A Prudent Central Banker

This paper studies monetary policy in an economy where the central banker's preferences are asymmetric around optimal inflation. In particular, positive deviations from the optimum can be weighted more, or less, severely than negative deviations in the policy maker's loss function. It is shown that under asymmetric preferences, uncertainty can induce a prudent behavior on the part of the central banker. Since the prudence motive can be large enough to override the inflation bias, optimal monetary policy could be implemented even in the absence of rules, reputation, or contractual mechanisms. For certain parameter values, a deflationary bias can arise in equilibrium.

Le rôle des fréquences spatiales dans l’effet d’encombrement en identification de lettres

L’effet d’encombrement, qui nous empêche d’identifier correctement un stimulus visuel lorsqu’il est entouré de flanqueurs, est omniprésent à travers une grande variété de classes de stimuli. L’excentricité du stimulus cible ainsi que la distance cible-flanqueur constituent des facteurs fondamentaux qui modulent l’effet d’encombrement. La similarité cible-flanqueur semble également contribuer à l’ampleur de l’effet d’encombrement, selon des données obtenues avec des stimuli non-linguistiques. La présente étude a examiné ces trois facteurs en conjonction avec le contenu en fréquences spatiales des stimuli, dans une tâche d’identification de lettres. Nous avons présenté des images filtrées de lettres à des sujets non-dyslexiques exempts de troubles neurologiques, tout en manipulant l’excentricité de la cible ainsi que la similarité cible-flanqueurs (selon des matrices de confusion pré-établies). Quatre types de filtrage de fréquences spatiales ont été utilisés : passe-bas, passe-haut, à large bande et mixte (i.e. élimination des fréquences moyennes, connues comme étant optimales pour l’identification de lettres). Ces conditions étaient appariées en termes d’énergie de contraste. Les sujets devaient identifier la lettre cible le plus rapidement possible en évitant de commettre une erreur. Les résultats démontrent que la similarité cible-flanqueur amplifie l’effet d’encombrement, i.e. l’effet conjoint de distance et d’excentricité. Ceci étend les connaissances sur l’impact de la similarité sur l’encombrement à l’identification visuelle de stimuli linguistiques. De plus, la magnitude de l’effet d’encombrement est plus grande avec le filtre passe-bas, suivit du filtre mixte, du filtre passe-haut et du filtre à large bande, avec différences significatives entre les conditions consécutives. Nous concluons que : 1- les fréquences spatiales moyennes offrent une protection optimale contre l’encombrement en identification de lettres; 2- lorsque les fréquences spatiales moyennes sont absentes du stimulus, les hautes fréquences protègent contre l’encombrement alors que les basses fréquences l’amplifient, probablement par l’entremise de leur impact opposé quant la disponibilité de l’information sur les caractéristiques distinctives des stimul.

Liquidity traps, capital flows

This paper explores the role of capital flows and exchange rate dynamics in shaping the global economy's adjustment in a liquidity trap. Using a multi-country model with nominal rigidities, we shed light on the global adjustment since the Great Recession, a period where many advanced economies were pushed to the zero bound on interest rates. We establish three main results: (i) When the North hits the zero bound, downstream capital flows alleviate the recession by reallocating demand to the South and switching expenditure toward North goods. (ii) A free capital flow regime falls short of supporting efficient demand and expenditure reallocations and induces too little downstream (upstream) flows during (after) the liquidity trap. (iii) When it comes to capital flow management, individual countries' incentives to manage their terms of trade conflict with aggregate demand stabilization and global efficiency. This underscores the importance of international policy coordination in liquidity trap episodes.

Relación entre el impuesto de renta y la generación de empleo en Colombia - Externalidades generadas en las empresas y en los inversionistas

El artículo analiza la relación que ha existido en Colombia a partir de la década de los años 90 s- entre el impuesto de renta y la generación de empleo. En el estudio se identificaron los principales obstáculos que enfrenta la política tributaria colombiana; entre ellos los altos costos laborales salariales y no salariales (impuestos a la nómina), la acción de los grupos de presión, el desempleo, excesos en la formulación de exenciones y descuentos tributarios injustificados al igual que la necesidad de formular políticas tributarias y laborales viables a mediano y largo plazo. Como puede verse a lo largo de la investigación, estos elementos han impedido la consecución de una política tributaria óptima que contemple los principios de equidad, progresividad, eficiencia y flexibilidad.

