Plucking Model Research Articles

A fur plucking model to study herpes simplex virus reactivation and recurrent disease.

Herpes simplex viruses (HSV-1 and HSV-2) have infected over half of the US adult population to cause a lifelong, persistent infection; however, our understanding of the mechanisms that govern HSV reactivation and recurrent disease is incomplete. This is in part due to limitations in the animal models used to study recurrent disease, which are laborious and inefficient in mice. To address this technical gap, we developed a mouse model in which fur plucking after flank skin infection is sufficient to induce episodes of HSV reactivation and recurrent disease. Our work provides a model for the field to investigate the pathogenic mechanisms of HSV and immune responses during recurrent disease and provides an opportunity to investigate the neurobiology of HSV infection.

Economic resilience: Why some countries recover more robustly than others from shocks

Economic resilience – the tendency of economies to bounce back from negative shocks – has never been more important, given the growing prevalence and frequency of such shocks. The existing literature on its determinants are inconclusive. We therefore reanalyze those determinants for a large sample of countries, first collectively and then separately for advanced countries and emerging markets. Deeper recessions are followed by stronger recoveries, consistent with Friedman's plucking model of the business cycle. In contrast, longer recessions are associated with weaker recoveries, as if more extensive destruction of human capital and other hysteresis effects limit resilience. Trade openness and exchange rate flexibility, which facilitate the substitution of external demand when domestic demand is weak, are positively associated with resilience, as are a strong current account balance and ample foreign reserves. Financial openness and rapid private credit growth in the preceding expansion contribute negatively, reflecting their legacy of financial problems.

AN EMPIRICAL TAKE ON THE “PLUCKING” MODEL

Traditional estimates of potential output based on the symmetric business cycle (boom–bust) view are prone to large retrospective revisions. The plucking view, which is supported by empirics, offers possible respite. Serious attempts to estimate the output ceiling in the plucking view, analogous to potential output in the traditional view, are scarce. This paper has three parts. The first estimates the output ceiling in a computationally simple approach. The second analyzes the relationship of the resultant output gap with inflation and with the unemployment rate. A comparison is made against output gap estimates based on prevailing methods. The third uses a vector autoregression (VAR) to analyze responses to supply and demand shocks. The paper finds that the plucking model offers three points of improvement over prevailing methods based on the boom–bust view. First, boom–bust estimates are prone to large retrospective revisions when two-sided filters are used, while the plucking estimates are not. Second, output gap estimates from both views do not correlate well with core inflation. This absence of evidence for a Phillips curve is problematic for the boom–bust view. The plucking estimates correlated well with the unemployment rate but the boom–bust estimates did not. Third, the output ceiling from the plucking model responded only to supply (oil price) shocks and not demand (interest rate) shocks, hence fits the description of a supply measure. This paper provides a template to estimate the output ceiling of the plucking model in other countries using publicly available macroeconomic data.

Asymmetric Co-fluctuations of U.S. Output and Unemployment: Friedman’s Plucking Model and Okun’s Law

Asymmetric Co-fluctuations of U.S. Output and Unemployment: Friedman’s Plucking Model and Okun’s Law

Friedman’s plucking model: New international evidence from Maddison Project data

Milton Friedman’s plucking model of business cycles hypothesizes that deeper recessions forecast larger booms while stronger booms do not necessarily forecast deeper recessions. While most previous past empirical work is limited to post-war data in the US, this paper tests the plucking model using Maddison Project growth data for 169 countries across several centuries. We find that the plucking property is broadly evident across time and countries. Plucking is particularly strong in advanced economies in East Asia (Japan), Europe (Western Europe) and North America (US and Canada) while to a lesser extent elsewhere in emerging economies. The overall strength of the plucking property globally also appears to have increased during the 20th century with the rise of widespread industrialized economies.

