The observational equivalence of natural and unnatural rates of interest

The results of the study presented in this paper demonstrate that a structural model of the natural interest rate, which is consistent with the standard assumptions of the natural rate theory, admits an interpretable, observationally equivalent representation in which a redefined, ’unnatural’ equilibrium rate is different from the natural rate in the original model. The alternative representation was obtained by an invertible transformation implemented in the minimal state-space form of the natural-rate model. The identification theory for state-space models is used in the paper to prove the observational equivalence of these two representations. In the alternative representation, the equilibrium interest rate fails to meet the assumption of the natural rate theory, because it depends on past demand shocks. The alternative model, being observationally equivalent, has different implications for the conduct of monetary policy. The problem of observational equivalence arises in relation to natural-rate models because of the inherent unobservability of the natural interest rate; a potential solution to this problem could be the augmentation of the information set which is used to identify and estimate the natural rate.

INFORMATION AND CONSULTANCY CENTRES IN SLOVAKIA – PROMOTING PARTNERSHIP IN COHESION POLICY

Implementation of cohesion policy, as the major EU budgetary chapter, is subject to vast scholarship. Therefore, surprisingly enough, the principal-agent (P-A) framework has received little recognition in this academic field so far. The present paper contributes to the expansion of this increasingly popular approach also into cohesion scholarship by examining the operation of Information and Consultancy Centres (ICC) in Slovakia. The major finding shows limits of the P-A framework by suggesting that instead of a mutual conflict, it is a cooperative mode dominantly shaping dynamics of P-A relations due to the shared goals and interests. ICC operations and relations with the Government are interpreted via observational equivalence and ceremonialism as the recognized P-A framework tools.

Well-definedness and observational equivalence for inductive–coinductive programs

We define notions of well-definedness and observational equivalence for programs of mixed inductive and coinductive types. These notions are defined by means of tests formulas which combine structural congruence for inductive types and modal logic for coinductive types. Tests also correspond to certain evaluation contexts. We define a program to be well-defined if it is strongly normalizing under all tests, and two programs are observationally equivalent if they satisfy the same tests. We show that observational equivalence is sufficiently coarse to ensure that least and greatest fixed point types are initial algebras and final coalgebras, respectively. This yields inductive and coinductive proof principles for reasoning about program behaviour. On the other hand, we argue that observational equivalence does not identify too many terms, by showing that tests induce a topology that, on streams, coincides with usual topology induced by the prefix metric. As one would expect, observational equivalence is, in general, undecidable, but in order to develop some practically useful heuristics we provide coinductive techniques for establishing observational normalization and observational equivalence, along with up-to techniques for enhancing these methods.

Conceptual Conspectus

This chapter contrasts the colonial and “sectarianized peoples” interpretations of modern Irish history, defining and defending the former while noting that the latter frequently displays “observational equivalence” with the former. Jürgen Osterhammel’s conception of colonialism is shown to be applicable and apposite, as are those of a range of thinkers from Machiavelli to Michael Hechter. A political rather than an economic or cultural conception of colonialism is defended. An overview of the influential “ancient-régime” reading of Irish history by Sean Connolly is shown to have significant limitations. The curious absence of decolonization from much Irish historiography is noted. The reason that matters is that it is important to date the end of colonization in the South and the North respectively and precisely.