Análisis del ciclo económico en una economía con rigideces nominales y un amplio sector informal

En este trabajo se construye un modelo de Equilibrio General Dinámico Estocástico (DSGE) con sector informal y rigideces en precios, usando como marco de análisis la teoría de búsqueda y emparejamiento del mercado de trabajo. El objetivo principal es analizar el efecto de los diferentes tipos de choques económicos sobre las principales variables del mercado laboral, en una economía con presencia importante del sector informal. Igualmente se estudia el efecto de la política monetaria, ya que la presencia de este sector afecta la dinámica del ciclo económico, y por ende los mecanismos de transmisión de la política monetaria. En particular, se analiza la dinámica del modelo bajo diferentes reglas de política monetaria y se compara el bienestar agente representativo generado por cada una de estas reglas.

Enhanced fault recovery methods for protected traffic services in GMPLS networks

Les noves tecnologies a la xarxa ens permeten transportar, cada cop més, grans volums d' informació i trànsit de xarxa amb diferents nivells de prioritat. En aquest escenari, on s'ofereix una millor qualitat de servei, les conseqüències d'una fallada en un enllaç o en un node esdevenen més importants. Multiprotocol Lavel Switching (MPLS), juntament amb l'extensió a MPLS generalitzat (GMPLS), proporcionen mecanismes ràpids de recuperació de fallada establint camins, Label Switch Path (LSPs), redundants per ser utilitzats com a camins alternatius. En cas de fallada podrem utilitzar aquests camins per redireccionar el trànsit. El principal objectiu d'aquesta tesi ha estat millorar alguns dels actuals mecanismes de recuperació de fallades MPLS/GMPLS, amb l'objectiu de suportar els requeriments de protecció dels serveis proporcionats per la nova Internet. Per tal de fer aquesta avaluació s'han tingut en compte alguns paràmetres de qualitat de protecció com els temps de recuperació de fallada, les pèrdues de paquets o el consum de recursos. En aquesta tesi presentem una completa revisió i comparació dels principals mètodes de recuperació de fallada basats en MPLS. Aquest anàlisi inclou els mètodes de protecció del camí (backups globals, backups inversos i protecció 1+1), els mètodes de protecció locals i els mètodes de protecció de segments. També s'ha tingut en compte l'extensió d'aquests mecanismes a les xarxes òptiques mitjançant el pla de control proporcionat per GMPLS. En una primera fase d'aquest treball, cada mètode de recuperació de fallades és analitzat sense tenir en compte restriccions de recursos o de topologia. Aquest anàlisi ens dóna una primera classificació dels millors mecanismes de protecció en termes de pèrdues de paquets i temps de recuperació. Aquest primer anàlisi no és aplicable a xarxes reals. Per tal de tenir en compte aquest nou escenari, en una segona fase, s'analitzen els algorismes d'encaminament on sí tindrem en compte aquestes limitacions i restriccions de la xarxa. Es presenten alguns dels principals algorismes d'encaminament amb qualitat de servei i alguna de les principals propostes d'encaminament per xarxes MPLS. La majoria dels actual algorismes d'encaminament no tenen en compte l'establiment de rutes alternatives o utilitzen els mateixos objectius per seleccionar els camins de treball i els de protecció. Per millorar el nivell de protecció introduïm i formalitzem dos nous conceptes: la Probabilitat de fallada de la xarxa i l'Impacte de fallada. Un anàlisi de la xarxa a nivell físic proporciona un primer element per avaluar el nivell de protecció en termes de fiabilitat i disponibilitat de la xarxa. Formalitzem l'impacte d'una fallada, quant a la degradació de la qualitat de servei (en termes de retard i pèrdues de paquets). Expliquem la nostra proposta per reduir la probabilitat de fallada i l'impacte de fallada. Per últim fem una nova definició i classificació dels serveis de xarxa segons els valors requerits de probabilitat de fallada i impacte. Un dels aspectes que destaquem dels resultats d'aquesta tesi és que els mecanismes de protecció global del camí maximitzen la fiabilitat de la xarxa, mentre que les tècniques de protecció local o de segments de xarxa minimitzen l'impacte de fallada. Per tant podem assolir mínim impacte i màxima fiabilitat aplicant protecció local a tota la xarxa, però no és una proposta escalable en termes de consum de recursos. Nosaltres proposem un mecanisme intermig, aplicant protecció de segments combinat amb el nostre model d'avaluació de la probabilitat de fallada. Resumint, aquesta tesi presenta diversos mecanismes per l'anàlisi del nivell de protecció de la xarxa. Els resultats dels models i mecanismes proposats milloren la fiabilitat i minimitzen l'impacte d'una fallada en la xarxa.

