Macroeconometric Modelling with a Global Perspective

This paper provides a synthesis and further development of a global modelling approach introduced in Pesaran, Schuermann and Weiner (2004), where country specific models in the form of VARX* structures are estimated relating a vector of domestic variables to their foreign counterparts and then consistently combined to form a Global VAR (GVAR). It is shown that VARX* models can be derived as the solution to a dynamic stochastic general equilibrium (DSGE) model where over-identifying long-run theoretical relations can be tested and imposed if acceptable. Similarly, short-run over-identifying theoretical restrictions can be tested and imposed if accepted. The assumption of the weak exogeneity of the foreign variables for the long-run parameters can be tested, where foreign variables can be interpreted as proxies for global factors. Rather than using deviations from ad hoc statistical trends, the equilibrium values of the variables reflecting the long-run theory embodied in the model can be calculated

Triangle-Free Triangulations, Hyperplane Arrangements and Shifted Tableaux

Flips of diagonals in colored triangle-free triangulations of a convex polygon are interpreted as moves between two adjacent chambers in a certain graphic hyperplane arrangement. Properties of geodesics in the associated flip graph are deduced. In particular, it is shown that: (1) every diagonal is flipped exactly once in a geodesic between distinguished pairs of antipodes; (2) the number of geodesics between these antipodes is equal to twice the number of Young tableaux of a truncated shifted staircase shape.Comment: figure added, plus several minor change

Improved Nearly-MDS Expander Codes

A construction of expander codes is presented with the following three properties: (i) the codes lie close to the Singleton bound, (ii) they can be encoded in time complexity that is linear in their code length, and (iii) they have a linear-time bounded-distance decoder. By using a version of the decoder that corrects also erasures, the codes can replace MDS outer codes in concatenated constructions, thus resulting in linear-time encodable and decodable codes that approach the Zyablov bound or the capacity of memoryless channels. The presented construction improves on an earlier result by Guruswami and Indyk in that any rate and relative minimum distance that lies below the Singleton bound is attainable for a significantly smaller alphabet size.Comment: Part of this work was presented at the 2004 IEEE Int'l Symposium on Information Theory (ISIT'2004), Chicago, Illinois (June 2004). This work was submitted to IEEE Transactions on Information Theory on January 21, 2005. To appear in IEEE Transactions on Information Theory, August 2006. 12 page

Beyond the DSGE Straitjacket

Academic macroeconomics and the research department of central banks have come to be dominated by Dynamic, Stochastic, General Equilibrium (DSGE) models based on micro-foundations of optimising representative agents with rational expectations. We argue that the dominance of this particular sort of DSGE and the resistance of some in the profession to alternatives has become a straitjacket that restricts empirical and theoretical experimentation and inhibits innovation and that the profession should embrace a more flexible approach to macroeconometric modelling. We describe one possible approach