Two monetary models with alternating markets : [Version 28 October 2013]

We present a thought-provoking study of two monetary models: the cash-in-advance and the Lagos and Wright (2005) models. We report that the different approach to modeling money — reduced-form vs. explicit role — neither induces theoretical nor quantitative differences in results. Given conformity of preferences, technologies and shocks, both models reduce to one difference equation. The equations do not coincide only if price distortions are differentially imposed across models. To illustrate, when cash prices are equally distorted in both models equally large welfare costs of inflation are obtained in each model. Our insight is that if results differ, then this is due to differential assumptions about the pricing mechanism that governs cash transactions, not the explicit microfoundation of money

Price Dispersion with Directed Search.

We study a market where identical capacity-constrained sellers compete to attract identical buyers, via price advertisements. Once buyers reach a store, prices might be renegotiable in a manner that is responsive to excess demand. We focus strongly symmetric equilibria, proving their existence and providing explicit solutions for the distributions of advertised and sale prices as functions of market characteristics. Since variations in the posted price can affect the store’s attractiveness and the incidence of haggling, the model endogenizes the ‘pricing convention’ prevailing in the market and generates several empirically testable predictions on market behavior.Directed Search ; Endogenous Trading Mechanisms ; Market Frictions ; Price Dispersion

Kerr-AdS and Kerr-dS solutions revisited

We reconsider the Kerr metric with cosmological term $\Lambda$ imposing the condition that the angular velocity $\omega$ of the dragging of the inertial frames vanishes at spatial boundaries. Some properties of the extreme black holes in the revisited solutions are discussed.Comment: 14 pages, Latex2e, 3 figure

Efficient Monetary Allocations and the Illiquidity of Bonds.

We construct a monetary economy with heterogeneity in discounting and consumption risk. Agents can insure against this risk with both money and nominal government bonds, but all trades must be monetized. We demonstrate that a deflationary policy a la Friedman cannot sustain the efficient allocation. The reason is that no-arbitrage imposes a stringent bound on the return money can pay. The efficient allocation can be sustained when bonds have positive yields and – under certain conditions – only if they are illiquid. Illiquidity – meaning bonds cannot be transformed into consumption as efficiently as cash – is necessary to eliminate arbitrage opportunities.Money ; Heterogeneity ; Friedman Rule ; Illiquid Assets

The Coordination Value of Monetary Exchange: Experimental Evidence

A new behavioral foundation is uncovered for why money promotes impersonal exchange. In an experiment, subjects could cooperate by intertemporally exchanging goods with anonymous opponents met at random. Indefinite repetition supported multiple equilibria, from full defection to the efficient outcome. Introducing the possibility to hold and exchange intrinsically worthless tickets affected outcomes and cooperation patterns. Tickets resembled fiat money, which emerged as a tool for equilibrium selection in the economy. Monetary exchange facilitated coordination on cooperation and redistributed surplus from defectors to cooperators. Treatments where subjects could develop a reputation revealed a limited record-keeping role for monetary exchange.money, cooperation, information, trust, folk theorem, repeated games

Does Quartessence Ease Tensions?

Tensions between cosmic microwave background observations and the growth of the large-scale structure inferred from late-time probes pose a serious challenge to the concordance $\Lambda$CDM cosmological model. State-of-the-art data from the Planck satellite predicts a higher rate of structure growth than what preferred by low-redshift observables. Such tension has hitherto eluded conclusive explanations in terms of straightforward modifications to $\Lambda$CDM, e.g. the inclusion of massive neutrinos or a dynamical dark energy component. Here, we investigate models of 'quartessence' -- a single dark component mimicking both dark matter and dark energy -- whose non-vanishing sound speed inhibits structure growth at late times on scales smaller than its corresponding Jeans' length. In principle, this could reconcile high- and low-redshift observations. We put this hypothesis to test against temperature and polarisation spectra from the latest Planck release, SDSS DR12 measurements of baryon acoustic oscillations and redshift-space distortions, and cosmic shear correlation functions from KiDS. This the first time that any specific model of quartessence is applied to actual data. We show that, if we naively apply $\Lambda$CDM nonlinear prescription to quartessence, the combined data sets allow for tight constraints on the model parameters. Apparently, quartessence alleviates the tension between the total matter fraction and late-time structure clustering, although in fact the tension is transferred from the latter to the quartessence sound speed parameter. However, we found that this strongly depends upon information from nonlinear scales. Indeed, if we relax this assumption, quartessence models appear still viable. For this reason, we argue that the nonlinear behaviour of quartessence deserves further investigation and may lead to a deeper understanding of the physics of the dark Universe.Comment: 8 pages, 6 figures, 1 table; matching published versio

Developing a unified pipeline for large-scale structure data analysis with angular power spectra -- I. The importance of redshift-space distortions for galaxy number counts

We develop a cosmological parameter estimation code for (tomographic) angular power spectra analyses of galaxy number counts, for which we include, for the first time, redshift-space distortions (RSD) in the Limber approximation. This allows for a speed-up in computation time, and we emphasise that only angular scales where the Limber approximation is valid are included in our analysis. Our main result shows that a correct modelling of RSD is crucial not to bias cosmological parameter estimation. This happens not only for spectroscopy-detected galaxies, but even in the case of galaxy surveys with photometric redshift estimates. Moreover, a correct implementation of RSD is especially valuable in alleviating the degeneracy between the amplitude of the underlying matter power spectrum and the galaxy bias. We argue that our findings are particularly relevant for present and planned observational campaigns, such as the Euclid satellite or the Square Kilometre Array, which aim at studying the cosmic large-scale structure and trace its growth over a wide range of redshifts and scales.Comment: 18 pages, 11 figures, 4 tables. New expression for RSDs in Limber approximation (Eq. 9), much easier to implement in numerical codes. Results on "conservative scenario" slightly change