CH_15_13th
... • It is not the rate of inflation, but the actual rate of inflation relative to the expected rate that will influence both output and employment. • When inflation is greater than anticipated, profit margins will improve, output will expand, and unemployment will fall below its natural rate. • Altern ...
... • It is not the rate of inflation, but the actual rate of inflation relative to the expected rate that will influence both output and employment. • When inflation is greater than anticipated, profit margins will improve, output will expand, and unemployment will fall below its natural rate. • Altern ...
Monetary Policy Statement March 2008 Contents
... Despite the weaker outlook for activity, we expect headline inflation to remain high, partly due to the inclusion of the planned emissions trading scheme in our projection. Higher food and energy prices are also contributing to near-term inflation. Furthermore, over the medium term, a tight labour m ...
... Despite the weaker outlook for activity, we expect headline inflation to remain high, partly due to the inclusion of the planned emissions trading scheme in our projection. Higher food and energy prices are also contributing to near-term inflation. Furthermore, over the medium term, a tight labour m ...
New Zealand’s macro-economic performance in the 1990s: trends and policy debates
... government had lowered its net debt objective from 20% of GDP to 15%, as progress had exceeded earlier expectations. The Government thought that the Asian crisis might have a serious and lasting impact on the New Zealand economy. While allowing automatic stabilisers to operate, it announced a cut of ...
... government had lowered its net debt objective from 20% of GDP to 15%, as progress had exceeded earlier expectations. The Government thought that the Asian crisis might have a serious and lasting impact on the New Zealand economy. While allowing automatic stabilisers to operate, it announced a cut of ...
Chapter 13 The Cost of Capital
... B is preferable to A – higher return for the same risk. C is preferable to B – same return for lower risk. The choice between D and C is less clear-cut. C pays higher returns but this is to compensate for the comparatively higher associated risk. The choice will therefore depend on the investor’s at ...
... B is preferable to A – higher return for the same risk. C is preferable to B – same return for lower risk. The choice between D and C is less clear-cut. C pays higher returns but this is to compensate for the comparatively higher associated risk. The choice will therefore depend on the investor’s at ...
Changes_in_measurement_of_pensions
... Conceptual issue – Expected holding gains ▪ Most pension funds invest in diversified portfolios that include equity shares ▪ Because pension funds expect part of their return on investment to come in the form of holding gains, able to assume a discount rate that is larger than the rate of return in ...
... Conceptual issue – Expected holding gains ▪ Most pension funds invest in diversified portfolios that include equity shares ▪ Because pension funds expect part of their return on investment to come in the form of holding gains, able to assume a discount rate that is larger than the rate of return in ...
When Contractionary Fiscal Policy Is Expansionary - ANU Press
... private sector spending on consumption and investment during cyclical troughs or subtract from aggregate spending during cyclical peaks. On the revenue side ol the public accounts, discretionary changes to income taxes operate by varying first household disposable income and then aggregate expenditu ...
... private sector spending on consumption and investment during cyclical troughs or subtract from aggregate spending during cyclical peaks. On the revenue side ol the public accounts, discretionary changes to income taxes operate by varying first household disposable income and then aggregate expenditu ...
NBER WORKING PAPER SERIES INCOMPLETE MARKETS
... increase in government consumption necessarily reduces the risk-free interest rate. And second, unless the elasticity of intertemporal substitution is low enough, it also reduces the capital-labor ratio, productivity, and wages. The effect on the risk-free rate is an implication of the precautionary ...
... increase in government consumption necessarily reduces the risk-free interest rate. And second, unless the elasticity of intertemporal substitution is low enough, it also reduces the capital-labor ratio, productivity, and wages. The effect on the risk-free rate is an implication of the precautionary ...
Answers to Questions: Chapter 8
... 13. Monetary impotence refers to the situation when an increase in the real money supply does not stimulate additional spending and output. The two conditions that would lead to monetary impotence are a vertical IS curve or horizontal LM curve. Because of falling consumer and business confidence, th ...
... 13. Monetary impotence refers to the situation when an increase in the real money supply does not stimulate additional spending and output. The two conditions that would lead to monetary impotence are a vertical IS curve or horizontal LM curve. Because of falling consumer and business confidence, th ...