Report of the 2010 assessment of the scientific assessment panel: future ozone and its impact on surface UV

SCIENTIFIC SUMMARY Globally averaged total column ozone has declined over recent decades due to the release of ozone-depleting substances (ODSs) into the atmosphere. Now, as a result of the Montreal Protocol, ozone is expected to recover from the effects of ODSs as ODS abundances decline in the coming decades. However, a number of factors in addition to ODSs have led to and will continue to lead to changes in ozone. Discriminating between the causes of past and projected ozone changes is necessary, not only to identify the progress in ozone recovery from ODSs, but also to evaluate the effectiveness of climate and ozone protection policy options. Factors Affecting Future Ozone and Surface Ultraviolet Radiation • At least for the next few decades, the decline of ODSs is expected to be the major factor affecting the anticipated increase in global total column ozone. However, several factors other than ODS will affect the future evolution of ozone in the stratosphere. These include changes in (i) stratospheric circulation and temperature due to changes in long-lived greenhouse gas (GHG) abundances, (ii) stratospheric aerosol loading, and (iii) source gases of highly reactive stratospheric hydrogen and nitrogen compounds. Factors that amplify the effects of ODSs on ozone (e.g., stratospheric aerosols) will likely decline in importance as ODSs are gradually eliminated from the atmosphere. • Increases in GHG emissions can both positively and negatively affect ozone. Carbon dioxide (CO2)-induced stratospheric cooling elevates middle and upper stratospheric ozone and decreases the time taken for ozone to return to 1980 levels, while projected GHG-induced increases in tropical upwelling decrease ozone in the tropical lower stratosphere and increase ozone in the extratropics. Increases in nitrous oxide (N2O) and methane (CH4) concentrations also directly impact ozone chemistry but the effects are different in different regions. • The Brewer-Dobson circulation (BDC) is projected to strengthen over the 21st century and thereby affect ozone amounts. Climate models consistently predict an acceleration of the BDC or, more specifically, of the upwelling mass flux in the tropical lower stratosphere of around 2% per decade as a consequence of GHG abundance increases. A stronger BDC would decrease the abundance of tropical lower stratospheric ozone, increase poleward transport of ozone, and could reduce the atmospheric lifetimes of long-lived ODSs and other trace gases. While simulations showing faster ascent in the tropical lower stratosphere to date are a robust feature of chemistry-climate models (CCMs), this has not been confirmed by observations and the responsible mechanisms remain unclear. • Substantial ozone losses could occur if stratospheric aerosol loading were to increase in the next few decades, while halogen levels are high. Stratospheric aerosol increases may be caused by sulfur contained in volcanic plumes entering the stratosphere or from human activities. The latter might include attempts to geoengineer the climate system by enhancing the stratospheric aerosol layer. The ozone losses mostly result from enhanced heterogeneous chemistry on stratospheric aerosols. Enhanced aerosol heating within the stratosphere also leads to changes in temperature and circulation that affect ozone. • Surface ultraviolet (UV) levels will not be affected solely by ozone changes but also by the effects of climate change and by air quality change in the troposphere. These tropospheric effects include changes in clouds, tropospheric aerosols, surface reflectivity, and tropospheric sulfur dioxide (SO2) and nitrogen dioxide (NO2). The uncertainties in projections of these factors are large. Projected increases in tropospheric ozone are more certain and may lead to reductions in surface erythemal (“sunburning”) irradiance of up to 10% by 2100. Changes in clouds may lead to decreases or increases in surface erythemal irradiance of up to 15% depending on latitude. Expected Future Changes in Ozone Full ozone recovery from the effects of ODSs and return of ozone to historical levels are not synonymous. In this chapter a key target date is chosen to be 1980, in part to retain the connection to previous Ozone Assessments. Noting, however, that decreases in ozone may have occurred in some regions of the atmosphere prior to 1980, 1960 return dates are also reported. The