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Inflation & Deflation - Vista Unified School District
... – hurts people on fixed incomes (the retired) – hurts savers – hurts lenders (helps debtors) – hurts people who contract to be paid in the future – makes financial decision making more difficult • hedging = avoiding or lessening a loss by taking a counterbalancing action. – buy gold or some other st ...
... – hurts people on fixed incomes (the retired) – hurts savers – hurts lenders (helps debtors) – hurts people who contract to be paid in the future – makes financial decision making more difficult • hedging = avoiding or lessening a loss by taking a counterbalancing action. – buy gold or some other st ...
This at the conference “Finance and Macroeconomics” held
... entire yield curve to just two factors—the general level of interest rates and the slope or tilt of the yield curve—and then model these two factors along with real GDP growth. Hördahl,Tristani, and Vestin examine a similar structure with a more detailed accounting for macroeconomic dynamics that re ...
... entire yield curve to just two factors—the general level of interest rates and the slope or tilt of the yield curve—and then model these two factors along with real GDP growth. Hördahl,Tristani, and Vestin examine a similar structure with a more detailed accounting for macroeconomic dynamics that re ...
How Did Economists Get It So Wrong?
... Joseph Schumpeter in 1934 — 1934! They are, he added, “forms of something which has to be done.” But many, and eventually most, economists turned to the insights of John Maynard Keynes for both an explanation of what had happened and a solution to future depressions. Keynes did not, despite what you ...
... Joseph Schumpeter in 1934 — 1934! They are, he added, “forms of something which has to be done.” But many, and eventually most, economists turned to the insights of John Maynard Keynes for both an explanation of what had happened and a solution to future depressions. Keynes did not, despite what you ...
James Tobin - Prize Lecture
... exogenous variables, qualitative and quantitative, these models sacrifice detail and generality, limiting the number of variables and equations by aggregations over agents, commodities, assets, and time. Theoretical macro-economic models of one brand or another are very influential. They guide the a ...
... exogenous variables, qualitative and quantitative, these models sacrifice detail and generality, limiting the number of variables and equations by aggregations over agents, commodities, assets, and time. Theoretical macro-economic models of one brand or another are very influential. They guide the a ...
Speaking points for Euro50-Natixis Breakfast Seminar
... Central banks have to be aware, of course, that financial innovation and globalisation may complicate the monetary analysis and affect the impact of monetary policy on the creation of liquidity by the private sector. In particular, the recent market turmoil may have increased the amount of reserves ...
... Central banks have to be aware, of course, that financial innovation and globalisation may complicate the monetary analysis and affect the impact of monetary policy on the creation of liquidity by the private sector. In particular, the recent market turmoil may have increased the amount of reserves ...
Mankiw 6e PowerPoints
... Asset holders sold Greek govt bonds, which caused interest rates on those bonds to rise ...
... Asset holders sold Greek govt bonds, which caused interest rates on those bonds to rise ...
The New Normal: Ten Personal Finance Challenges and
... 10. Human capital investments (including health); increases resilience ...
... 10. Human capital investments (including health); increases resilience ...
Misunderstanding the Great Depression, making the next one
... – System where any agent can borrow infinite amount at risk-free rate – E.g. (1): “In order to derive conditions for equilibrium in the capital market we invoke two assumptions. • First, we assume a common pure rate of interest, with all investors able to borrow or lend funds on equal terms. • Secon ...
... – System where any agent can borrow infinite amount at risk-free rate – E.g. (1): “In order to derive conditions for equilibrium in the capital market we invoke two assumptions. • First, we assume a common pure rate of interest, with all investors able to borrow or lend funds on equal terms. • Secon ...
Taking Stock: What Ever Happened to the "Invisible Hand"?
... by now and should be at higher levels than is currently the case—similar economic statistics to what we are witnessing today have historically existed alongside higher rates). If we are sceptical about the merits of the invisible hand taking vengeance in the other points discussed above, at least th ...
