What drives the German current account?
... is thus crucial for positive and normative evaluations of the current account, and for policy advice (Obstfeld and Rogoff (1996), Obstfeld (2012), Kollmann (1998, 2001, 2004)). This underscores the importance of analyzing the current account using a structural model that captures the relevant shock ...
... is thus crucial for positive and normative evaluations of the current account, and for policy advice (Obstfeld and Rogoff (1996), Obstfeld (2012), Kollmann (1998, 2001, 2004)). This underscores the importance of analyzing the current account using a structural model that captures the relevant shock ...
Kad Brunner*
... expenditure categories showed little, if any, serious exposure to the impact of borrowing costs according to this view. Countercyclic variations of the money stock imposed under the circumstances a heavy burden on a sector of the economy satisfying "social or political priorities." This social evalu ...
... expenditure categories showed little, if any, serious exposure to the impact of borrowing costs according to this view. Countercyclic variations of the money stock imposed under the circumstances a heavy burden on a sector of the economy satisfying "social or political priorities." This social evalu ...
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... must be met by selling secondary reserves or by reducing loan volume, either of which will lead to further destruction of deposits. A multiple contraction of deposits will begin. ...
... must be met by selling secondary reserves or by reducing loan volume, either of which will lead to further destruction of deposits. A multiple contraction of deposits will begin. ...
Optimal fiscal and monetary policy action in a closed economy!
... within 5 to 12.5 years depending on how distorting the …scal instrument is (5 years if we use public spending or consumption taxes, and 12.5 years if we use capital taxes). This pace should be slower if there are labor market rigidities since, in the presence of such rigidities, …scal policy should ...
... within 5 to 12.5 years depending on how distorting the …scal instrument is (5 years if we use public spending or consumption taxes, and 12.5 years if we use capital taxes). This pace should be slower if there are labor market rigidities since, in the presence of such rigidities, …scal policy should ...
NBER WORKING PAPER SERIES REAL EXCHANGE RATES AND PRODUCTIVITY GROWTH IN THE
... nontraded goods in Japan. In order to keep U.S. traded goods competitive, the real exchange rate based on general price series like the GDP deflator or the CPI index must continually fall resulting in a real appreciation of the yen. This paper provides estimates of how far real exchange rates based ...
... nontraded goods in Japan. In order to keep U.S. traded goods competitive, the real exchange rate based on general price series like the GDP deflator or the CPI index must continually fall resulting in a real appreciation of the yen. This paper provides estimates of how far real exchange rates based ...
1 Too Low for Too Long Interest Rates, Bank Risk Taking and Bank
... of three forces: interest rate pass-through risk shifting and leverage. The model differentiates the impact of interest rates on bank risk taking according to the degree of bank’s capitalization. When capital is endogenously determined, and when banks can adjust their capital holdings in response to ...
... of three forces: interest rate pass-through risk shifting and leverage. The model differentiates the impact of interest rates on bank risk taking according to the degree of bank’s capitalization. When capital is endogenously determined, and when banks can adjust their capital holdings in response to ...
No.1 - BNR
... Pigou’s analysis, the ratio of money demand to resources (income) depends on “the internal rate of return (market interest rate) on investments and of the marginal satisfaction forgone from less consumption”. In effect, the higher the internal rate of return, “the less attractive is the production u ...
... Pigou’s analysis, the ratio of money demand to resources (income) depends on “the internal rate of return (market interest rate) on investments and of the marginal satisfaction forgone from less consumption”. In effect, the higher the internal rate of return, “the less attractive is the production u ...
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... since the early 1980s is a striking illustration.1 This evolving economic environment appears to be associated with an alteration of the propagation mechanism of monetary policy. Though some authors, such as Stock and Watson (2003), attribute an important part of the reduced volatility to smaller ma ...
... since the early 1980s is a striking illustration.1 This evolving economic environment appears to be associated with an alteration of the propagation mechanism of monetary policy. Though some authors, such as Stock and Watson (2003), attribute an important part of the reduced volatility to smaller ma ...
Answers to Concepts Review and Critical Thinking Questions
... its dividend policy by increasing the retention ratio, or its total asset turnover increases. 3. The internal growth rate is greater than 15%, because at a 15% growth rate the negative EFN indicates that there is excess internal financing. If the internal growth rate is greater than 15%, then the su ...
... its dividend policy by increasing the retention ratio, or its total asset turnover increases. 3. The internal growth rate is greater than 15%, because at a 15% growth rate the negative EFN indicates that there is excess internal financing. If the internal growth rate is greater than 15%, then the su ...
Combining Monetary and Fiscal Policy in an SVAR for a Small Open
... to 1 in 1950Q3, 1965Q1 and 1980Q1 and to 0 otherwise; later, researchers added 2001Q3 to capture the 9/11 event). Ramey (2011b) in addition studied a narrative news variable based on expected present values of government spending caused by military events as reported in news media. On the other hand ...
... to 1 in 1950Q3, 1965Q1 and 1980Q1 and to 0 otherwise; later, researchers added 2001Q3 to capture the 9/11 event). Ramey (2011b) in addition studied a narrative news variable based on expected present values of government spending caused by military events as reported in news media. On the other hand ...
Chapter 22 - Samuel Moon Jung
... Economics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 22 Aggregate Demand and Supply Analysis 22.1 Aggregate Demand 1) The aggregate demand curve is the total quantity of an economy's A) intermediate goods demanded at different inflation rates. B) intermediate goods demanded at a part ...
... Economics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 22 Aggregate Demand and Supply Analysis 22.1 Aggregate Demand 1) The aggregate demand curve is the total quantity of an economy's A) intermediate goods demanded at different inflation rates. B) intermediate goods demanded at a part ...
