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This article uses a rational expectations model with multiple equilibrium unemployment rates to explain financial crises. The model has equilibria where asset prices are unbounded above. I argue that this is an important feature of any rational-agent explanation of a financial crisis, since for the expansion phase of the crisis to be rational, investors must credibly believe that asset prices could keep increasing forever with positive probability. I explain the sudden crash in asset prices that precipitates a financial crisis as a large shock to expectations that leads to a permanent increase in the unemployment rate.

Background Physician decision-making skills training is a priority to improve adoption of the cerebral palsy (CP) clinical guideline and, through this, lower the age of CP diagnosis. Clinical guideline implementation aims to improve physician practice, but evaluating meaningful change is complex. Limitations in the validity evidence of evaluation instruments impact the evidence base. Validity frameworks, such as Kane’s, enable a targeted process to gather evidence for instrument scores, congruent to context and purpose. Yet, application of argument-based methodology to implementation validation is rare. Key-features examination methodology has established validity evidence supporting its use to measure decision-making skills, with potential to predict performance. We aimed to apply Kane’s framework to evaluate a pilot key-features examination on physician decision-making in early CP diagnosis. Methods Following Kane’s framework, we evaluated evidence across inferences of scoring, generalisation, extrapolation and implications in a study design describing the development and pilot of a CP diagnosis key-features examination for practising physicians. If found to be valid, we proposed to use the key-feature scores as an outcome measure of decision-making post education intervention to expedite CP diagnosis and to correlate with real-world performance data to predict physician practice. Results Supporting evidence for acceptance of scoring inferences was achieved through examination development with an expert group ( n  = 10) and pilot results ( n  = 10): (1) high internal consistency (0.82); (2) acceptable mean item-discrimination (0.34); and (3) acceptable reliability of examination scorers (95.2% congruence). Decreased physician acceptance of examination time (70%) was identified as a threat and prioritised in case reduction processes. Partial acceptance of generalisation, extrapolation and implications inferences were defensible with: (1) accumulated development evidence following established key-features methodology; (2) high pilot acceptance for authenticity (90%); and (3) plausibility of assumptions of score correlation with population register data. Conclusions Kane’s approach is beneficial for prioritising sources of validity evidence alongside the iterative development of a key-features examination in the CP field. The validity argument supports scoring assumptions and use of scores as an outcome measure of physician decision-making for CP guideline education implementation interventions. Scoring evidence provides the foundation to direct future studies exploring association of key-feature scores with real-world performance.

This article reformulates two important ideas from Keynes's General Theory. The first is that there may be a continuum of steady-state unemployment rates. The second is that beliefs select an equilibrium. I argue that search and matching costs in the labour market lead to the existence of a continuum of equilibria and I resolve the resulting indeterminacy by assuming that the beliefs of stock market participants are self-fulfilling. The article reconciles Keynesian economics with general equilibrium theory without invoking the assumption of frictions that prevent wages and prices from reaching their equilibrium levels.

There is evidence that obesity-related disorders are increased among people with depression. Variation in the FTO (fat mass and obesity associated) gene has been shown to contribute to common forms of human obesity. This study aimed to investigate the genetic influence of polymorphisms in FTO in relation to body mass index (BMI) in two independent samples of major depressive disorder (MDD) cases and controls. We analysed 88 polymorphisms in the FTO gene in a clinically ascertained sample of 2442 MDD cases and 809 controls (Radiant Study). In all, 8 of the top 10 single-nucleotide polymorphisms (SNPs) showing the strongest associations with BMI were followed-up in a population-based cohort (PsyCoLaus Study) consisting of 1292 depression cases and 1690 controls. Linear regression analyses of the FTO variants and BMI yielded 10 SNPs significantly associated with increased BMI in the depressive group but not the control group in the Radiant sample. The same pattern was found in the PsyCoLaus sample. We found a significant interaction between genotype and affected status in relation to BMI for seven SNPs in Radiant ( P <0.0057), with PsyCoLaus giving supportive evidence for five SNPs ( P -values between 0.03 and 0.06), which increased in significance when the data were combined in a meta-analysis. This is the first study investigating FTO and BMI within the context of MDD, and the results indicate that having a history of depression moderates the effect of FTO on BMI. This finding suggests that FTO is involved in the mechanism underlying the association between mood disorders and obesity.

