Scylla and Charybdis: Navigating a Liquidity Trap
... The Japanese experience is instructive. Falling Japanese prices wiped out three years of Japanese GDP. Collapsing property—See Exhibits 9 and 10—and stock prices forced companies and households to pay down debt. As interest rates approached zero, firms, instead of borrowing, hoarded cash to pay down ...
... The Japanese experience is instructive. Falling Japanese prices wiped out three years of Japanese GDP. Collapsing property—See Exhibits 9 and 10—and stock prices forced companies and households to pay down debt. As interest rates approached zero, firms, instead of borrowing, hoarded cash to pay down ...
Chap 5 - TCU.edu
... For the money market fund, your holding-period return for the next year depends on the level of 30-day interest rates each month when the fund rolls over maturing securities. The one-year savings deposit offers a 7.5% holding period return for the year. If you forecast that the rate on money market ...
... For the money market fund, your holding-period return for the next year depends on the level of 30-day interest rates each month when the fund rolls over maturing securities. The one-year savings deposit offers a 7.5% holding period return for the year. If you forecast that the rate on money market ...
Macro1
... – The Fed’s choice of policy instrument (which is the same choice as that made by most other major central banks) is a short-term interest rate. – Given this choice, the exchange rate and the quantity of money find their own equilibrium values. – The specific interest rate that the Fed targets is th ...
... – The Fed’s choice of policy instrument (which is the same choice as that made by most other major central banks) is a short-term interest rate. – Given this choice, the exchange rate and the quantity of money find their own equilibrium values. – The specific interest rate that the Fed targets is th ...
Volume 36, Issue 4
... derive from the nonlinearities in the output-inflation nexus highlighted by recent theoretical studies. We cannot detect, though, the threshold after which the effect of inflation on output either disappears or turns negative, exactly because of low inflation rates throughout our sample. Under a pol ...
... derive from the nonlinearities in the output-inflation nexus highlighted by recent theoretical studies. We cannot detect, though, the threshold after which the effect of inflation on output either disappears or turns negative, exactly because of low inflation rates throughout our sample. Under a pol ...
directorate general economics
... understood at least since the work of Irving Fisher.12 The key point is that, because of the ...
... understood at least since the work of Irving Fisher.12 The key point is that, because of the ...
Investigating Business Cycle Synchronization in West Africa
... 2000 and signed a treaty to create a second monetary union, the West African Monetary Zone (WAMZ). We note that West Africa already has a monetary union mainly comprising former French colonies, the Communauté Financière Africaine (CFA) zone comprising Benin, Burkina Faso, Côte d'Ivoire, Guinea-Biss ...
... 2000 and signed a treaty to create a second monetary union, the West African Monetary Zone (WAMZ). We note that West Africa already has a monetary union mainly comprising former French colonies, the Communauté Financière Africaine (CFA) zone comprising Benin, Burkina Faso, Côte d'Ivoire, Guinea-Biss ...
Power Point - U of T : Economics
... • - in my view, this thesis is badly mistaken: • - confuses micro-economics with macroeconomics; and • - confuses changes in relative prices with changes in the price level (CPI) ...
... • - in my view, this thesis is badly mistaken: • - confuses micro-economics with macroeconomics; and • - confuses changes in relative prices with changes in the price level (CPI) ...
Homework Assignment #6
... B) hit its highest point near World War II and then generally declined until the early 1980s. C) increased over most of the period following World War II and hit it highest point during the early 1980s, after which is has declined. D) has stayed roughly constant since the mid 1940s. Answer: B ...
... B) hit its highest point near World War II and then generally declined until the early 1980s. C) increased over most of the period following World War II and hit it highest point during the early 1980s, after which is has declined. D) has stayed roughly constant since the mid 1940s. Answer: B ...
Floating rate Term Deposits
... lower this asset-liability mismatch. The advantages of commercial banks offering floating rates on deposits along with fixed rates can be better understood with an example. Housing loan typically figures as the single largest component of an individual's liability. For most middle-income individuals ...
... lower this asset-liability mismatch. The advantages of commercial banks offering floating rates on deposits along with fixed rates can be better understood with an example. Housing loan typically figures as the single largest component of an individual's liability. For most middle-income individuals ...
Suppose that the economy is in a long
... but is neutral in the long run? 4. Explain how each of the following developments would affect the supply of money, the demand for money, and the interest rate. Illustrate your answers with a diagram. a. The Federal Reserve raises the discount rate. b. A wave of consumer pessimism reduces aggregate ...
... but is neutral in the long run? 4. Explain how each of the following developments would affect the supply of money, the demand for money, and the interest rate. Illustrate your answers with a diagram. a. The Federal Reserve raises the discount rate. b. A wave of consumer pessimism reduces aggregate ...