projections reported on in this chapter are taken from a recent compilation of CCM simulations. The ozone projections, which also form the basis for the UV projections, are limited in their representativeness of possible futures since they mostly come from CCM simulations based on a single GHG emissions scenario (scenario A1B of Emissions Scenarios. A Special Report of Working Group III of the Intergovernmental Panel on Climate Change, Cambridge University Press, 2000) and a single ODS emissions scenario (adjusted A1 of the previous (2006) Ozone Assessment). Throughout this century, the vertical, latitudinal, and seasonal structure of the ozone distribution will be different from what it was in 1980. For this reason, ozone changes in different regions of the atmosphere are considered separately. • The projections of changes in ozone and surface clear-sky UV are broadly consistent with those reported on in the 2006 Assessment. • The capability of making projections and attribution of future ozone changes has been improved since the 2006 Assessment. Use of CCM simulations from an increased number of models extending through the entire period of ozone depletion and recovery from ODSs (1960–2100) as well as sensitivity simulations have allowed more robust projections of long-term changes in the stratosphere and of the relative contributions of ODSs and GHGs to those changes. • Global annually averaged total column ozone is projected to return to 1980 levels before the middle of the century and earlier than when stratospheric halogen loading returns to 1980 levels. CCM projections suggest that this early return is primarily a result of GHG-induced cooling of the upper stratosphere because the effects of circulation changes on tropical and extratropical ozone largely cancel. Global (90°S–90°N) annually averaged total column ozone will likely return to 1980 levels between 2025 and 2040, well before the return of stratospheric halogens to 1980 levels between 2045 and 2060. • Simulated changes in tropical total column ozone from 1960 to 2100 are generally small. The evolution of tropical total column ozone in models depends on the balance between upper stratospheric increases and lower stratospheric decreases. The upper stratospheric increases result from declining ODSs and a slowing of ozone destruction resulting from GHG-induced cooling. Ozone decreases in the lower stratosphere mainly result from an increase in tropical upwelling. From 1960 until around 2000, a general decline is simulated, followed by a gradual increase to values typical of 1980 by midcentury. Thereafter, although total column ozone amounts decline slightly again toward the end of the century, by 2080 they are no longer expected to be affected by ODSs. Confidence in tropical ozone projections is compromised by the fact that simulated decreases in column ozone to date are not supported by observations, suggesting that significant uncertainties remain. • Midlatitude total column ozone is simulated to evolve differently in the two hemispheres. Over northern midlatitudes, annually averaged total column ozone is projected to return to 1980 values between 2015 and 2030, while for southern midlatitudes the return to 1980 values is projected to occur between 2030 and 2040. The more rapid return to 1980 values in northern midlatitudes is linked to a more pronounced strengthening of the poleward transport of ozone due to the effects of increased GHG levels, and effects of Antarctic ozone depletion on southern midlatitudes. By 2100, midlatitude total column ozone is projected to be above 1980 values in both hemispheres. • October-mean Antarctic total column ozone is projected to return to 1980 levels after midcentury, later than in any other region, and yet earlier than when stratospheric halogen loading is projected to return to 1980 levels. The slightly earlier return of ozone to 1980 levels (2045–2060) results primarily from upper stratospheric cooling and resultant increases in ozone. The return of polar halogen loading to 1980 levels (2050–2070) in CCMs is earlier than in empirical models that exclude the effects of GHG-induced changes in circulation. Our confidence in the drivers of changes in Antarctic ozone is higher than for other regions because (i) ODSs exert a strong influence on Antarctic ozone, (ii) the effects of changes in GHG abundances are comparatively small, and (iii) projections of ODS emissions are more certain than those for GHGs. Small Antarctic ozone holes (areas of ozone <220 