Optimal maintenance policy for equipment subject to random deterioration and random failure A modern control theory approach.

The stochastic version of Pontryagin's maximum principle is applied to determine an optimal maintenance policy of equipment subject to random deterioration. The deterioration of the equipment with age is modelled as a random process. Next the model is generalized to include random catastrophic failure of the equipment. The optimal maintenance policy is derived for two special probability distributions of time to failure of the equipment, namely, exponential and Weibull distributions Both the salvage value and deterioration rate of the equipment are treated as state variables and the maintenance as a control variable. The result is illustrated by an example

The Soviet Union, Finland and the Cold War : The Finnish Card in Soviet Foreign Policy, 1956-1959

From the Soviet point of view the actual substance of Soviet-Finnish relations in the second half of 1950s clearly differed from the contemporary and later public image, based on friendship and confidence rhetoric. As the polarization between the right and the left became more underlined in Finland in the latter half of the 1950s, the criticism towards the Soviet Union became stronger, and the USSR feared that this development would have influence on Finnish foreign policy. From the Soviet point of view, the security commitments of FCMA-treaty needed additional guarantees through control of Finnish domestic politics and economic relations, especially during international crises. In relation to Scandinavia, Finland was, from the Soviet point of view, the model country of friendship or neutrality policy. The influence of the Second Berlin Crisis or the Soviet-Finnish Night Frost Crisis in 1958-1959 to Soviet policy towards Scandinavia needs to be observed from this point of view. The Soviet Union used Finland as a tool, in agreement with Finnish highest political leadership, for weakening of the NATO membership of Norway and Denmark, and for maintaining Swedish non-alliance. The Finnish interest to EFTA membership in the summer of 1959, at the same time with the Scandinavian countries, seems to have caused a panic reaction in the USSR, as the Soviets feared that these economic arrangements would reverse the political advantages the country had received in Finland after the Night Frost Crisis. Together with history of events, this study observes the interaction of practical interests and ideologies, both in individuals and in decision-making organizations. The necessary social and ideological reforms in the Soviet Union after 1956 had influence both on the legitimacy of the regime, and led to contradictions in the argumentation of Soviet foreign policy. This was observed both in the own camp as well as in the West. Also, in Finland a breakthrough took place in the late 1950's: as the so-called counter reaction lost to the K-line, "a special relationship" developed with the Soviet Union. As a consequence of the Night Frost Crisis the Soviet relationship became a factor decisively defining the limits of domestic politics in Finland, a part of Finnish domestic political argumentation. Understood from this basis, finlandization is not, even from the viewpoint of international relations, a special case, but a domestic political culture formed by the relationship between a dominant state, a superpower, and a subordinate state, Finland.

Essays on macroeconomic effects of fiscal policy rules

Economic and Monetary Union can be characterised as a complicated set of legislation and institutions governing monetary and fiscal responsibilities. The measures of fiscal responsibility are to be guided by the Stability and Growth Pact, which sets rules for fiscal policy and makes a discretionary fiscal policy virtually impossible. To analyse the effects of the fiscal and monetary policy mix, we modified the New Keynesian framework to allow for supply effects of fiscal policy. We show that defining a supply-side channel for fiscal policy using an endogenous output gap changes the stabilising properties of monetary policy rules. The stability conditions are affected by fiscal policy, so that the dichotomy between active (passive) monetary policy and passive (active) fiscal policy as stabilising regimes does not hold, and it is possible to have an active monetary - active fiscal policy regime consistent with dynamical stability of the economy. We show that, if we take supply-side effects into ac-count, we get more persistent inflation and output reactions. We also show that the dichotomy does not hold for a variety of different fiscal policy rules based on government debt and budget deficit, using the tax smoothing hypothesis and formulating the tax rules as difference equations. The debt rule with active monetary policy results in indeterminacy, while the deficit rule produces a determinate solution with active monetary policy, even with active fiscal policy. The combination of fiscal requirements in a rule results in cyclical responses to shocks. The amplitude of the cycle is larger with more weight on debt than on deficit. Combining optimised monetary policy with fiscal policy rules means that, under a discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias. We also show that commitment to an optimal monetary policy not only corrects the inflation bias but also increases the persistence of output reactions. With fiscal policy rules based on the deficit we can retain the tax smoothing hypothesis also in a sticky price model.