Business cycles in Iran: Evidence from asymmetry and correlated shocks

asymmetry in Iran has been investigated using a nonlinear unobserved component model. In this regard, according to Kim and Nelson's (1999) interpretation of Friedman plucking model (1993), asymmetric transit

Friedman’s Plucking Model: New International Evidence From Maddison Project Data

Milton Friedman’s plucking model of business cycles hypothesizes that deeper recessions forecast larger booms while stronger booms do not necessarily forecast deeper recessions. While most previous past empirical work is limited to post-war data in the US, this paper tests the plucking model using Maddison Project growth data for 169 countries across several centuries. We find that the plucking principle is broadly evident across time and countries, particularly in East Asia, Europe and North America while to a lesser extent elsewhere.

Cyclical fluctuations of economic growth and monetary policy in Nigeria: does fiscal policy also matter?

ABSTRACT This study investigated the key monetary policy determinants of economic recovery, confirmed the optimum monetary policy target, and assessed the moderating role of fiscal policy in achieving economic growth in Nigeria. A plucking model of Friedman was estimated with Markov-switching, while threshold regression techniques were employed to confirm the monetary policy rate that can ensure economic recovery. Quarterly data, sourced from the National Bureau of Statistics and the Central Bank of Nigeria, between 2010:Q1 and 2019:Q1 were utilised. The results showed a significant asymmetry in the growth cycles with both monetary and fiscal policy found to be pro-cyclical, while increase in reserves in the regime of slow economic growth was not found to be growth supportive. The threshold analyses show that the Treasury Bill rate is pro-economic growth when monetary policy rate is at least 7.8%. While the Treasury Bill is a better monetary instrument that can deliver improved economic growth in Nigeria, the study recommends pro-cyclical policy coordination between monetary and fiscal policy to achieve economic recovery in Nigeria.

A Plucking Model of Business Cycles

In standard models, economic activity fluctuates symmetrically around a “natural rate” and stabilization policies can dampen these fluctuations but do not affect the average level of activity. An alternative view—labeled the “plucking model” by Milton Friedman—is that economic fluctuations are drops below the economy’s full potential ceiling. If this view is correct, stabilization policy, by dampening these fluctuations, can raise the average level of activity. We show that the dynamics of the unemployment rate in the US display a striking asymmetry that strongly favors the plucking model: increases in unemployment are followed by decreases of similar amplitude, while the amplitude of the increase is not related to the amplitude of the previous decrease. We develop a microfounded plucking model of the business cycle. The source of asymmetry in our model is downward nominal wage rigidity, which we embed in an explicit search model of the labor market. Our search framework implies that downward nominal wage rigidity is consistent with optimizing behavior and equilibrium. In our plucking model, stabilization policy lowers average unemployment and thereby yields sizable welfare gains. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Detecting currency manipulation: An application of a state-space model with Markov switching

Following an idea of Milton Friedman's “plucking model,” we propose to use a state-space model with Markov switching as an auxiliary tool for detecting currency manipulation. Without imposing any a priori restrictions, our model tests if fluctuations of a country's exchange rate are symmetric or if there exists a time-varying support level or resistance level of exchange rate. Using weekly and monthly data of countries on the “monitoring list” of the US Treasury as of April 2017, we find that exchange rates of China, South Korea, Switzerland, and Taiwan rarely fall below their time-varying trends, but are plucked upward from time to time by transitory shocks, suggesting that the FX (foreign exchange) authorities of these countries may have been intervening more actively against appreciation shocks. Our sub-sample analysis reveals that our model accurately captures the period of Switzerland's minimum exchange rate policy with probability of one and Japan's exchange rate rarely falls below its trend after implementing Abenomics. We discuss the difficulties of detecting FX intervention along with the relative advantage of our approach.