Animal Spirits and the International Transmission of Business Cycles
... maximizing agents will want to spend more on goods and services today when they expect future income (output gap) to increase and to spend less when the real interest rate increases. M ...
... maximizing agents will want to spend more on goods and services today when they expect future income (output gap) to increase and to spend less when the real interest rate increases. M ...
Q QUA ANTI ITAT
... The characteristic of the logarithm of any number greater than 1 is positive and is one less than the number of digits to the left of the decimal point in the given number. The characteristic of the logarithm of any number less then 1 is negative and it is numerically one more ...
... The characteristic of the logarithm of any number greater than 1 is positive and is one less than the number of digits to the left of the decimal point in the given number. The characteristic of the logarithm of any number less then 1 is negative and it is numerically one more ...
Monetary and Fiscal Policy with Sovereign Default
... default affects business cycles in emerging economies.6 With this literature, it shares the assumption of the government’s lack of commitment and the way sovereign default is modeled. Within this literature, the studies that are closest to this paper are Cuadra et al. (2010), Hur et al. (2014) and D ...
... default affects business cycles in emerging economies.6 With this literature, it shares the assumption of the government’s lack of commitment and the way sovereign default is modeled. Within this literature, the studies that are closest to this paper are Cuadra et al. (2010), Hur et al. (2014) and D ...
Optimal Tax Timing with Asymmetric Long-Term/Short
... losses. In contrast to the existing literature, this model can help explain why many investors not only defer short-term capital losses to long term but also defer large long-term capital gains and losses. Because the benefit of tax deductibility of capital losses increases with the short-term tax r ...
... losses. In contrast to the existing literature, this model can help explain why many investors not only defer short-term capital losses to long term but also defer large long-term capital gains and losses. Because the benefit of tax deductibility of capital losses increases with the short-term tax r ...
What drives Inflation Expectations?
... run permanent shock to IP and to oil prices (bottom chart), we are able to mimic the series for the euro area. Analogous results for the US are presented in Figure 4. The top chart shows that, also for the US, the “secular stagnation” shock does not explain the recent drop in long-term inflation co ...
... run permanent shock to IP and to oil prices (bottom chart), we are able to mimic the series for the euro area. Analogous results for the US are presented in Figure 4. The top chart shows that, also for the US, the “secular stagnation” shock does not explain the recent drop in long-term inflation co ...
Economics of Money, Banking, and Financial Markets, 8e
... 27) Explain the Keynesian theory of money demand. What motives did Keynes think determined money demand? What are the two reasons why Keynes thought velocity could not be treated as a constant? Answer: Keynes believed the demand for money depended on income and interest rates. Money was held to faci ...
... 27) Explain the Keynesian theory of money demand. What motives did Keynes think determined money demand? What are the two reasons why Keynes thought velocity could not be treated as a constant? Answer: Keynes believed the demand for money depended on income and interest rates. Money was held to faci ...
NBER WORKING PAPER SERIES SETTING THE RECORD STRAIGHT ON
... not seen a return in the United States and other countries to the wage-price guideposts and wageprice controls of the 1960s and 1970s; nor have they been characterized by anything other than wide acceptance of Friedman’s position that controls and guideposts were ineffective ways to fight inflation ...
... not seen a return in the United States and other countries to the wage-price guideposts and wageprice controls of the 1960s and 1970s; nor have they been characterized by anything other than wide acceptance of Friedman’s position that controls and guideposts were ineffective ways to fight inflation ...
Principles of Macroeconomics Self-study quiz and Exercises March
... 2) Contractionary fiscal policy includes raising taxes. 3) Monetary policy includes changing the level of household taxes. 4) A corporate bond is a promissory note issued by a firm when it borrows money. 5) In the circular flow diagram everyoneʹs expenditure is someone elseʹs receipt. 6) A dividend ...
... 2) Contractionary fiscal policy includes raising taxes. 3) Monetary policy includes changing the level of household taxes. 4) A corporate bond is a promissory note issued by a firm when it borrows money. 5) In the circular flow diagram everyoneʹs expenditure is someone elseʹs receipt. 6) A dividend ...
Estimating Risk Premiums
... estimate the risk premium by looking at the historical premium earned by stocks over default-free securities over long time periods. These approaches might yield reasonable estimates in markets like the United States, with a large and diverisified stock market and a long history of returns on both s ...
... estimate the risk premium by looking at the historical premium earned by stocks over default-free securities over long time periods. These approaches might yield reasonable estimates in markets like the United States, with a large and diverisified stock market and a long history of returns on both s ...
Interest rate
An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). Specifically, the interest rate is a percentage of principal paid a certain number of times per period for all periods during the total term of the loan or credit. Interest rates are normally expressed as a percentage of the principal for a period of one year, sometimes they are expressed for different periods such as a month or a day. Different interest rates exist parallelly for the same or comparable time periods, depending on the default probability of the borrower, the residual term, the payback currency, and many more determinants of a loan or credit. For example, a company borrows capital from a bank to buy new assets for its business, and in return the lender receives rights on the new assets as collateral and interest at a predetermined interest rate for deferring the use of funds and instead lending it to the borrower.Interest-rate targets are a vital tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment. The central banks of countries generally tend to reduce interest rates when they wish to increase investment and consumption in the country's economy. However, a low interest rate as a macro-economic policy can be risky and may lead to the creation of an economic bubble, in which large amounts of investments are poured into the real-estate market and stock market. In developed economies, interest-rate adjustments are thus made to keep inflation within a target range for the health of economic activities or cap the interest rate concurrently with economic growth to safeguard economic momentum.