The Macroeconomic Effects of Fiscal Policy in a Small Open Economy under a Flexible Exchange Rate Regime

This licentiate's thesis analyzes the macroeconomic effects of fiscal policy in a small open economy under a flexible exchange rate regime, assuming that the government spends exclusively on domestically produced goods. The motivation for this research comes from the observation that the literature on the new open economy macroeconomics (NOEM) has focused almost exclusively on two-country global models and the analyses of the effects of fiscal policy on small economies are almost completely ignored. This thesis aims at filling in the gap in the NOEM literature and illustrates how the macroeconomic effects of fiscal policy in a small open economy depend on the specification of preferences. The research method is to present two theoretical model that are extensions to the model contained in the Appendix to Obstfeld and Rogoff (1995). The first model analyzes the macroeconomic effects of fiscal policy, making use of a model that exploits the idea of modelling private and government consumption as substitutes in private utility. The model offers intuitive predictions on how the effects of fiscal policy depend on the marginal rate of substitution between private and government consumption. The findings illustrate that the higher the substitutability between private and government consumption, (i) the bigger is the crowding out effect on private consumption (ii) and the smaller is the positive effect on output. The welfare analysis shows that the less fiscal policy decreases welfare the higher is the marginal rate of substitution between private and government consumption. The second model of this thesis studies how the macroeconomic effects of fiscal policy depend on the elasticity of substitution between traded and nontraded goods. This model reveals that this elasticity a key variable to explain the exchange rate, current account and output response to a permanent rise in government spending. Finally, the model demonstrates that temporary changes in government spending are an effective stabilization tool when used wisely and timely in response to undesired fluctuations in output. Undesired fluctuations in output can be perfectly offset by an opposite change in government spending without causing any side-effects.

Below-ground processes in meadow soil under elevated ozone and carbon dioxide : - Greenhouse gas fluxes, N cycling and microbial communities

This thesis focuses on how elevated CO2 and/or O3 affect the below-ground processes in semi-natural vegetation, with an emphasis on greenhouse gases, N cycling and microbial communities. Meadow mesocosms mimicking lowland hay meadows in Jokioinen, SW Finland, were enclosed in open-top chambers and exposed to ambient and elevated levels of O3 (40-50 ppb) and/or CO2 (+100 ppm) for three consecutive growing season, while chamberless plots were used as chamber controls. Chemical and microbiological analyses as well as laboratory incubations of the mesocosm soils under different treatments were used to study the effects of O3 and/or CO2. Artificially constructed mesocosms were also compared with natural meadows with regards to GHG fluxes and soil characteristics. In addition to research conducted at the ecosystem level (i.e. the mesocosm study), soil microbial communities were also examined in a pot experiment with monocultures of individual species. By comparing mesocosms with similar natural plant assemblage, it was possible to demonstrate that artificial mesocosms simulated natural habitats, even though some differences were found in the CH4 oxidation rate, soil mineral N, and total C and N concentrations in the soil. After three growing seasons of fumigations, the fluxes of N2O, CH4, and CO2 were decreased in the NF+O3 treatment, and the soil NH4+-N and mineral N concentrations were lower in the NF+O3 treatment than in the NF control treatment. The mesocosm soil microbial communities were affected negatively by the NF+O3 treatment, as the total, bacterial, actinobacterial, and fungal PLFA biomasses as well as the fungal:bacterial biomass ratio decreased under elevated O3. In the pot survey, O3 decreased the total, bacterial, actinobacterial, and mycorrhizal PLFA biomasses in the bulk soil and affected the microbial community structure in the rhizosphere of L. pratensis, whereas the bulk soil and rhizosphere of the other monoculture, A. capillaris, remained unaffected by O3. Elevated CO2 caused only minor and insignificant changes in the GHG fluxes, N cycling, and the microbial community structure. In the present study, the below-ground processes were modified after three years of moderate O3 enhancement. A tentative conclusion is that a decrease in N availability may have feedback effects on plant growth and competition and affect the N cycling of the whole meadow ecosystem. Ecosystem level changes occur slowly, and multiplication of the responses might be expected in the long run.

Carbon sequestration: Evaluating the impact on rural land and valuation approach

This thesis uses semi-structured interviews and documentary analysis to explore the impact of carbon sequestration rights on rural land in Queensland and to determine whether current rural valuation knowledge and practice is equipped to deal with these rights. The carbon right in Queensland is complex and subject to significant individual variation. The nature and form of this right will determine whether it has a positive or negative impact on Queensland rural land. Significant gaps in the knowledge of industry stakeholders, including rural valuers, concerning carbon rights were found, and recommendations for valuation practice were made.