ECON366 - KONSTANTINOS KANELLOPOULOS
... higher unemployment.” Comment on this statement. If wages are rigid, there is a trade-off between unemployment and inflation. In other words, if policy makers implement demand management policies (restrictive monetary policy) to reduce inflation, unemployment will increase at least in the short run. ...
... higher unemployment.” Comment on this statement. If wages are rigid, there is a trade-off between unemployment and inflation. In other words, if policy makers implement demand management policies (restrictive monetary policy) to reduce inflation, unemployment will increase at least in the short run. ...
Regional Policy
... Reduced energy use in public buildings in Lithuania (=3% of national energy consumption) ...
... Reduced energy use in public buildings in Lithuania (=3% of national energy consumption) ...
Secular stagnation or financial cycle drag?
... pre-crisis boom actually pushed output above potential and undermined productivity. In other words, it was not even required to achieve full employment. Third, the natural or equilibrium real interest rate is positive and considerably higher than the secular stagnation hypothesis would suggest. Ther ...
... pre-crisis boom actually pushed output above potential and undermined productivity. In other words, it was not even required to achieve full employment. Third, the natural or equilibrium real interest rate is positive and considerably higher than the secular stagnation hypothesis would suggest. Ther ...
monthly market insights - Commonwealth Foreign Exchange
... for the Fed to raise rates two more times this year may not be meaningfully impacted. Following the GOP healthcare bill debacle in late March, investors will be paying increasing attention to the political landscape. Any signs that the administration and more broadly, the Republican Party are hungry ...
... for the Fed to raise rates two more times this year may not be meaningfully impacted. Following the GOP healthcare bill debacle in late March, investors will be paying increasing attention to the political landscape. Any signs that the administration and more broadly, the Republican Party are hungry ...
Answers to Questions: Chapter 9
... 7. Forward-looking expectations attempt to predict the implications of economic disturbances (and policy changes) in advance. The backward-looking approach adjusts to what has already happened. It is likely that workers and firms will use the backward-looking approach. The existence of long-term wag ...
... 7. Forward-looking expectations attempt to predict the implications of economic disturbances (and policy changes) in advance. The backward-looking approach adjusts to what has already happened. It is likely that workers and firms will use the backward-looking approach. The existence of long-term wag ...
Vienna vs. Chicago on Monetary Issues
... say, government securities, or commercial paper, or the like, the result will be to pull the prices of such assets out of line with other assets and thus widen the area into which the extra cash spills. The increased demand will spread sooner or later affecting equities, houses, durable producer goo ...
... say, government securities, or commercial paper, or the like, the result will be to pull the prices of such assets out of line with other assets and thus widen the area into which the extra cash spills. The increased demand will spread sooner or later affecting equities, houses, durable producer goo ...
PROBLEMS
... simply change the inflation rate by 2%, leaving the real interest rate unchanged. Therefore, the change in the nominal interest rate is the same as the change in inflation, therefore ∆ i = 2%. ...
... simply change the inflation rate by 2%, leaving the real interest rate unchanged. Therefore, the change in the nominal interest rate is the same as the change in inflation, therefore ∆ i = 2%. ...
Econ 204 Topic 7 - University of Alberta
... clearing between institutions (through the Bank of Canada accounts when needed) 3) Banks are Profit Seekers Banks compete for investments, and make profits by lending these investments Also make profits from bank fees for a range ...
... clearing between institutions (through the Bank of Canada accounts when needed) 3) Banks are Profit Seekers Banks compete for investments, and make profits by lending these investments Also make profits from bank fees for a range ...
Borrowing, Depreciation, Taxes in Cash Flow Problems
... http://www.whitehouse.gov/omb/circulars/a094/a94_appxc.html Revised yearly, usually “good until January of the next year” How would the government decide its discount rates? What is the government’s MARR? ...
... http://www.whitehouse.gov/omb/circulars/a094/a94_appxc.html Revised yearly, usually “good until January of the next year” How would the government decide its discount rates? What is the government’s MARR? ...
Could A S y m p o S i...
... then the concerns? Some attach more importance to inflation than to other economic outcomes, and always fear inflation. Others attach more weight to some indicators than to others. U.S. unemployment has fallen to 5.5 percent, which some see as entering the danger zone. Most importantly, Federal Rese ...
... then the concerns? Some attach more importance to inflation than to other economic outcomes, and always fear inflation. Others attach more weight to some indicators than to others. U.S. unemployment has fallen to 5.5 percent, which some see as entering the danger zone. Most importantly, Federal Rese ...
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and to maintain predictable exchange rates with other currencies.Monetary economics provides insight into how to craft optimal monetary policy.Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values.Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing.