We define and study an infinite-dimensional Lie algebra homeo(+). which is
shown to be naturally associated to the topological Lie group Homeo(+) of a
ll orientation-preserving homeomorphisms of the circle. Roughly, we rely on
the universal decorated Teichmuller theory developed before as motivation
to provide Frechet coordinates on the homogeneous space given by Homeo(+).
modulo the group of real fractional linear transformations, whose correspon
ding vector fields on the circle we then extend by the usual Lie algebra sl
(2) of real traceless two-by-two matrices in order to define homeo(+). Surp
risingly, homeo(+) turns out to be equal to the algebra of all vector field
s on the circle which are "piecewise sl(2)" in the obvious sense. It is evi
dently important to consider the relationship between our new Frechet coord
inates and the usual trigonometric functions on the circle, and we undertak
e here both natural infinitesimal calculations. We finally apply some furth
er previous work in order to give sufficient conditions on the Fourier coef
ficients of a certain class of homeomorphisms of the circle which arises na
turally in topology and number theory. (C) 1998 Academic Press.