Detecting Currency Manipulation: An Application of State-Spacemodel with Markov Switching

Following an idea of Milton Friedman’s plucking model, we propose to use a state-space model with Markov switching as an auxiliary tool for detecting currency manipulation. Without imposing any a priori restrictions, our model tests if fluctuations of a country’s exchange rate are symmetric or if there exists a time-varying support level or resistance level of exchange rate. Using weekly and monthly data of countries on the monitoring list of the US Treasury as of April 2017, we find that exchange rates of China, South Korea, Switzerland, and Taiwan rarely fall below their time-varying trends, but are plucked upward from time to time by transitory shocks, suggesting that the FX (foreign exchange) authorities of these countries may have been intervening more actively against appreciation shocks. Our subsample analysis reveals that our model accurately captures the period of Switzerland's minimum exchange rate policy with probability of one and Japan’s exchange rate rarely falls below its trend after implementing Abenomics. We discuss the difficulties of detecting FX intervention along with the relative advantage of our approach.

Nonlinear evidence on the existence of jobless recoveries

Abstract The sluggish growth in employment following the Great Recession has spurred research into investigating its cause. Economists are split as to whether it reflects the advent of “jobless recoveries” or just reflects “slow recoveries” in which both output and employment are slow to recover. We estimate a version of Friedman’s plucking model to investigate this issue. We find evidence suggesting that employment does have its own dynamic response after a recession. Some of the slow growth in employment can be ascribed to the slow output growth, but there is a remaining portion which is consistent with the jobless recovery hypothesis. We then produce evidence relative to four different hypothesis of why jobless recoveries have occurred.

Mechanics and response of a surface rock block subjected to pressure fluctuations: A plucking model and its application

Plucking (removal of rock blocks) is often the dominant mechanism for producing a scour hole on riverbeds comprised of heavily jointed rock masses being subjected to pressure fluctuations from a jet flow. This paper explores the mechanics and response of a surface block subjected to pressure fluctuations. First a particle-flow simulation was conducted to demonstrate how repeated pressure fluctuations are able to gradually remove rock bridges in discontinuities surrounding a rock block, if a pressure fluctuation's intensity is substantial. As a consequence, these weak planes may become fully persistent. The block's uplift speed then depends on the pressure differences on the opposite (horizontal) faces, and the frictional resistance of the lateral discontinuities. This paper proposes a theoretical framework to model the mechanics and response of a rock block subjected to a sinusoidal pressure fluctuation. This model can be applied to estimate the development of a scour hole, through plucking, during a specific flood event. An example demonstrates the applicability of the proposed approach in predicting the potential depth of the scour hole.

Application of Three Non-Linear Econometric Approaches to Identify Business Cycles in Peru

I use three non-linear econometric models to identify and analyze business cycles in the Peruvian economy for the period 1980:1-2008:4. The models are the Smooth Transition Autoregressive (STAR) model suggested by Terasvirta (1994), the extended version of the MarkovSwitching model proposed by Hamilton (1989), and the plucking model of Friedman (1964, 1993). The results indicate strong rejection of the null hypothesis of linearity. The majority of models identify quarters concentrated around 1988-1989 and 1990-1991 as recession times. Other important events which happened in the Peruvian economy (natural disaster in 1983, effects of the Asian and Russian crises in 1990s, terrorist activities in 1980s) are not selected except as atypical observations. Most of models also identify the period 1995:1-2008:4 as a very long and stable period of moderate-high growth rates. From the perspective of the Peruvian economic history and from a statistical point of view, the MSIAH(3) model is the preferred model.

Business Cycle Asymmetry in China: Evidence from Friedman's Plucking Model

AbstractFriedman's plucking model of business fluctuations suggests that output cannot exceed an upper limit, but it is occasionally “plucked” downward below trends as a result of economic recessions. This paper investigates China's business fluctuations using quarterly real GDP data for the period 1978–2009. Our results show some evidence supporting Friedman's plucking model. We find that a ceiling effect of real output exists, and that negative asymmetric shocks significantly affect the transitory component, which captures the plucking downward behavior during the recession. The results also suggest that the basic asymmetric unobserved component model is not appropriate for directly modeling China's real output because the business cycle is inaccurately measured, but it works quite well when considering a structural break in the second quarter of 1992. The results reveal that although China's economy strengthened in the second quarter of 2009, it is essential for China's government to take further positive and effective measures to maintain sustainable development of the economy.

Asymmetry in the Business Cycle: Friedman's Plucking Model with Correlated Innovations

This paper develops an unobserved components model for U.S. real GDP that allows for both asymmetric transitory movements and correlation between the permanent and transitory innovations. The asymmetry is modeled using Markov-switching in the transitory component in the spirit of Kim and Nelson’s (1999) version of Friedman’s plucking model. The findings suggest that ignoring the correlation between permanent and transitory movements underestimates the role of permanent movements, whereas ignoring asymmetry in the transitory component underestimates the role of temporary movements in U.S. real GDP. These results imply that both permanent movements and asymmetric transitory shocks are important for explaining post-war output fluctuations in the U.S. and for explaining the recession that began in 2007 in particular.

Asymmetry in business fluctuations: International evidence on Friedman's plucking model

Friedman's plucking model of business fluctuations suggests that output cannot exceed a ceiling level, and it is occasionally plucked downward by recession; output has depth and steepness. This study uses a sample of 12 industrial and emerging economies and finds some evidence that negative shocks are largely transitory, while positive shocks are mostly permanent. In a few cases, as implied by the plucking model, output fluctuations tend to be asymmetric: recessions are transitory, and duration dependent, although expansions are not. There is, however, serial correlation in almost all cases. International evidence on Friedman's plucking model is far from robust.

Asymmetry in the Business Cycle: Friedman's Plucking Model with Correlated Innovations

Recent research has shown that unobserved components (UC) models can, under certain conditions, be estimated without imposing the common zero-correlation restriction between the permanent and transitory innovations. Estimates applying this model to US real GDP suggest that US output experiences considerable permanent movements. This result is in stark contrast to the findings based on estimates of zero-correlation models which suggest that fluctuations in output are primarily transitory. If the transitory component of US real GDP is asymmetric, particularly during recessions, then the linear UC model may over-emphasize permanent movements due to the dominance of expansions in the data. This paper produces and estimates an unobserved components model that allows for asymmetric transitory movements and for correlation between all the innovations. The asymmetry is modeled using Markov-switching in the transitory component, in the spirit of Kim and Nelson's (1999) version of Friedman's plucking model. The findings suggest that both permanent movements and asymmetric transitory shocks are important for explaining post-war output fluctuations in the U.S.

State-Space Models with Regime-Switching: Classical and Gibbs Sampling Approaches with Applications

Both state-space models and Markov switching models have been highly productive paths for empirical research in macroeconomics and finance. This book presents recent advances in econometric methods that make feasible the estimation of models that have both features. One approach, in the classical framework, approximates the likelihood function; the other, in the Bayesian framework, uses Gibbs-sampling to simulate posterior distributions from data. The authors present numerous applications of these approaches in detail: decomposition of time series into trend and cycle, a new index of coincident economic indicators, approaches to modeling monetary policy uncertainty, Friedman's plucking model of recessions, the detection of turning points in the business cycle and the question of whether booms and recessions are duration-dependent, state-space models with heteroskedastic disturbances, fads and crashes in financial markets, long-run real exchange rates, and mean reversion in asset returns.

Friedman's Plucking Model of Business Fluctuations: Tests and Estimates of Permanent and Transitory Components

In Milton Friedman's model, output cannot exceed a ceiling level but occasionally is plucked downward by recession, implying fluctuations are asymmetric, recessions transitory, and recessions duration dependent though expansions are not. The empirical literature lends support, but formal modeling has been absent. The econometric model presented here encompasses both plucking and symmetric fluctuations around a stochastic trend. We find GDP is well characterized by the plucking model, implied recessions correspond to NBER reference cycles, and no role for symmetric cycles. Decomposition of the unemployment rate reveals a corresponding asymmetry and timing. Paths of ceiling output and trend unemployment are presented.