![NBER WORKING PAPER SERIES THE VALUATION OF LONG-DATED ASSETS Ian Martin](http://s1.studyres.com/store/data/008687064_1-78b3c7b80d1ec4971c760dc315bf039e-300x300.png)
NBER WORKING PAPER SERIES THE VALUATION OF LONG-DATED ASSETS Ian Martin
... asset prices. Third, the empirical fact that Sharpe ratios are high—λ > σ—means that in this example explosions in Xt can be attributed to very negative realizations of Z1 +· · ·+Zt , and hence to explosions in M1 · · · Mt , that is, to extremely bad news. In this i.i.d.-lognormal example, the fact ...
... asset prices. Third, the empirical fact that Sharpe ratios are high—λ > σ—means that in this example explosions in Xt can be attributed to very negative realizations of Z1 +· · ·+Zt , and hence to explosions in M1 · · · Mt , that is, to extremely bad news. In this i.i.d.-lognormal example, the fact ...
On the interplay between speculative bubbles and productive
... a binding …nance constraint, the return of capital needs to be larger than in the unconstrained case, which implies that capital is lower than the golden rule level. This allows us to discuss the e¤ect of …nancial regulation on the longrun allocation. As a main insight with clear policy implication ...
... a binding …nance constraint, the return of capital needs to be larger than in the unconstrained case, which implies that capital is lower than the golden rule level. This allows us to discuss the e¤ect of …nancial regulation on the longrun allocation. As a main insight with clear policy implication ...
The Heisei Recession: An Overview Koichi Hamada, Yale University
... Economic theory faces a test of its applicability in the light of the novel situation, unobserved in the world economy at least after World War II, where the price is falling, the short-term interest approaches virtually the zero limit, and the demand for money is insatiable. This paper in an attemp ...
... Economic theory faces a test of its applicability in the light of the novel situation, unobserved in the world economy at least after World War II, where the price is falling, the short-term interest approaches virtually the zero limit, and the demand for money is insatiable. This paper in an attemp ...
Working With Our Basic Aggregate Demand / Supply Model
... • As the real interest rate falls, AD increases (to AD2). • As the monetary expansion was unanticipated, the expansion in AD leads to a short-run increase in output (from Y1 to Y2) and an increase in the price level (from P1 to P2) – inflation. • The impact of a shift in monetary policy is transmitt ...
... • As the real interest rate falls, AD increases (to AD2). • As the monetary expansion was unanticipated, the expansion in AD leads to a short-run increase in output (from Y1 to Y2) and an increase in the price level (from P1 to P2) – inflation. • The impact of a shift in monetary policy is transmitt ...
UNDERSTANDING LIQUIDITY CRISES: THE THEORY OF HYMAN MINSKY M B
... money in his possession; second, of the money at his banker’s, and all the other money due to him and payable on demand; thirdly of whatever credit he happens to possess’ (ibid: 61). Minsky focused on the pro-cyclical nature of the credit supply as the source of economic instability, reflecting his ...
... money in his possession; second, of the money at his banker’s, and all the other money due to him and payable on demand; thirdly of whatever credit he happens to possess’ (ibid: 61). Minsky focused on the pro-cyclical nature of the credit supply as the source of economic instability, reflecting his ...
SMALL MENU COSTS AND LARGE BUSINESS CYCLES: AN
... profits that result from price changes may be even smaller and, therefore, firms are better off by not changing prices in response to a demand shock. In Mankiw's model the decision of the firm depends on a comparison between one-time menu costs and the change in single-period profit. This paper argu ...
... profits that result from price changes may be even smaller and, therefore, firms are better off by not changing prices in response to a demand shock. In Mankiw's model the decision of the firm depends on a comparison between one-time menu costs and the change in single-period profit. This paper argu ...
Economics 1 - Bakersfield College
... If the price of BMW’s is higher than many people want to pay, the government can pass a law setting a maximum legal selling price below the equilibrium price, and now everyone who wants to buy a BMW for that cheaper price will be able to do so. Use a supply and demand diagram to support your answer. ...
... If the price of BMW’s is higher than many people want to pay, the government can pass a law setting a maximum legal selling price below the equilibrium price, and now everyone who wants to buy a BMW for that cheaper price will be able to do so. Use a supply and demand diagram to support your answer. ...
1. Janus
... (1998). The recommendation he formulated might have seemed provocative, as it included a central bank openly supporting the inflationary processes’ escalation2. Later on it was wildly commented upon within the formal models of Reifschneider and Williams (2000) or Eggerston and Woodford (2003). The e ...
