Permanent Equilibrium Research Articles

Measuring RMB equilibrium exchange rate and misalignment in China: Application of BEER and PEER approaches

The study attempts to measure RMB real effective exchange rate (REER) equilibrium and its associated degree of misalignments for China using the behavioral equilibrium exchange rate (BEER) and permanent equilibrium exchange rate approaches. We use a range of economic fundamentals and employ yearly data covering the period 1980–2020, and apply the Johansen Cointegration test and other econometric methods for the study purpose. We find evidence of the existence of RMB real effective exchange rate equilibrium, and for most of the periods, the RMB REER is closer to its equilibrium level. We also find that the RMB REER misaligned with its equilibrium producing episodes of undervaluation and overvaluation, but the magnitude of the misalignments is small and the BEER approach produces a lower degree of misalignments. This suggests that the RMB undervaluation is moderate and not as exaggerated. We identify that the economic fundamentals used in this study are important determinants of RMB real effective exchange rate equilibrium. In line with the above, the study recommends that China may continue using its RMB exchange rate as its policy tool, but the policymakers should focus on the core fundamentals that derived the equilibrium exchange rate.

Sustainable Development, Globalization, Non-antagonistic Development, Philosophical Environmentalism and Endangered Democracy

In this paper, one discusses the conditions favourable for sustainable development, limitations of it in the social reality and the sense of implementing it everywhere. The author points out that sustainable development has always taken place in nature thanks to the mechanisms of self-regulation and the laws of nature. However, what is new is the idea of sustainable development in the social reality. Balancing inequalities to the end, i.e. until the state of permanent equilibrium of social systems is achieved, leads to stagnation. Because the source of sustainable development is throwing off equilibrium, and stabilization kills development. He also indicates that the idea of sustainable development was not born out of ecological, but economic reasons, and still serves mainly economic, not ecological purposes. It works best in the sphere of the economy. Nevertheless, it is implemented everywhere with a better or worse result, because the world fashion for sustainable development and its mythologization has prevailed. One sees in it a panacea for all social problems. In fact, it is a tool of self-regulation in social systems that ensure the survival of them. There is a feedback loop between sustainable development and globalization. Sustainable development contributes to globalization, and globalization promotes sustainable development. However, only until one reaches some critical moment. Then, globalization begins to hinder sustainable development and eventually makes it unfeasible. The condition for the implementation of sustainable development is the freedom provided by the democratic system. Therefore, it works best in a liberal democracy. Unfortunately, this democracy is already collapsing. It has taken on a caricature form that makes difficult for people to live and for governments to exercise power. Therefore, one replaces it by totalitarian or fascist regimes, which for different reasons gives greater hope for a better functioning of the state. However, totalitarianism limits freedom significantly and fascism, in addition, raises legitimate fear due to negative historical experiences. There is no place for sustainable development in these regimes. That is why many researchers and politicians want to stop fascism and bring about sanitation of democracy with New Enlightenment, New Metanoia, and New Humanism. In such way, they want to enable further sustainable development.

Unsteady Heat Transfer in Bilayer, and Three-Layer Materials

The heat transfer equation is used to determine the heat flow by conduction through a composite material along the real axis. An analytical dimensionless analysis is implemented in the framework of a separation of variables method (SVM). This approach leads to an Eigenvalues problem that is solved by the Newton’s method. Two types of dynamics are found: An unsteady condition (in the form of jumps or drops in temperatures depending on the considered case), and a permanent equilibrium (tending to the ambient temperature). The validity and effectiveness of the proposed approach for any number of adjacent layers is also discussed. It is shown that, as expected, the diffusion of the temperature is linked to the ratio of the thermo-physical properties of the considered layers and their number.

Optimal pricing and design of station-based bike-sharing systems: A microeconomic model

Carefully collected data of nine station-based Bike Sharing Systems (BSS) observed during several years, feed the theoretical formulation of three (aggregated) strategic models representing BSS operation from which the optimal design and pricing is derived. The models include both the operator's costs (investment and operation) and users' costs (time to walk to-from a station, waiting at a station, and time while cycling). The design variables are station spacing, number and capacity of stations, number of bicycles and bike repositioning. Once optimized, the design variables lead to cost functions and optimal pricing. In the first model, a permanent equilibrium without waiting times is assumed. In the second model, waiting at stations (due to a lack of bicycles or docking sites) is introduced in an aggregate form, which results in an increase in the optimal number of bikes and docking sites, making the optimal money price per trip to increase. The third and final model introduces repositioning of bicycles in order to diminish waiting time, making the optimal price grow even further. We obtain an optimal subsidy per trip that grows with the area covered by the BSS, which has implications for its actual implementation in large cities and their spatial and social equity. The optimal pricing scheme is caused by economies of scale due to the reduction in users' access and egress times as the density of stations increases (positive externality) in addition to a fixed operator cost.