Dobson units, DU) could persist to the end of the 21st century. • March-mean Arctic total column ozone is projected to return to 1980 levels two to three decades before polar halogen loading returns to 1980 levels, and to exceed 1980 levels thereafter. While CCM simulations project a return to 1980 levels between 2020 and 2035, most models tend not to capture observed low temperatures and thus underestimate present-day Arctic ozone loss such that it is possible that this return date is biased early. Since the strengthening of the Brewer-Dobson circulation through the 21st century leads to increases in springtime Arctic column ozone, by 2100 Arctic ozone is projected to lie well above 1960 levels. Uncertainties in Projections • Conclusions dependent on future GHG levels are less certain than those dependent on future ODS levels since ODS emissions are controlled by the Montreal Protocol. For the six GHG scenarios considered by a few CCMs, the simulated differences in stratospheric column ozone over the second half of the 21st century are largest in the northern midlatitudes and the Arctic, with maximum differences of 20–40 DU between the six scenarios in 2100. • There remain sources of uncertainty in the CCM simulations. These include the use of prescribed ODS mixing ratios instead of emission fluxes as lower boundary conditions, the range of sea surface temperatures and sea ice concentrations, missing tropospheric chemistry, model parameterizations, and model climate sensitivity. • Geoengineering schemes for mitigating climate change by continuous injections of sulfur-containing compounds into the stratosphere, if implemented, would substantially affect stratospheric ozone, particularly in polar regions. Ozone losses observed following large volcanic eruptions support this prediction. However, sporadic volcanic eruptions provide limited analogs to the effects of continuous sulfur emissions. Preliminary model simulations reveal large uncertainties in assessing the effects of continuous sulfur injections. Expected Future Changes in Surface UV. While a number of factors, in addition to ozone, affect surface UV irradiance, the focus in this chapter is on the effects of changes in stratospheric ozone on surface UV. For this reason, clear-sky surface UV irradiance is calculated from ozone projections from CCMs. • Projected increases in midlatitude ozone abundances during the 21st century, in the absence of changes in other factors, in particular clouds, tropospheric aerosols, and air pollutants, will result in decreases in surface UV irradiance. Clear-sky erythemal irradiance is projected to return to 1980 levels on average in 2025 for the northern midlatitudes, and in 2035 for the southern midlatitudes, and to fall well below 1980 values by the second half of the century. However, actual changes in surface UV will be affected by a number of factors other than ozone. • In the absence of changes in other factors, changes in tropical surface UV will be small because changes in tropical total column ozone are projected to be small. By the middle of the 21st century, the model projections suggest surface UV to be slightly higher than in the 1960s, very close to values in 1980, and slightly lower than in 2000. The projected decrease in tropical total column ozone through the latter half of the century will likely result in clear-sky surface UV remaining above 1960 levels. Average UV irradiance is already high in the tropics due to naturally occurring low total ozone columns and high solar elevations. • The magnitude of UV changes in the polar regions is larger than elsewhere because ozone changes in polar regions are larger. For the next decades, surface clear-sky UV irradiance, particularly in the Antarctic, will continue to be higher than in 1980. Future increases in ozone and decreases in clear-sky UV will occur at slower rates than those associated with the ozone decreases and UV increases that occurred before 2000. In Antarctica, surface clear-sky UV is projected to return to 1980 levels between 2040 and 2060, while in the Arctic this is projected to occur between 2020 and 2030. By 2100, October surface clear-sky erythemal irradiance in Antarctica is likely to be between 5% below to 25% above 1960 levels, with considerable uncertainty. This is consistent with multi-model-mean October Antarctic total column ozone not returning to 1960 levels by 2100. In contrast, by 2100, surface clear-sky UV in the Arctic is projected to be 0–10% below 1960 levels.