... (1998). The recommendation he formulated might have seemed provocative, as it included a central bank openly supporting the inflationary processes’ escalation2. Later on it was wildly commented upon within the formal models of Reifschneider and Williams (2000) or Eggerston and Woodford (2003). The e ...
The United Kingdom`s quantitative easing policy
... For the Bank’s purchases of gilts, the liquidity premia channel was not expected to be very important. The gilt market continued to function effectively throughout the crisis, although even here the strains in financial markets could be discerned at times. The liquidity premia channel was more impor ...
... For the Bank’s purchases of gilts, the liquidity premia channel was not expected to be very important. The gilt market continued to function effectively throughout the crisis, although even here the strains in financial markets could be discerned at times. The liquidity premia channel was more impor ...
“During the recent tax season we reduced prices for our Quicken
... ⇒ Theoretical and empirical monetary models should allow for asymmetries in price setting Finding 2: Strategic pricing complementarities (real rigidities) between competing firms are important ⇒ Monetary transmission may be affected by the modes and degrees of competition ⇒ Real rigidities are an ap ...
... ⇒ Theoretical and empirical monetary models should allow for asymmetries in price setting Finding 2: Strategic pricing complementarities (real rigidities) between competing firms are important ⇒ Monetary transmission may be affected by the modes and degrees of competition ⇒ Real rigidities are an ap ...
Lecture 20
... The Aggregate Supply (AS) Curve is a graph that shows the relationship between the aggregate quantity of output supplied by all firms in an economy (Y) and the overall price level (PL). ...
... The Aggregate Supply (AS) Curve is a graph that shows the relationship between the aggregate quantity of output supplied by all firms in an economy (Y) and the overall price level (PL). ...
Power Point - U of T : Economics
... • b) Venetian wars with Turks from 1490s: curbed trade with & silver exports to Levant • - 1517: Ottoman conquest of Mamluk Egypt and Syria + the new Portuguese trade with Asia: severe drop in Venetian silver + copper exports more German silver and copper going to Antwerp market • - but somewhat o ...
... • b) Venetian wars with Turks from 1490s: curbed trade with & silver exports to Levant • - 1517: Ottoman conquest of Mamluk Egypt and Syria + the new Portuguese trade with Asia: severe drop in Venetian silver + copper exports more German silver and copper going to Antwerp market • - but somewhat o ...
NBER WORKING PAPER SERIES Stephen G. Cecchetti
... We pay central bankers to be paranoid. One of their primary responsibilities is to do extensive contingency planning, preparing for every possible calamity. And when they do their job well, most of us don’t even notice. In the past decade there are numerous examples of the central bank actions that ...
... We pay central bankers to be paranoid. One of their primary responsibilities is to do extensive contingency planning, preparing for every possible calamity. And when they do their job well, most of us don’t even notice. In the past decade there are numerous examples of the central bank actions that ...
Print Version - Of Wicksell And Fed Fallacies
... towards the natural rate. This, in turn, threatens the profitability of investments made during the easy credit period. As the cycle turns, the process of unwinding leverage forces the market rate above the natural rate and a recession ensues. Suddenly, past investments look terrible, especially the ...
... towards the natural rate. This, in turn, threatens the profitability of investments made during the easy credit period. As the cycle turns, the process of unwinding leverage forces the market rate above the natural rate and a recession ensues. Suddenly, past investments look terrible, especially the ...
Historical Experience with Low Inflation
... Blanchard and Lawrence Summers attributed it to an increase in the return on capital springing from deregulation and reductions in marginal tax rates. But the increase in economic growth over the following decade that one would have expected to result from an investment boom driven by an increase in ...
... Blanchard and Lawrence Summers attributed it to an increase in the return on capital springing from deregulation and reductions in marginal tax rates. But the increase in economic growth over the following decade that one would have expected to result from an investment boom driven by an increase in ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... ment process cyclical or asymptotic?, Is the adjustment to sharp changes over short periods different in kind or only in degree from the adjustment to slower changes over longer periods? How long does it take for people to alter their anticipations in light of experience? Much of the controversy tha ...
... ment process cyclical or asymptotic?, Is the adjustment to sharp changes over short periods different in kind or only in degree from the adjustment to slower changes over longer periods? How long does it take for people to alter their anticipations in light of experience? Much of the controversy tha ...
INSTITUTE OF ACTUARIES OF INDIA EXAMINATIONS Subject CT7 - Economics
... Give a simple relationship between GDP at market prices and Net National Product at basic prices. ...
