Hawtreyan “Credit Deadlock” or Keynesian “Liquidity Trap”? Lessons for Japan from the Great Depression

This paper outlines the ideas of Ralph Hawtrey and Lauchlin Currie on the need for monetised fiscal deficit spending in 1930s USA to combat the deep depression into which the economy had been allowed to sink. In such exceptional circumstances of “credit deadlock” in which banks were afraid to lend and households and business afraid to borrow, the deadlock could best be broken through the spending of new money into circulation via large fiscal deficits. This complementarity of fiscal and monetary policy was shown to be essential, and as such indicates the potential power of monetary policy – in contrast to the Keynesian “liquidity trap” view that it is powerless This lesson was not learned by the Japanese authorities in their response to the asset price collapse of 1991-92, resulting in a lost decade as ballooning fiscal deficits were neutralised throughout the 1990s by unhelpfully tight monetary policy with the Bank of Japan refusing to monetise the deficits.

Central bank balance sheet concerns and credible optimal escape from the Liquidity trap

I show that when a central bank is financially independent from the treasury and has balance sheet concerns, an increase in the size or a change in the composition of the central bank's balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular, when the short-term interest rate is up against the zero lower bound, an open market operation by the central bank that involves purchases of long-term bonds can help mitigate the deation and a large negative output gap under a discretionary equilibrium. This is because such an open market operation provides an incentive to the central bank to keep interest rates low in future in order to avoid losses in its balance sheet.

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.

Essay on secular stagnation

In this paper we show that a closed economy, with a balanced budget and unable to increase public spending, can avoid or leave a persistent slump through adequate and timely combination of monetary and fiscal policy based on distortionary taxation. We use a three generations OLG New Keynesian model in which a permanent slump is possible without any self-correcting force to full-employment. Complementing recent work on Secular Stagnation using lump-sum taxation and government spending as fiscal instruments, our contribution is to use distortionary taxes over labor, consumption and capital, in a balanced budget environment with constant (or decreasing) government spending.

International debt deleveraging

I provide a framework for understanding debt deleveraging in a group of financiallyintegrated countries. During an episode of international deleveraging world consumptiondemand is depressed and the world interest rate is low, reflecting a high propensity to save.If exchange rates are allowed to float, deleveraging countries can depreciate their nominalexchange rate to increase production and mitigate the fall in consumption associatedwith debt reduction. The key insight of the paper is that in a monetary union thischannel of adjustment is shut off, and therefore the falls in consumption demand and inthe world interest rate are amplified. Hence, monetary unions are especially prone tohit the zero lower bound on the nominal interest rate and enter a liquidity trap duringdeleveraging. In a liquidity trap deleveraging gives rise to a union-wide recession, which isparticularly severe in high-debt countries. The model suggests several policy interventionsthat mitigate the negative impact of deleveraging on output in monetary unions.

A crise econômica no Japão após os anos 90

Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES)

Crisis in Japan and the Way Out: A Counterargument to Pessimistic Views

This paper focuses on a review of the present state of, and outlook for the Japanese economy. The paper is composed of three parts. The first describes the interrelation between the crisis-ridden East Asian economies and Japan. I argue that Japan did not cause the Asian currency crisis. The second part describes the current state of the Japanese economy after the bubble burst. I also discuss the medium- and long-term challenges that face the Japanese economy. The third part concentrates on the issue of the "liquidity trap" Japan is experiencing. I argue that the yen's exchange rate is more likely to appreciate than depreciate by pumping liquidity into the economy while interest rates cannot be lowered any further, and therefore a "helicopter money" policy is the only way to induce a positive inflation rate and escape from the liquidity trap.

Trap-nesting bees (Hymenoptera: Apoidea) in forest fragments of the State of Sao Paulo, Brazil

We studied the community ecology of trap-nesting bees in two forest fragments of the State of Sao Paulo, Brazil, during two years, utilizing bamboo canes and tubes made of black cardboard as trap nests. The traps were inspected once a month with an otoscope. One hundred and fifteen nests were obtained at Estacao Ecologica de Paulo de Faria, Paulo de Faria (EEPF). These included nine species belonging to five genera and two families. At Santa Cecilia Farm (SCF), 12 species belonging to seven genera and three families built 392 nests. Natural enemies reared from nests of both areas included Hymenoptera, Diptera and Coleoptera. Species richness was similar between the areas but the communities differed considerably in species composition. The higher diversity found at EEPF was due to more even distribution of the species. No difference was observed between the numbers of nests built in each year in each area. Although the species richness was lower in the cool/dry season of both years at SCF, and in the first year at EEPF, the nesting frequencies did not differ between seasons for both the overall community but for each of the most abundant species. No annual fluctuation in the frequencies of nesting was observed. As temperature and precipitation were not found to be significantly different between the two years of study in each area, we concluded that climatic stability resulted in population stability.

