A Brief Rejoinder to Professor Mullock

Mullock on Summers on Hart is bad enough, but Summers on Mullock on Summers on Hart is worse. Fortunately or unfortunately, there is no rule (primary or secondary) entitling either of us to vouch Professor Hart into the proceedings. With all due respect to Professor Mullock (and to me, of course), I fear the two of us may be compounding erroneous interpretations of Professor Hart’s work. Sans Hart, I shall exercise admirable restraint and argue over the meaning of the scripture. Regrettably, Professor Mullock and I are both defenders of the faith; I had hoped to draw the fire of a non-Christian

Gibson's Paradox and the Gold Standard

This paper provides a new explanation for Gibson's Paradox -- the observation that the price level and the nominal interest rate were positively correlated over long periods of economic history. We explain this phenomenon interms of the fundamental workings of a gold standard. Under a gold standard, the price level is the reciprocal of the real price of gold. Because gold is adurable asset, its relative price is systematically affected by fluctuations inthe real productivity of capital, which also determine real interest rates. Our resolution of the Gibson Paradox seems more satisfactory than previous hypotheses. It explains why the paradox applied to real as well as nominal rates of return, its coincidence with the gold standard period, and the co-movement of interest rates, prices, and the stock of monetary gold during the gold standard period. Empirical evidence using contemporary data on gold prices and real interest rates supports our theory.

The Economic Consequences of Noise Traders

The claim that financial markets are efficient is backed by an implicit argument that misinformed "noise traders" can have little influence on asset prices in equilibrium. If noise traders' beliefs are sufficiently different from those of rational agents to significantly affect prices, then noise traders will buy high and sell low. They will then lose money relative to rational investors and eventually be eliminated from the market. We present a simple overlapping-generations model of the stock market in which noise traders with erroneous and stochastic beliefs (a) significantly affect prices and (b) earn higher returns than do rational investors. Noise traders earn high returns because they bear a large amount of the market risk which the presence of noise traders creates in the assets that they hold: their presence raises expected returns because sophisticated investors dislike bearing the risk that noise traders may be irrationally pessimistic and push asset prices down in the future. The model we present has many properties that correspond to the "Keynesian" view of financial markets. (i) Stock prices are more volatile than can be justified on the basis of news about underlying fundamentals. (ii) A rational investor concerned about the short run may be better off guessing the guesses of others than choosing an appropriate P portfolio. (iii) Asset prices diverge frequently but not permanently from average values, giving rise to patterns of mean reversion in stock and bond prices similar to those found directly by Fama and French (1987) for the stock market and to the failures of the expectations hypothesis of the term structure. (iv) Since investors in assets bear not only fundamental but also noise trader risk, the average prices of assets will be below fundamental values; one striking example of substantial divergence between market and fundamental values is the persistent discount on closed-end mutual funds, and a second example is Mehra and Prescott's (1986) finding that American equities sell for much less than the consumption capital asset pricing model would predict. (v) The more the market is dominated by short-term traders as opposed to long-term investors, the poorer is its performance as a social capital allocation mechanism. (vi) Dividend policy and capital structure can matter for the value of the firm even abstracting from tax considerations. And (vii) making assets illiquid and thus no longer subject to the whims of the market -- as is done when a firm goes private -- may enhance their value.

Temperature coefficients and radiation induced DLTS spectra of MOCVD grown n(+)p InP solar cells

The effects of temperature and radiation on n(+)p InP solar cells and mesa diodes grown by metallorganic chemical vapor deposition (MOCVD) were studied. It was shown that MOCVD is capable of consistently producing good quality InP solar cells with Eff greater than 19 percent which display excellent radiation resistance due to minority carrier injection and thermal annealing. It was also shown that universal predictions of InP device performance based on measurements of a small group of test samples can be expected to be quite accurate, and that the degradation of an InP device due to any incident particle spectrum should be predictable from a measurement following a single low energy proton irradiation

Self-Assembly of Arbitrary Shapes Using RNAse Enzymes: Meeting the Kolmogorov Bound with Small Scale Factor (extended abstract)

We consider a model of algorithmic self-assembly of geometric shapes out of square Wang tiles studied in SODA 2010, in which there are two types of tiles (e.g., constructed out of DNA and RNA material) and one operation that destroys all tiles of a particular type (e.g., an RNAse enzyme destroys all RNA tiles). We show that a single use of this destruction operation enables much more efficient construction of arbitrary shapes. In particular, an arbitrary shape can be constructed using an asymptotically optimal number of distinct tile types (related to the shape's Kolmogorov complexity), after scaling the shape by only a logarithmic factor. By contrast, without the destruction operation, the best such result has a scale factor at least linear in the size of the shape, and is connected only by a spanning tree of the scaled tiles. We also characterize a large collection of shapes that can be constructed efficiently without any scaling