The Influences of International Trade on Sustainable Economic Growth: An Economic Policy Perspective

This study uses the Gregory–Hansen cointegration method and the vector error correction model in the vector autoregression system to reveal how international trade contributes to economic sustainability. The Gregory–Hansen test for cointegration method reveals a permanent equilibrium relation among sustainably economic growth, exports, and imports and shows that exports facilitate GDP growth and accelerate improvements in the capability of imports in the long-run. The causality between GDP and exports is unidirectional, indicating that exports area determinant of sustainable economic growth. The bidirectional causality from imports to GDP also sheds light on the important influence of imports on economic sustainability; however, GDP growth also drives import growth. The interaction between imports and exports corresponds to their bidirectional causal relationship, which is indicative of imports contributing to export production and of export growth expanding the capacity for imports. This finding indicates that imports are both exogenous and endogenous factors for exports.

Integration of Life and Consciousness into Cosmology

The Big Bang model is based on vague interpretations of experimental data. Direct interpretation of the data opens a new vision of the universe in a permanent dynamic equilibrium without beginning and without end. In the universe as the main system, the evolution of life on planet Earth is a consistent part of the universal process that operates in the entire universe. The origin of life as a consistent part of universal dynamics is in higher dimensions of the multidimensional dynamic quantum vacuum.

Seasonality matters: A multi-season, multi-state dynamic optimization in fisheries

Many biological and economic processes in fisheries occur seasonally though most of the extant literature tends to neglect periodicity. This work is an attempt to treat seasonality in a systematic way. We present a multi-season multi-state bioeconomic model and apply a periodic Bellman approach using dynamic programming to obtain the optimal feedback policy of each season. Our approach has rich potentials. It could deal with seasonal patterns of arbitrary uneven lengths: some may span years and some may occur within a year.Our numerical illustration demonstrates that a seasonal dynamic optimization model allows for naturally occurring seasonal moratorium or potentially a Marine Protected Area (MPA). It shows that there exists optimal dynamic paths that develop into a permanent equilibrium cycle, which consists of one harvesting season followed by a moratorium period. This indicates an optimal closure of the fishery that a yearly model would overlook. Fishing pressure on the mature stock elicits even heavier harvesting in the next season on the same group. A protective moratorium of the immature hinders the value of the whole stock.

Profitability of an electrolysis based hydrogen production plant providing grid balancing services

Electricity production and consumption on electrical networks must be in permanent equilibrium to maintain the frequency around its nominal value (50 Hz or 60 Hz). The increasing use of intermittent power sources leads to new balancing requirements (entities capable of quickly adjusting their power injection or power consumption). We investigate in this paper the economic viability of an electrolysis based hydrogen production plant which provides balancing services to the network by participating to primary frequency regulation. This investigation is performed by modelling a grid connected electrolyser plant using the CEA's proprietary simulation platform Odyssey. This study focuses on the French context considering the compensation schemes of the French Transmission System Operator (TSO) RTE. Two scenarios are considered: (i) the assessment is made taking into account the economic conditions currently proposed by the French TSO, and (ii) a sensitivity study is conducted for evaluating the conditions for which the participation in frequency regulation would effectively enhance the economical balance and reduce the cost of producing hydrogen. Results indicate first that revenues related to frequency regulation are exclusively driven by the capacity component. Furthermore, the current economic conditions are not sufficiently attractive for a hydrogen production plant operator as they lead to an increase of the production cost. Sensitivity analyses highlight the fact that an increase of the compensation capacity component by a factor 2 to 3 is necessary to expect a reduction in production cost and to encourage hydrogen producers to participate to primary frequency regulation.

Measuring the dollar–euro permanent equilibrium exchange rate using the unobserved components model

This paper employs an unobserved component model that incorporates a set of economic fundamentals to obtain the Euro–Dollar permanent equilibrium exchange rates (PEER) for the period 1975Q1 to 2008Q4. The results show that for most of the sample period, the Euro–Dollar exchange rate closely followed the values implied by the PEER. The only significant deviations from the PEER occurred in the years immediately before and after the introduction of the single European currency. The forecasting exercise shows that incorporating economic fundamentals provides a better long-run exchange rate forecasting performance than a random walk process.