... by now and should be at higher levels than is currently the case—similar economic statistics to what we are witnessing today have historically existed alongside higher rates). If we are sceptical about the merits of the invisible hand taking vengeance in the other points discussed above, at least th ...
liquidity characteristics, implicit information of asset prices and
... the causative effect of monetary and credit expansion on asset prices (Luo, 2011). Many existing empirical results proved that monetary liquidity had significant effect on asset prices (Baks and Kramer, 1999; Congdon, 2005; Li and Deng, 2011; Liu and Yin, 2011), and credit expansion is the leading c ...
... the causative effect of monetary and credit expansion on asset prices (Luo, 2011). Many existing empirical results proved that monetary liquidity had significant effect on asset prices (Baks and Kramer, 1999; Congdon, 2005; Li and Deng, 2011; Liu and Yin, 2011), and credit expansion is the leading c ...
Intermediate Macroeconomics: Great Recession
... can end up with “negative equity,” which means that the outstanding mortgage balance exceeds the market value of the home. In this situation, a homeowner may have an incentive to “walk away” – to quit paying the mortgage altogether. Negative equity is more likely if the homeowner put little “down” o ...
... can end up with “negative equity,” which means that the outstanding mortgage balance exceeds the market value of the home. In this situation, a homeowner may have an incentive to “walk away” – to quit paying the mortgage altogether. Negative equity is more likely if the homeowner put little “down” o ...
2. What is deflation?
... income mechanism is Japan’s experience in the 1990s, also referred to as the “lost decade”. A deflation triggered by a sharp fall in aggregate demand, possibly accompanied by unpredictable changes in economic sentiment (the Keynesian “animal spirits”), which induces producers to cut prices on an ong ...
... income mechanism is Japan’s experience in the 1990s, also referred to as the “lost decade”. A deflation triggered by a sharp fall in aggregate demand, possibly accompanied by unpredictable changes in economic sentiment (the Keynesian “animal spirits”), which induces producers to cut prices on an ong ...
Long Run Exchange Rate Determination
... determination. Hence we present it first. It was discussed in 16th Century Spain, for example. It was last resurrected by Gustav Cassel in the period between WWI and WWII. He used it in discussions of how much European countries would have to either change their exchange rates or their domestic pric ...
... determination. Hence we present it first. It was discussed in 16th Century Spain, for example. It was last resurrected by Gustav Cassel in the period between WWI and WWII. He used it in discussions of how much European countries would have to either change their exchange rates or their domestic pric ...
How Did Economists Get It So Wrong? By PAUL KRUGMAN
... In the 1930s, financial markets, for obvious reasons, didn’t get much respect. Keynes compared them to “those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly cor ...
... In the 1930s, financial markets, for obvious reasons, didn’t get much respect. Keynes compared them to “those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly cor ...
Problem 1. Use the money market to explain the interest
... rate. The Federal Reserve could increase the money supply by buying bonds to bring the interest rate back down. Answer 13: (d). (Stolen from the textbook.) The primary argument against active monetary and fiscal policy is that these policies affect the economy with a long lag. As we have seen, monet ...
... rate. The Federal Reserve could increase the money supply by buying bonds to bring the interest rate back down. Answer 13: (d). (Stolen from the textbook.) The primary argument against active monetary and fiscal policy is that these policies affect the economy with a long lag. As we have seen, monet ...
Summary of Opinions at the MPM in January
... disappearance of downward pressures of commodity prices as well as tightening aggregate demand/supply gap. Nonetheless, several sentences imply that the members remain less confident about rapid improvements of inflation ahead. One important culprit, in their view, is adaptive formation of inflation ...
... disappearance of downward pressures of commodity prices as well as tightening aggregate demand/supply gap. Nonetheless, several sentences imply that the members remain less confident about rapid improvements of inflation ahead. One important culprit, in their view, is adaptive formation of inflation ...
Global Watch June 2003 special issue
... Bank of Thailand eased its monetary policy in the middle of 1998, and has maintained the low interest rate policy to date. Real interest rate dropped from some 10% in 1997 to 1% level at the end of 1998, and currently stays at almost the same level. Comparing the movement of real interest rate with ...