A Working Solution to the Question of Nominal GDP
... M1 and MZM are drawn from the Federal Reserve Bank of St. Louis’ FRED database; Anderson and Jones (2011) describe their construction in detail. With quite similar results, not shown, we also replicated the analysis using Anderson and Jones’ Divisia M2 series, as well as the much broader, Divisia M ...
... M1 and MZM are drawn from the Federal Reserve Bank of St. Louis’ FRED database; Anderson and Jones (2011) describe their construction in detail. With quite similar results, not shown, we also replicated the analysis using Anderson and Jones’ Divisia M2 series, as well as the much broader, Divisia M ...
Optimal Monetary Policy in a Currency Area
... In this work, without imposing complete markets, we obtain stationary consumption by assuming a unitary elasticity of substitution between the consumption of the bundles of goods produced in the two regions. In this case, relative prices automatically stabilize the output risks and there is perfect ...
... In this work, without imposing complete markets, we obtain stationary consumption by assuming a unitary elasticity of substitution between the consumption of the bundles of goods produced in the two regions. In this case, relative prices automatically stabilize the output risks and there is perfect ...
Nr. 34 The Precarious Fiscal Foundations of EMU (PDF: 158.6
... Deflationary situations with zero interest rates, as in the US in the 1930’s and currently in Japan, correspond to a combination of passive monetary and passive fiscal policy in the model of section 2. The price level in such a policy configuration is indeterminate. Automatic corrective mechanisms m ...
... Deflationary situations with zero interest rates, as in the US in the 1930’s and currently in Japan, correspond to a combination of passive monetary and passive fiscal policy in the model of section 2. The price level in such a policy configuration is indeterminate. Automatic corrective mechanisms m ...
NBER WORKING PAPER SERIES THE JAPANESE BUBBLE: A 'HETEROGENEOUS' APPROACH Robert B. Barsky
... Figure 3 shows stock yields – both dividend price and earnings price ratios in monthly data from 1980 to 1992. Several interesting points arise from figure 3. To begin with, the Japanese bubble story doesn‟t really start in 1985-86. Between the beginning of 1982 and the beginning of 1985, the divide ...
... Figure 3 shows stock yields – both dividend price and earnings price ratios in monthly data from 1980 to 1992. Several interesting points arise from figure 3. To begin with, the Japanese bubble story doesn‟t really start in 1985-86. Between the beginning of 1982 and the beginning of 1985, the divide ...
GNP - MIT
... For each $100 dollars of revenue (GDP) they receive, they have costs and profits of: W $75 wages Profit=Dividend $25 profit, and this is paid as dividends to consumer households I They buy new plant and equipment equal to profits each year, plus $10 extra(less) for each 1 percentage point the intere ...
... For each $100 dollars of revenue (GDP) they receive, they have costs and profits of: W $75 wages Profit=Dividend $25 profit, and this is paid as dividends to consumer households I They buy new plant and equipment equal to profits each year, plus $10 extra(less) for each 1 percentage point the intere ...
FRBSF L CONOMIC
... inflation falls. Moreover, the decline in short-term interest rates is consistent with the easing of the stance of monetary policy that would prevail if policymakers try to mitigate the negative economic effects of increased uncertainty. These effects of uncertainty are not unique to the United Stat ...
... inflation falls. Moreover, the decline in short-term interest rates is consistent with the easing of the stance of monetary policy that would prevail if policymakers try to mitigate the negative economic effects of increased uncertainty. These effects of uncertainty are not unique to the United Stat ...
Introduntion - Hakan Berument`sHomepage
... possible especially just before elections or when there is a positive output gap. However, increasing spending increases interest rates. ...
... possible especially just before elections or when there is a positive output gap. However, increasing spending increases interest rates. ...
jeopardy - Northern Highlands
... financial institutions that offers a broad range of banking services, but tends to specialize in savings accounts and mortgage loans. Savings and loan associations, and Mutual savings banks ...
... financial institutions that offers a broad range of banking services, but tends to specialize in savings accounts and mortgage loans. Savings and loan associations, and Mutual savings banks ...
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.