Alternative Formulations for the Income Component of HDI

human development, consumption, globalization

Output Costs, Currency Crises, and Interest Rate Defense of a Peg

Central banks typically raise short-term interest rates to defend currency pegs. Higher interest rates, however, often lead to a credit crunch and an output contraction. We model this trade-off in an optimizing, first-generation model in which the crisis may be delayed but is ultimately inevitable. We show that higher interest rates may delay the crisis, but raising interest rates beyond a certain point may actually bring forward the crisis due to the large negative output effect. The optimal interest rate defense involves setting high interest rates (relative to the no defense case) both before and at the moment of the crisis. Furthermore, while the crisis could be delayed even further, it is not optimal to do so.

A Tale of Two States

Indian states, development

Living with the Fear of Floating: An Optimal Policy Perspective

As documented in recent studies, developing countries (classified by the IMF as floaters or managed floaters) are extremely reluctant to allow for large nominal exchange rate fluctuations. This 'fear of floating' is reflected in the fact that, in spite of being subject to larger shocks, developing countries exhibit lower exchange rate variability and higher reserve variability than developed countries. Moreover, there is a positive correlation between changes in the exchange rate and interest rates and a negative correlation between both changes in reserves and the exchange rate and changes in interest rates and reserves. We build a simple model that rationalizes these key features as the outcome of an optimal policy response to monetary shocks. The model incorporates three key frictions: an output cost of nominal exchange rate fluctuations, an output cost of higher interest rates to defend the currency, and a fixed cost of intervention.

Symmetry-adapted real-space density functional theory for cylindrical geometries: application to large X (X=C, Si, Ge, Sn) nanotubes

We present a symmetry-adapted real-space formulation of Kohn-Sham density functional theory for cylindrical geometries and apply it to the study of large X (X=C, Si, Ge, Sn) nanotubes. Specifically, starting from the Kohn-Sham equations posed on all of space, we reduce the problem to the fundamental domain by incorporating cyclic and periodic symmetries present in the angular and axial directions of the cylinder, respectively. We develop a high-order finite-difference parallel implementation of this formulation, and verify its accuracy against established planewave and real-space codes. Using this implementation, we study the band structure and bending properties of X nanotubes and Xene sheets, respectively. Specifically, we first show that zigzag and armchair X nanotubes with radii in the range 1 to 5 nm are semiconducting. In particular, we find an inverse linear dependence of the bandgap with respect to the radius for all nanotubes, other than the armchair and zigzag type III carbon variants, for which we find an inverse quadratic dependence. Next, we exploit the connection between cyclic symmetry and uniform bending deformations to calculate the bending moduli of Xene sheets in both zigzag and armchair directions. We find Kirchhoff-Love type bending behavior for all sheets, with graphene and stanene possessing the largest and smallest moduli, respectively. In addition, other than graphene, the sheets demonstrate significant anisotropy, with larger bending moduli along the armchair direction. Finally, we demonstrate that the proposed approach has very good parallel scaling and is highly efficient, enabling ab initio simulations of unprecedented size for systems with a high degree of cyclic symmetry. In particular, we show that even micron-sized nanotubes can be simulated with modest computational effort.Comment: 24 pages, 8 figures, 4 table

A tale of two states: Maharashtra and West Bengal

In this paper the authors study the economic evolution between 1960 and 1995 of two states in India — Maharashtra and West Bengal. In 1960, West Bengal’s per capita income exceeded that of Maharashtra. By 1995, it had fallen to just 69 percent of Maharashtra’s per capita income. The authors employ a "wedge" methodology based on the first order conditions of a multi-sector neoclassical growth model to ascertain the sources of the divergent economic performances. Their diagnostic analysis reveals that a large part of West Bengal’s development woes can be attributed to: (a) low sectoral productivity, especially in manufacturing and services; and (b) sectoral misallocation in labor markets. These patterns, together with additional evidence on developments in the labor market, the manufacturing sector, and voting behavior, suggest a systematic worsening of the business environment in manufacturing in West Bengal during this period.India