... Bank of Thailand eased its monetary policy in the middle of 1998, and has maintained the low interest rate policy to date. Real interest rate dropped from some 10% in 1997 to 1% level at the end of 1998, and currently stays at almost the same level. Comparing the movement of real interest rate with ...
what president obama should know about recessions
... As macro-economies falter and the aggregate demand for labor falls, monetary authorities should automatically expand the money supply so as to quickly restore the original demand for labor and corresponding wage level. Failing to do so invites many workers to erroneously maintain their previous wage ...
... As macro-economies falter and the aggregate demand for labor falls, monetary authorities should automatically expand the money supply so as to quickly restore the original demand for labor and corresponding wage level. Failing to do so invites many workers to erroneously maintain their previous wage ...
No: 2012 – 56 Release date: 27 November 2012
... Although domestic demand shows some recovery for the final quarter of the year, aggregate demand conditions are still expected to support disinflation. 12. The Committee assessed that cost factors have been contributing to the disinflation as well. With the recent stable course of exchange rates an ...
... Although domestic demand shows some recovery for the final quarter of the year, aggregate demand conditions are still expected to support disinflation. 12. The Committee assessed that cost factors have been contributing to the disinflation as well. With the recent stable course of exchange rates an ...
Austrian Business Cycle Theory and Global Crisis[1]
... prices such as energy, industrial inputs, and metals never increased before 2007 as much as they did in 2007. Similarly, it should be kept in mind that the rise in real-estate credits diverges from the trend established before 2002. John B. Taylor (2009) elaborates on the unprecedented severity and ...
... prices such as energy, industrial inputs, and metals never increased before 2007 as much as they did in 2007. Similarly, it should be kept in mind that the rise in real-estate credits diverges from the trend established before 2002. John B. Taylor (2009) elaborates on the unprecedented severity and ...
The Lessons from the Housing Market Crisis Elias Karakitsos
... issuance of Treasuries. The burst of this new bubble will undermine the recovery in 2010 and risks plunging the US economy into another recession in 2011 or 2012, as default risk premiums, exchange-rate premiums and inflation-premiums soar. ...
... issuance of Treasuries. The burst of this new bubble will undermine the recovery in 2010 and risks plunging the US economy into another recession in 2011 or 2012, as default risk premiums, exchange-rate premiums and inflation-premiums soar. ...
Note on Disequilibrium Dynamics A 30
... vast numbers of individuals and sccmingly separate dccisions about the buying and sclling of commodities". In these equilibirum models, which I will call Walrasian, price taking agents recicve explicit price signals which are sufficient to gcncrate (notional) dcmands and supplies. A vcctor of priccs ...
... vast numbers of individuals and sccmingly separate dccisions about the buying and sclling of commodities". In these equilibirum models, which I will call Walrasian, price taking agents recicve explicit price signals which are sufficient to gcncrate (notional) dcmands and supplies. A vcctor of priccs ...
Switching Bubbles: From Outside to Inside
... Section 2 presents the model and solves the steady-state equilibrium without bubbles. First, I solve the fundamental equilibrium and show that rational bubbles can appear in this model. In particular, rational bubbles can appear if the fraction of capital than can be collateralized decreases. It cou ...
... Section 2 presents the model and solves the steady-state equilibrium without bubbles. First, I solve the fundamental equilibrium and show that rational bubbles can appear in this model. In particular, rational bubbles can appear if the fraction of capital than can be collateralized decreases. It cou ...
Joseph Stiglitz Beijing May 13 Possible Concepts
... The degree of institutionalization refers to the share of family financial assets in pension funds, life insurance policies and mutual funds, which e usually considered institutional investors. With the term securitization, we refer to the transferability of the assets in the financial market, and s ...
... The degree of institutionalization refers to the share of family financial assets in pension funds, life insurance policies and mutual funds, which e usually considered institutional investors. With the term securitization, we refer to the transferability of the assets in the financial market, and s ...
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.