Measurement and state preparation via ion trap quantum computing

We investigate in detail the effects of a QND vibrational number measurement made on single ions in a recently proposed measurement scheme for the vibrational state of a register of ions in a linear rf trap [C. D'HELON and G. J. MILBURN, Phys Rev. A 54, 5141 (1996)]. The performance of a measurement shows some interesting patterns which are closely related to searching.

Decoherence and fidelity in ion traps with fluctuating trap parameters

We consider two different kinds of fluctuations in an ion trap potential: external fluctuating electrical fields, which cause statistical movement (wobbling) of the ion relative to the center of the trap, and fluctuations of the spring constant, which an due to fluctuations of the ac component of the potential applied in the Paul trap for ions. We write down master equations for both cases and, averaging out the noise, obtain expressions for the heating of the ion. We compare our results to previous results for far-off resonance optical traps and heating in ion traps. The effect of fluctuating external electrical fields for a quantum gate operation (controlled-NOT) is determined and the fidelity for that operation derived. [S1050-2947(99)06005-9].

Analysis of long-term light-trap data for Helicoverpa spp. (Lepidoptera : Noctuidae) in Australia: the effect of climate and crop host plants

Regression analyses of a long series of light-trap catches at Narrabri, Australia, were used to describe the seasonal dynamics of Helicoverpa armigera (Hubner). The size of the second generation was significantly related to the size of the first generation, to winter rainfall, which had a positive effect, and to spring rainfall which had a negative effect. These variables accounted for up to 96% of the variation in size of the second generation from year to year. Rainfall and crop hosts were also important for the size of the third generation. The area and tonnage of many potential host crops were significantly correlated with winter rain. When winter rain was omitted from the analysis, the sizes of both the second and third generations could be expressed as a function of the size of the previous generation and of the areas planted to lucerne, sorghum and maize. Lucerne and maize always had positive coefficients and sorghum a negative one. We extended our analysis to catches of H. punctigera (Wallengren), which declines in abundance after the second generation. Winter rain had a positive effect on the sizes of the second and third generations, and rain in spring or early summer had a negative effect. Only the area grown to lucerne had a positive effect on abundance. Forecasts of pest levels from a few months to a few weeks in advance are discussed, along with the improved understanding of the seasonal dynamics of both species and the significance of crops in the management of insecticide resistance for H. armigera.

Entangled coherent-state qubits in an ion trap

We show how entangled qubits can be encoded as entangled coherent states of two-dimensional center-of-mass vibrational motion for two ions in an ion trap. The entangled qubit state is equivalent to the canonical Bell state, and we introduce a proposal for entanglement transfer from the two vibrational modes to the electronic states of the two ions in order for the Bell state to be detected by resonance fluorescence shelving methods.

Determination of the force constant of a single-beam gradient trap by measurement of backscattered light

A single-beam gradient trap could potentially be used to hold a stylus for scanning force microscopy. With a view to development of this technique, we modeled the optical trap as a harmonic oscillator and therefore characterized it by its force constant. We measured force constants and resonant frequencies for 1-4-mu m-diameter polystyrene spheres in a single-beam gradient trap using measurements of back-scattered light. Force constants were determined with both Gaussian and doughnut laser modes, with powers of 3 and 1 mW, respectively. Typical values for spring constants were measured to be between 10(-6) and 4 x 10(-6) N/m. The resonant frequencies of trapped particles were measured to be between 1 and 10 kHz, and the rms amplitudes of oscillations were estimated to be around 40 nm. Our results confirm that the use of the doughnut mode for single-beam trapping is more efficient in the axial direction. (C) 1996 Optical Society of America.

Effectiveness of Three Seed-Trap Designs

Vegetation monitoring is essential to evaluate management and assess condition. However, methods that have been used cannot assess the viability of the community or provide indicators of future condition. Seed traps can be used to measure reproductive potential of a vegetation community via seed rain. This study evaluates three different seed-trap designs and compares their effectiveness in terms of the diversity and abundance of seed captured, the presence of seed-predating insects, cost, manufacturing ease and serviceability. Field trials were conducted in open, grassy woodlands in south-western and south-eastern Queensland. The results showed that the tall funnel-trap design was the least effective, while the wet wind trap and pitfall funnel trap proved more effective. On the basis of the results of this study, further investigations are recommended for testing trap performance in different vegetation communities, seed predation in relation to seed production and variation in seed production over time. Seed traps that monitor seed rain are potentially useful in assessing the health and viability of a vegetation community. Used in conjunction with other monitoring methods, they may offer valuable insights about the dynamics of entire communities and/or individual species, and therefore appropriate management strategies.