Measuring real exchange rate misalignment in Croatia: cointegration approach

The purpose of the paper is to analyze misalignment of the real exchange rate in Croatia. The misalignment analysis is conducted using the permanent equilibrium exchange rate approach. The equilibrium real exchange rate is computed using the cointegration approach whereby the real exchange rate and its fundamentals, namely terms of trade, net foreign assets and the ratio of prices of tradables to non-tradables are included in cointegration analysis. The Hodrick and Prescott filter is used to obtain permanent values of the equilibrium real exchange rate. The real exchange rate misalignment is computed as the deviation of the RER from its permanent equilibrium level. Four overvaluation periods and three undervaluation periods are recorded in Croatia in the observed period. Overvaluation periods are more often and of longer duration than undervaluation periods. However, the real exchange rate does not deviate largely from its estimated equilibrium value in the observed period, and it is neither overvalued nor undervalued constantly, but the periods alternate. Considering the results of the analysis, together with the empirical characteristics of Croatian economy, namely the high foreign currency indebtedness, highly euroized economy and underdeveloped export oriented sector, the depreciation of the real exchange rate is not recommended to economic policy makers and the current Croatian exchange rate policy is appropriate.

Tragedy of Commonly-Shared Debts

The debates about how to deal with government budget deficits are raging all over the world. In the US, the federal government was forced to shut down for 16 days in October, 2013 because of the failure to pass a budget through congresses, and barely averted a default of federal government obligations due to failure to raise the federal debt ceiling limit. The city of Detroit filed the largest municipal bankruptcy in the US history on July 18, 2013, despite Michigan State constitution’s balanced budget requirement. In Europe, the sovereign debt crisis has dragged down the entire EU economy since late 2009 with no end in sight. In Japan, the government debt to GDP ratio is well over 200%, which is one of the highest in the world. In the world of academics, the debates of government budget deficits have become the key battlegrounds of different schools of thoughts of economics and political ideologies. Economists and political scientists could not even agree to a framework to solve budget deficit problems, and let alone settle these debates. This paper provides a permanent and equilibrium solution to government budget deficits. Surprisingly the solution comes from the first principles of quantum politics. The political equilibrium structure has the time translational symmetry in treating different generations equally. One result of applying physics laws of social science to study the most stable political structure is that the most stable political structure is not only to require the majority voters must deal with minority voters fairly to avoid the tyranny of the majority, but also to require the voting generation must exercise their fiduciary duty to their children and unborn future generations. In terms of government budget deficits, the fiduciary duty means that the current voting citizens must take the full responsible of the current government budget deficits or surplus. The permanent equilibrium solution of government budget deficits is legally and personally held all the voting citizens accountable for the current fiscal surplus and deficit at all levels of governments. In contrast to the balanced budget approaches, the permanent equilibrium solution in this paper allows deficit spending and the accumulation of government debts as long as the government debts must be paid off by the responsible borrowers and voters. This method to solve the government budget deficit problem is an excellent example of applications of law of equilibrium, which can be used to solve economic, political, and other social problems in a value-free way. The permanent solution to government budget deficits presented in this paper is consistent with a different line of reasoning in economics, which is known as the tragedy of the commons. In cases of government budget deficits, the tragedy of fiscal abuse happens because the US Constitution fails to protect interests of the future generations. Through the commonly-shared responsibility for government debts, current voters and their political representatives have financially taken unfair advantage of their children and the future generations, who virtually have no political power.

The Body and the Polis: Alcmaeon on Health and Disease

Alcmaeon, a philosopher-cum-doctor from Croton, offers the earliest known definition of health and disease. The aim of this paper is to examine the formulation of his medical theory in terms of political organization, namely the polarity between one-man rule (monarchia) and egalitarianism (isonomia), by taking into account contemporary philosophical and medical texts, as well as the historical context. The paper is divided into four sections. I first overview the compendium in which this medical theory is reported, trace the doxographical layers, and analyse the terminology employed (I). I then focus on the key aspects of this medical theory, including the constitution of the body, the interaction of opposites, and the aetiology of disease (II). I suggest that Alcmaeon's notion of equality can be understood in various ways, and discuss the possible interpretations in the light of early Greek philosophy and medicine. The most likely interpretations are that there exists a kind of equilibrium between pairs of opposites, in addition to the equilibrium reached within each of them, and that the bodily constituents remain in a state of permanent equilibrium (III). Finally, I argue that Alcmaeon has in mind an egalitarian model of distribution of shares to the bodily constituents, which are depicted as the citizens of a tiny state whose antagonistic or collaborative tendencies affect its functioning (IV).

