hospitalised in our PICU after cardiac surgery that demonstrated LCOS not responding to classical catecholamine therapy and who received levosimendan as rescue. LCOS parameters like urine output, mixed venous oxygen saturation (SvO2), arterio-venous differences in CO2 (AVCO2) and plasmatic lactate were compared before therapy and at 12, 24, 48 and 72 hours after the beginning of the levosimendan infusion. We also analyzed the effect on the utilisation of amines (amine score), adverse events and mortality.Results: After the beginning of levosimendan infusion, urine output (3.1 vs 5.3ml/kg/h, p=0.003) and SVO2 (56 vs 64mmHg, p=0.001) increase significantly during first 72 hours and at the same time plasmatic lactate (2.6 vs 1.4 mmole/l, p<0.001), AVCO2 (11 vs 8 mmHg, p=0.002) and amine score (63 vs 39, p=0.007) decrease significantly. No side effects were noted during administration of levosimendan. In this group of patients, mortality was 0%.Conclusion: Levosimendan is an effective treatment in children after congenital heart surgery. Our study, with a greater sample of patient than other studies, confirms the improvement of cardiac output already shown in other paediatric studies.

DETERMINATION OF CELL-SPECIFIC NEUROTOXICITY OF MALONATE, METHYLMALONATE AND PROPIONATE IN A 3D RAT BRAIN CELL AGGREGATE SYSTEM

Malonate, methylmalonate and propionate are potentially neurotoxic metabolites in branched-chain organic acidurias. Their effects were tested on cultured 3D rat brain cell aggregates, using dosages of 0.1, 1.0 and 10.0 mM with a short but intense (twice a day over 3 days) and a longer but less intense treatment (every 3 rdday over 9 days). CNS cell-specific immunohistochemical stainings allowed the follow-up of neurons (axons, phosphorylated medium-weight neurofilament), astrocytes (glial fibrillary acidic protein) and oligodendrocytes (myelin basic protein). Methylmalonate and malonate were quantified by tandem mass spectrometry. Tandem mass spectrometry analysis of harvested brain cell aggregates revealed clear intracellular accumulation of methylmalonate and malonate. In immunohistochemical stainings oligodendrocytes appeared the most affected brain cells. The MBP signal disappeared already at 0.1 mM treatment with each metabolite. Mature astrocytes were not affected by propionate, while immature astrocytes on intense treatment with propionate developed cell swelling. 1 mM methylmalonate induced cell swelling of both immature and mature astrocytes , while 1 mM malonate only affected mature astrocytes. Neurons were not affected by methylmalonate, but 10.0 mM malonate on less intense treatment and 0.1, 1.0 and 10.0 mM propionate on intense treatment affected axonal growth. Our study shows significant uptake and deleterious effects of these metabolites on brain cells, principally on astrocytes and oligodendrocytes. This may be explained by the absence of the pathway in glial cells, which thus are not able to degrade these metabolites. Further studies are ongoing to elucidate the underlying mechanisms of the observed neurotoxic effects.

Interim analysis of the Reitan Catheter Pump (RCP) heart failure efficacy study: RCP improves cardiovascular and renal function in acute decompensated heart failure (ADHF)

Background: The RCP is a 14 French collapsable percutaneous cardiovascular support device positioned in the descending part of the thoracic aorta via the femoral artery. A 10 patient first in man study demonstrated device safety and significant improvement in renal function among high risk PCI patients. We now report haemodynamic and renal efficacy in patients with ADHF.Methods: Prospective non randomised study seeking to recruit 20 patients with ADHF with a need for inotropic or mechanical circulatory support with: i) EF < 30% ii)Cardiac index(CI) < 2.2 L / min / m2 Outcome measures included: 1) Cardiac index (CI) 2) Pulmonary Capillary Wedge Pressure (PCWP) 3) Urine output / serum creatinine 4) Vascular / device complications 5) 30 day mortalityResults: INTERIM ANALYSIS (n=12) The mean age of the study group was 64 years, with a mean baseline creatinine of 193 umol/L, eGFR 38 ml/min. The intended RCP treatment period was 24 hours. During RCP treatment there was a significant mean reduction of PCWP at 4 hours of 17% (25 to 21 mmHg p=0.04). Mean CI increased at 12 hours by 11%, though not reaching significance (1.78 to 1.96 L/min/m2 p=0.08). RCP insertion prompted substantial diuresis. Urine output tripled over the first 12 hours compared to baseline (55 ml/hr vs 213 ml/hr p=0.03). This was associated with significantly improved renal function, a 28% reduction in serum creatinine at 12 hours (193 to 151 umol/L p=0.003), and a increase in eGFR from 38 ml/min to 50 ml/min (p=0.0007). 2 patients previously refused cardiac transplantation were reassessed and successfully transplanted within 9 months of RCP treatment on the basis of demonstrable renal reversibility. There were no vascular or device complications. There were 2 deaths at 30 days, one from multi-organ failure and sepsis, and one from intractable heart failure - neither were device related.Conclusion: RCP support in ADHF patients was associated with improved haemodynamics, and an improvement in renal function. The Reitan Catheter Pump may have a role in providing percutaneous cardiovascular and renal support in the acutely decompensated cardiac patient, and may have a role in suggesting renal reversibility in potential cardiac transplant patients. Further data will be reported at recruitment completion.

A correlation sensitivity analysis of non-life underwriting risk in solvency capital requirement estimation

This paper analyses the impact of using different correlation assumptions between lines of business when estimating the risk-based capital reserve, the Solvency Capital Requirement (SCR), under Solvency II regulations. A case study is presented and the SCR is calculated according to the Standard Model approach. Alternatively, the requirement is then calculated using an Internal Model based on a Monte Carlo simulation of the net underwriting result at a one-year horizon, with copulas being used to model the dependence between lines of business. To address the impact of these model assumptions on the SCR we conduct a sensitivity analysis. We examine changes in the correlation matrix between lines of business and address the choice of copulas. Drawing on aggregate historical data from the Spanish non-life insurance market between 2000 and 2009, we conclude that modifications of the correlation and dependence assumptions have a significant impact on SCR estimation.

Detailed DEM analysis of a rockslide scar to characterize the basal sliding surface of active rockslides

The basal sliding surfaces in large rockslides are often composed of several surfaces and possess a complex geometry. The exact morphology and location in three dimensions of the sliding surface remains generally unknown, in spite of extensive field and subsurface investigations, such as those at the Åknes rockslide (western Norway). This knowledge is crucial for volume estimations, failure mechanisms, and numerical slope stability modeling. This paper focuses on the geomorphologic characterization of the basal sliding surface of a postglacial rockslide scar in the vicinity of Åknes. This scar displays a stepped basal sliding surface formed by dip slopes of the gneiss foliation linked together by steeply dipping fractures. A detailed characterization of the rockslide scar by means of high-resolution digital elevation models permits statistical parameters of dip angle, spacing, persistence, and roughness of foliation surfaces and step fractures to be obtained. The characteristics are used for stochastic simulations of stepped basal sliding surfaces at the Åknes rockslide. These findings are compared with previous models based on geophysical investigations. This study discusses the investigation of rockslide scars and rock outcrops for a better understanding of potential rockslides. This work identifies possible basal sliding surface locations, which is a valuable input for volume estimates, design and location of monitoring instrumentation, and numerical slope stability modeling.