Although usually thought of as external environmental stressors, a significant heritable component has been reported for measures of stressful life events (SLEs) in twin studies. Method We examined the variance in SLEs captured by common genetic variants from a genome-wide association study (GWAS) of 2578 individuals. Genome-wide complex trait analysis (GCTA) was used to estimate the phenotypic variance tagged by single nucleotide polymorphisms (SNPs). We also performed a GWAS on the number of SLEs, and looked at correlations between siblings. A significant proportion of variance in SLEs was captured by SNPs (30%, p = 0.04). When events were divided into those considered to be dependent or independent, an equal amount of variance was explained for both. This 'heritability' was in part confounded by personality measures of neuroticism and psychoticism. A GWAS for the total number of SLEs revealed one SNP that reached genome-wide significance (p = 4 × 10-8), although this association was not replicated in separate samples. Using available sibling data for 744 individuals, we also found a significant positive correlation of R 2 = 0.08 in SLEs (p = 0.03). These results provide independent validation from molecular data for the heritability of reporting environmental measures, and show that this heritability is in part due to both common variants and the confounding effect of personality.

Troy Davig and Eric Leeper (2007) have proposed a condition they call the generalized Taylor principle to rule out indeterminate equilibria in a version of the new-Keynesian model where the parameters of the policy rule follow a Markov-switching process. We show that although their condition rules out a subset of indeterminate equilibria, it does not establish uniqueness of the fundamental equilibrium. We discuss the differences between indeterminate fundamental equilibria included by Davig and Leeper's condition and fundamental equilibria that their condition misses

This paper has three parts. Part 1 constructs a classical economic model of inflation, augmented by a complete set of financial markets; I call this the core monetary model. Part 2 develops a series of calibrated examples to illustrate how the core monetary model explains the history of inflation after the Second World War, and Part 3 provides evidence to show that the unconventional monetary policy, followed in the wake of the 2008 financial crisis, was effective in stabilizing inflation expectations. The core monetary model provides a unified framework to explain how an interest rule can be used to control inflation in normal times, and to explain the purpose of unconventional monetary policy when policy attains the zero lower bound. I argue that management of the variation in the composition of the Fed's balance sheet, is an important tool in a central bank's arsenal that can be used to help prevent deflation in the wake of a financial crisis.

Studies exploring gene-environment interplay in affective disorders now include very large numbers of participants. Methods for evaluating the role of adversity in such studies need to be developed that do not rely on lengthy and labour-intensive interviews. In the present study, a brief questionnaire method for measuring 11 adverse events reported before interview and before their worst illness episodes by bipolar, unipolar and healthy control participants, participating in genetic association studies, was evaluated. Five hundred and twelve bipolar disorder (BD) participants, 1447 participants with recurrent unipolar depression (UPD) and 1346 psychiatrically healthy control participants underwent the researcher-administered version of the List of Threatening Experiences Questionnaire (LTE-Q) for the 6 months before their worst affective episodes for UPD and BD participants, and for the 6 months before interview for the UPD participants and controls. UPD and BD cases were significantly more likely to report at least one event, as well as more events in the 6 months before interview and before their worst illness episodes, than healthy controls. Both manic and depressive episodes were significantly associated with adverse events in the BD cases. Depressed mood at the time of interview influenced event reporting in UPD and control participants but not the BD cases. Age was negatively correlated with the number of events reported by controls. The researcher-administered LTE-Q provides a measure of case-control differences for adversity that is applicable in large genetic association studies. Confounding factors for event reporting include present mood and age.

This paper is about the effectiveness of qualitative easing, a form of unconventional monetary policy that changes the risk composition of the central bank balance sheet. We construct a general equilibrium model where agents have rational expectations, and there is a complete set of financial securities, but where some agents are unable to participate in financial markets. We show that a change in the risk composition of the central bank’s balance sheet affects equilibrium asset prices and economic activity. We prove that, in our model, a policy in which the central bank stabilizes non-fundamental fluctuations in the stock market is self-financing and leads to a Pareto efficient outcome.