On equilibrium real exchange rates in euro area: Special focus on behavioral equilibrium exchange rates in Ireland and Greece

This paper focuses on the intra-euro-area imbalances. Therefore the first aim of this paper is to identify euro-area countries exhibiting macroeconomic imbalances. The subsequent aim is to estimate equilibrium real exchange rates for these countries and to compute their degrees of real exchange rate misalignment. The intra-area balance is assessed using the Cluster Analysis and the Principle Component Analysis; on this basis Greece and Ireland are selected as the two euro-area countries with largest imbalances in 2010. Further the medium-run equilibrium exchange rates for Greece and Ireland are estimated applying the Behavioral Equilibrium Exchange Rate (BEER) approach popularised by Clark and MacDonald (1998). In addition, the long-run equilibrium exchange rates are estimated using the Permanent Equilibrium Exchange Rate (PEER) model. Employing the BEER and PEER approaches on quarterly time series of real effective exchange rates (REER) from 1997: Q1 to 2010: Q4 we identify an undervaluation of the Greek and Irish REER around their entrance to the euro area. For the rest of the period analysed their REER is broadly in line with estimated BEER and PEER levels.

Rigid-Body Contact Using Finite Particle Method

Using the recently proposed Finite Particle Method (FPM), this paper presents the rigid-body contact simulation of 3D structures. The FPM models the space truss with finite particles. Following Newton's second law, every particle is in a permanent dynamic equilibrium. Fictitious motion procedures are developed in the particle internal force calculation to handle the geometric nonlinearity without iterative correction. Contact model and corresponding algorithm are developed based on the FPM. A numerical example is presented to demonstrate the capability of the FPM for analyzing rigid-body contact problems.

Real Exchange Rate Misalignment in Azerbaijan

By using quarterly data from 2001-2007 and applying various approaches, we estimate real equilibrium exchange rate misalignment for Azerbaijani Manat (AZN) and find that AZN is slightly overvalued. Purchasing power parity approach does not explain the equilibrium exchange rate. However using behavioral and permanent equilibrium exchange rate approaches, we find that the relative productivity, terms of trade, trade openness, net foreign assets, government expenditures and oil prices are the main determinants of misalignment.

Reassessing Italian Modernization: Social Autonomy in the Age of Exhaustion

Reassessing Italian ModernizationSocial Autonomy in the Age of Exhaustion Franco Berardi (bio) 1 Counter-Reformation and Modernity In this article, I wish to focus on the historical and cultural background which may help to explain the particularity of Italian modernity, starting from the Counter-Reformation, the moment when religious schism in Europe led to the cultural split that marks social and economic differentiation. The Counter-Reformation sanctioned the different pace of Christian European civilization in the age of colonization and industrialization. While the Protestant Reformation forged the culture of the northern European bourgeoisie, infusing the principles of individual discipline and personal responsibility into the public mind, Catholic culture privileged the sense of belonging and a fatalistic dependence on Providence. More deeply, the iconophobic severity of the Protestant imagination is part of the internalization of the industrial perception of time and space. According to Max Weber, classical industrial development is supported by the Protestant mentality [8–11]. In the spirit of the Protestant Reformation, the European bourgeoisie built the foundations of its power by subjecting itself to a rigid ethical and existential discipline. On the one hand, the bourgeois assumes responsibility for his or her actions and is accountable for them before God and man, and most of all before the banker. Economic fortune, then, is a worldly confirmation of divine benevolence. On the other hand, after the Council of Trent (1545–63), the Counter-Reformation reinstated the primacy of the religious over the secular realm and defended the belief that respecting the ecclesiastic hierarchy was much more important than submitting to productive discipline. The deep substratum of Catholic culture resisted both productivity and bourgeois efficiency. While Calvinism was based on the observance of the law, the spirit of the Counter-Reformation reinforced the primacy of mercy and the absolute value of repentance. The effects of the Counter-Reformation remained deeply engrained in the Italian social imaginary throughout modernity and manifested themselves in all their reactionary force at decisive moments in the life of the country. During the Neapolitan revolution of 1799, the enlightened bourgeoisie was isolated and defeated due to the complicity of the people with the House of Bourbon, the Church’s ally. After 1800, the alliance of the Church with the rural classes acted as an antibourgeois conservative force in the defense of the cultural hegemony of the Church against all attempts at the secularization of national life. In the years following the Second World War, Christian Democracy, the dominant political force in Italy, represented the mediation of a permanent equilibrium between capitalist modernization and populist and reactionary resistance. However, it would be wrong to see the “laxness” [End Page 29] that derives from the spirit of the Counter-Reformation as a purely regressive and conservative energy. In Vuelta de siglo, the Mexican philosopher Bolívar Echeverría argues that we should not identify modernity with a single model, but rather as the coexistence of two conflicting and interweaving paradigms [195–217]. The first paradigm developed out of the dominant bourgeois vision of modernity based on the Protestant ethic and on the territorial centrality of industrial production. The other vision of modernity emerged from the Counter-Reformation and the Baroque. This “second modernity” for Echeverría became subordinate and marginalized when the industrialization of the human environment reduced the social field to a process of mechanical production and reproduction, elevating the former paradigm as the sole guarantor of modern subjectivity. The bourgeoisie is strongly rooted in a local territory because the accumulation of value cannot be separated from the buildup (and expansion) of material products derived from the conflictive cooperation of the manual skills of workers and the entrepreneurial and financial skills of capitalists. Since the sixteenth century the Catholic Church has created a different kind of modernity, based on imagination and deterritorialization. The religious power of Rome has always been based on the ideological control of imagination: mysticism, spirituality, ascetic self-denial, but also the sensuous representation of flourishing bodies and an extreme sophistication of aesthetic forms. Catholic Spain of the sixteenth and seventeenth centuries was the harbinger of a non-industrial brand of accumulation, based on the massive robbery of the Americas. This strain of...

