As every fledgling pilot learns, either by instruction or by experience, night doesn’t fall; night rises. That is to say that as sunset approaches first the surface of the earth under the pilot gets dark, while the sun shines brightly (or at least the clouds are bright) up in the air. This is, of course, a consequence of the curvature of the earth. So the unpleasant surprise for the novice who is accostomed to flying about in nice weather in the middle of the day is that a late-planned approach to landing could well be conducted in the dark of night. This is especially true in the summer, when the sun descends rapidly under the horizon. If the hapless pilot has no training yet in night landings, then the lesson in doing so is readily at hand. Continue reading
It is often noted that the carpenter approaches any problem as a nail, so he takes out his hammer to hit it. So here comes my description of the Euro crisis, and its solution. As I do stochastic analysis these days, I bring my toolkit, Brownian motions and all.
As any mother chasing her two-year-old around the airport knows, a path of a stochastic process can be erratic, with lots of surprises. So it is with economic variables. Any sequence of numbers, be they stock market prices, temperatures at noon, or the course of the Gross Domestic Product of Greece, if they contain uncertainty about what the next number will be, is a stochastic process. Continue reading