Quantifying the value of ecosystem services: a case study of honeybee pollination in the UK

There is concern that insect pollinators, such as honey bees, are currently declining in abundance, and are under serious threat from environmental changes such as habitat loss and climate change; the use of pesticides in intensive agriculture, and emerging diseases. This paper aims to evaluate how much public support there would be in preventing further decline to maintain the current number of bee colonies in the UK. The contingent valuation method (CVM) was used to obtain the willingness to pay (WTP) for a theoretical pollinator protection policy. Respondents were asked whether they would be WTP to support such a policy and how much would they pay? Results show that the mean WTP to support the bee protection policy was £1.37/week/household. Based on there being 24.9 million households in the UK, this is equivalent to £1.77 billion per year. This total value can show the importance of maintaining the overall pollination service to policy makers. We compare this total with estimates obtained using a simple market valuation of pollination for the UK.

Should educational policies be regressive?

In this paper, we show that when the government is able to transfer wealth between generations, regressive policies are no longer optimal. The optimal educational policy can be decentralized through appropriate Pigouvian taxes and credit provision, is not regressive, and provides equality of opportunities in education (in the sense of irrelevance of parental income for the amount of education). Moreover, in the presence of default, the optimal policy can be implemented through income-contingent payments.

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.

A unit root test based on partially adaptive estimation

This paper constructs a unit root test baseei on partially adaptive estimation, which is shown to be robust against non-Gaussian innovations. We show that the limiting distribution of the t-statistic is a convex combination of standard normal and DF distribution. Convergence to the DF distribution is obtaineel when the innovations are Gaussian, implying that the traditional ADF test is a special case of the proposed testo Monte Carlo Experiments indicate that, if innovation has heavy tail distribution or are contaminated by outliers, then the proposed test is more powerful than the traditional ADF testo Nominal interest rates (different maturities) are shown to be stationary according to the robust test but not stationary according to the nonrobust ADF testo This result seems to suggest that the failure of rejecting the null of unit root in nominal interest rate may be due to the use of estimation and hypothesis testing procedures that do not consider the absence of Gaussianity in the data.Our results validate practical restrictions on the behavior of the nominal interest rate imposed by CCAPM, optimal monetary policy and option pricing models.

Imaginary money

This paper considers price setting in pure units of account, linked to the means of payment through managed parities. If prices are sticky in the units in which they are set, parity changes may facilitate equilibrium adjustment of relative prices. The paper derives simultaneously the optimal choice of unit of account by each price setter, and the optimal parity policy. The gains from having multiple units of account are computed for a simple calibrated economy.

The time consistency of the Friedman rule

We consider the problem of time consistency of the Ramsey monetary and fiscal policies in an economy without capital. Following Lucas and Stokey (1983) we allow the government at date t to leave its successor at t + 1 a profile of real and nominal debt of all maturities, as a way to influence its decisions. We show that the Ramsey policies are time consistent if and only if the Friedman rule is the optimal Ramsey policy.

Experience generalization for multi-agent reinforcement learning

On-line learning methods have been applied successfully in multi-agent systems to achieve coordination among agents. Learning in multi-agent systems implies in a non-stationary scenario perceived by the agents, since the behavior of other agents may change as they simultaneously learn how to improve their actions. Non-stationary scenarios can be modeled as Markov Games, which can be solved using the Minimax-Q algorithm a combination of Q-learning (a Reinforcement Learning (RL) algorithm which directly learns an optimal control policy) and the Minimax algorithm. However, finding optimal control policies using any RL algorithm (Q-learning and Minimax-Q included) can be very time consuming. Trying to improve the learning time of Q-learning, we considered the QS-algorithm. in which a single experience can update more than a single action value by using a spreading function. In this paper, we contribute a Minimax-QS algorithm which combines the Minimax-Q algorithm and the QS-algorithm. We conduct a series of empirical evaluation of the algorithm in a simplified simulator of the soccer domain. We show that even using a very simple domain-dependent spreading function, the performance of the learning algorithm can be improved.