Real Exchange Rate Misalignment: An Application of Behavioral Equilibrium Exchange Rate (BEER) to Nigeria

Abstract This paper seeks to estimate the long run behavioral equilibrium exchange rate in Nigeria. The empirical analysis builds on quarterly data from 1986Q1 to 2006Q4 and derives a Behavioral Equilibrium Exchange Rate (BEER) and a Permanent Equilibrium Exchange Rate (PEER). The econometric analysis starts by analyzing the stochastic properties of the data and found all the variables stationary at first level of differencing. Accordingly, the paper proceeds by estimating vector-error correction models. Regression results show that most of the long-run behavior of the real exchange rate could be explained by real net foreign assets, terms of trade, index of crude oil volatility, index of monetary policy performance and government fiscal stance. On the basis of these fundamentals, four episodes each of overvaluation and undervaluation were identified and the antecedents characterizing the episodes were equally traced to the archive of exchange rate management in the country within the review period. Among others for instance, large inflow of oil revenues into the country and stable macroeconomic performance were discovered to account for undervaluation of the real exchange rate between 2001Q1 and 2006Q4 in Nigeria. The results further suggest that deviations from the equilibrium path are eliminated within one to two years. The paper recommends the pursuance of sound monetary policy as an instrument for achieving real exchange rate cum macroeconomic stability in Nigeria.

Two Cases of Pneumocele of Maxillary Sinus

Pneumocele is a rare disease involving one or more paranasal sinuses. It is defined as abnormal dilatation of paranasal sinus, which is air-filled with either focal or generalized thinning of bony sinus walls. The aim of pneumocele treatment is two-fold: to re-establish permanent pressure equilibrium in the involved sinus and to correct the possible facial deformities. The first goal can be achieved by middle meatal antrostomy. When alterations of the maxillary or orbital contour are present, corrections can be obtained by osteotomies through Caldwell-Luc or an infraorbital approach. We report two cases of pneumocele of maxillary sinus. The first case was treated with osteotomy via Caldwell-Luc approach and the second case was treated simultaneously with osteotomy and rhinoplasty. No recurrence was observed after surgical treatment in both cases.

Real Exchange Rate Misalignment in Azerbaijan

By using quarterly data from 2001-2007 and applying various approaches, we estimate real equilibrium exchange rate misalignment for Azerbaijani Manat (AZN) and find that AZN is slightly overvalued. Purchasing power parity approach does not explain the equilibrium exchange rate. However using behavioral and permanent equilibrium exchange rate approaches, we find that the relative productivity, terms of trade, trade openness, net foreign assets, government expenditures and oil prices are the main determinants of misalignment.

Transitional appreciation of equilibrium exchange rates and the ERM II

A suitable parity for exchange rate fixing can be derived from an analysis of the equilibrium exchange rate. As the equilibrium exchange rates of the new EU 5 countries, the Czech Republic, Hungary, Poland, Slovenia, and the Slovak Republic, tend to exhibit appreciation trends, credibility of the potential commitment to fixed exchange rate parity with respect to the euro can be undermined. In order to investigate this issue, we estimate a behavioral model of real exchange rates for EU 5 countries and derive the respective equilibrium real exchange rates. Using the linear-quadratic filter we estimate permanent equilibrium exchange rates and their stationary points. We find that as of 2004 fixing of the national currencies to the euro should not be undermined by further significant trend appreciation in the equilibrium exchange rates of the EU 5 countries, in aggregate.