... Give a simple relationship between GDP at market prices and Net National Product at basic prices. ...
Minutes of the Monetary Policy Meeting on November 18 and 19, 2015
... Members agreed that the European economy maintained its moderate recovery as private consumption continued to increase, although exports had shown some weakness, mainly due to the effects of the slowdown in emerging economies. As for the outlook, they concurred that the economy would likely continue ...
... Members agreed that the European economy maintained its moderate recovery as private consumption continued to increase, although exports had shown some weakness, mainly due to the effects of the slowdown in emerging economies. As for the outlook, they concurred that the economy would likely continue ...
4.6 Elasticity of Demand
... We will assume that increasing the price usually decreases demand and decreasing the price will increase demand so that dqq and dp have opposite sign, p that is, their ratio is always negative. Thus, ∆q ∆p ≈ −E ...
... We will assume that increasing the price usually decreases demand and decreasing the price will increase demand so that dqq and dp have opposite sign, p that is, their ratio is always negative. Thus, ∆q ∆p ≈ −E ...
The Effects of Bank Rescue Measures in the recent Financial Crisis
... Our analysis also makes an attempt to account for the benefits of government intervention during financial crises by using a model which stresses financial market imperfections which leads to amplification of negative financial shocks. We consider two types of financial market distortions, related t ...
... Our analysis also makes an attempt to account for the benefits of government intervention during financial crises by using a model which stresses financial market imperfections which leads to amplification of negative financial shocks. We consider two types of financial market distortions, related t ...
Managing Credit Bubbles - Universitat Pompeu Fabra
... To evaluate the merit of these calls for policy, one must have a view of the forces driving these credit cycles. Credit may ‡uctuate for variety of reasons, and di¤erent types of ‡uctuations may call for di¤erent policy responses. At a very general level, ‡uctuations in credit may re‡ect changes in ...
... To evaluate the merit of these calls for policy, one must have a view of the forces driving these credit cycles. Credit may ‡uctuate for variety of reasons, and di¤erent types of ‡uctuations may call for di¤erent policy responses. At a very general level, ‡uctuations in credit may re‡ect changes in ...
mismanagement of financial liberalization or innovation
... Why did this financial crisis occur? Why have financial crises been so prevalent throughout U.S. history, as well as in so many other countries, and what insights do they provide on the current crisis? Why are financial crises almost always followed by severe contractions in economic activity? We wi ...
... Why did this financial crisis occur? Why have financial crises been so prevalent throughout U.S. history, as well as in so many other countries, and what insights do they provide on the current crisis? Why are financial crises almost always followed by severe contractions in economic activity? We wi ...
Fears of Deflation Then and Now
... Then there is the question of expectations. Thus, while expectations play a role in descriptions of the process of deflation (and inflation) they are viewed as being more or less exogenous, if not almost deterministically driven so that depression and deflation could become self-fulfilling prophesie ...
... Then there is the question of expectations. Thus, while expectations play a role in descriptions of the process of deflation (and inflation) they are viewed as being more or less exogenous, if not almost deterministically driven so that depression and deflation could become self-fulfilling prophesie ...
Chapter 13 The Federal Reserve System
... other banks or from the Fed. A bank in need of reserves will usually borrow reserves from other banks through the federal funds market. But what if there is a shortage of reserves throughout the financial system? In a fractional reserve banking system, it is possible for widespread financial panic t ...
... other banks or from the Fed. A bank in need of reserves will usually borrow reserves from other banks through the federal funds market. But what if there is a shortage of reserves throughout the financial system? In a fractional reserve banking system, it is possible for widespread financial panic t ...
Economic bubble
![](https://commons.wikimedia.org/wiki/Special:FilePath/South_Sea_Bubble_Cards-Tree.png?width=300)
An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is trade in an asset at a price or price range that strongly deviates from the corresponding asset's intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.While some economists deny that bubbles occur, the cause of bubbles remains disputed by those who are convinced that asset prices often deviate strongly from intrinsic values. Many explanations have been suggested, and research has recently shown that bubbles may appear even without uncertainty, speculation, or bounded rationality. In such cases, the bubbles may be argued to be rational, where investors at every point fully compensated for the possibility that the bubble might collapse by higher returns. These approaches require that the timing of the bubble collapse can only be forecast probabilistically and the bubble process is often modelled using a Markov switching model. It has also been suggested that bubbles might ultimately be caused by processes of price coordination or emerging social norms.