Productivity Trends in Europe: Implications for Real Exchange Rates, Real Interest Rates, and Inflation

The paper examines a long–run (neoclassical) framework in which differences in productivity growth across sectors and countries lead to inflation differentials. In a currency union, these inflation differentials imply cross–country differentials in real interest rates. The authors estimate the likely size of these differentials for European Union countries, discuss the potential costs of persistent inflation differentials, and comment on the conflicts they may cause within Economic and Monetary Union (EMU). The analytical framework is a variant of the Balassa–Samuelson "productivity hypotheisis," which relates sectoral productivity trends to trends in the relative price of home goods.     

NUMERICAL SIMULATION OF FLOW OVER TWO CIRCULAR CYLINDERS IN TANDEM ARRANGEMENT

In this article,the 2-D unsteady viscous flow around two circular cylinders in a tandem arrangement is numerically simulated in order to study the characteristics of the flow in both laminar and turbulent regimes.The method applied alternatively is based on the finite volume method on a Cartesian-staggered grid.The great source term technique is employed to identify the cylinders placed in the flow field.To apply the boundary conditions,the ghost-cell technique is used.The implemented computational method is firstly validated through simulation of laminar and turbulent flows around a fixed circular cylinder.Finally,the flow around two circular cylinders in a tandem arrangement is simulated and analyzed.The flow visualization parameters,the Strouhal numbers,and drag and lift coefficients are comprehensively presented and compared for different cases in order to reveal the effect of the Reynolds number and gap spacing on the behavior of the flow.The obtained results have shown two completely distinct flow characteristics in laminar and turbulent regimes.     

Interest rate rules and price determinacy: The role of transactions services of bonds

Interest rate rules have been associated with price indeterminacy when they do not respond aggressively enough to inflation. Price indeterminacy is typically associated with indeterminacy of real bond balances, suggesting that the missing element is a meaningful role for government bonds. We assume that government bonds provide arbitrarily small transactions services and show that this can dramatically change the local and global determinacy conditions. In particular, the specification of fiscal policy affects the aggressiveness with which monetary policy must respond to inflation to deliver local determinacy—a range of passive monetary policies, even an interest rate peg, may yield determinacy.     

Did the Unconventional Monetary Policy of the U.S. Hurt Emerging Markets?

Open Economies Review - Policymakers in emerging markets complained that the unconventional US monetary policy response to the Great Recession hurt their economies. US policymakers responded that...     

Lake Urmia restoration success story: A natural trend or a planned remedy?

Lake Urmia is the second-largest hypersaline lake in the world. There has been a drastic water level drop of 7.2 m from 1995 to 2016. Beginning in October 2013, the Lake Urmia Restoration Plan (LURP) launched a 10-year program. An increase in water level and a relative improvement in Lake Urmia condition has been observed since 2017. It is an undecided and controversial issue whether the recent positive trend of Lake Urmia has been due to the LURP activities or it is a natural contribution of climate factors variations. To shed some light on this issue, we examine three other lakes, adjacent to the Lake Urmia basin, with similar rainfall variability to investigate their status during the same period. Van (Turkey), Mosul, and Tharthar (both in Iraq), are evaluated as well as Lake Urmia. Three decades of remotely sensed data including precipitation ($P$), water level ($\mathit{WL}$), and lake extent ($A$) were considered for the mentioned lakes. A significant correlation was observed between standardized $\mathit{WL}-P$, and $A-P$ over the long-term period, especially for the recent three years ($R$² = 0.63–0.87). We show that the cumulative precipitation in the antecedent months played a major role in the improvement of these lakes' situation but with different time lags (up to 6 months for Van and Mosul lakes and up to 36 months for Lake Urmia and Tharthar lake). These findings could inform the planners of LURP to adopt strategies for achieving a sustainable state of Lake Urmia based on a more realistic outlook.     

Addressing International Empirical Puzzles: the Liquidity of Bonds

Models that assume bonds denominated in different currencies are perfect substitutes can not explain certain empirical puzzles: the exchange rate volatility puzzle is that these models can not explain the observed volatility in real and nominal exchange rates; the Backus-Smith puzzle is that these models can not explain the observed low correlation between real exchange rates and the ratio of home to foreign consumption; the Backus-Kehoe-Kydland puzzle is that these models can not explain the observed low correlation between home and foreign consumption; and finally, the uncovered interest parity puzzle is that these models can not explain the observed deviations from that parity. These long standing puzzles make the models harder to defend. In this paper, we present a symmetric two country portfolio balance model in which home and foreign bonds are imperfect substitutes for money in each country’s transactions technology; this of course makes home and foreign bonds imperfect substitutes for each other. Our calibrated model is capable of addressing the Backus-Smith puzzle and the Backus-Kehoe-Kydland puzzle. It does not fully resolve the exchange rate volatility puzzle, but it makes some headway. And finally it generates deviations from uncovered interest parity, though by some estimates these deviations are not large enough to be consistent with the data.     

Comprehensive Understanding of Urban Water Supply Management: Towards Sustainable Water-socio-economic-health-environment Nexus

Water Resources Management - The majority of the cities across the developing countries have saddled water supply and quality management issues. Unfortunately, even cities with adequate water...     

Elitist Continuous Ant Colony Optimization Algorithm for Optimal Management of Coastal Aquifers

This paper presents an evolutionary based approach to achieve optimal management of a coastal aquifer to control saltwater intrusion. An improved Elitist Continuous Ant Colony Optimization (ECACO) algorithm is employed for optimal control variables setting of coastal aquifer management problem. The objectives of the optimal management are; maximizing the total water-pumping rate, while controlling the drawdown limits and protecting the wells from saltwater intrusion. Since present work is one of the first efforts towards the application of an ECACO algorithm, sharp interface solution for steady state problem is first exploited. The performance of the developed optimization model is evaluated through application examples available in the literature. The comparisons indicate the applicability of the ECACO algorithm. In the second approach, the numerical simulation is combined with ECACO algorithm. In this model, through some simple schemes, such as continuity equations in the porous media cells and existing hydraulic systems in the study area, further details can be investigated. The evaluation results show the potential applicability of the proposed numerical based model for optimal management of coastal aquifers.     

Euler equations and money market interest rates: A challenge for monetary policy models

Standard macroeconomic models equate the money market rate targeted by the central bank with the interest rate implied by a consumption Euler equation. We use U.S. data to calculate the interest rates implied by Euler equations derived from a number of specifications of household preferences. Correlations between these Euler equation rates and the Federal Funds rate are generally negative. Regression results and impulse response functions imply that the spreads between the Euler equation rates and the Federal Funds rate are systematically linked to the stance of monetary policy. Our findings pose a fundamental challenge for models that equate the two.