financial markets and the economy

... Why Is the Fed Getting It Wrong? 2.7.1 The Theory 66 2.7.2 NASA’s Space Program 68 2.7.3 The Locked Office 71 2.7.4 The Relationship between the Board’s Staff, the Governors, the FOMC, and the Regional ... Index-Number Theory under Homogeneity 186 A.6.1 The Consumer and the Manufacturing Firm 187 A.6.2 The Financial Intermediary 189 A.7 Aggregation Theory without Homogeneity 191 A.7.1 The Consumer and the ... famous book, The General Theory The New Keynesians point to economic downturns like the Great Depression of the 1930s and the Great Recession that followed the subprime financial crisis, and argue...

Ngày tải lên: 01/11/2014, 16:53

... Britain on the one hand, and France, Germany, and Russia on the other, made the protectionist danger all the more live and potent Moreover, the continued fall of the dollar against the euro threatened ... under their noses the real sources of wealth were gathering their strength Then markets got ahead of the economics Now the economics are about to get ahead of the markets The Human Factor From the ... recovered and soon found themselves benefiting hugely from the recovery in the economy They were awash with capital So they lent like the blazes and the supply of money and credit expanded rapidly.17...

Ngày tải lên: 04/11/2014, 05:17

... The gist of their response was that, while they had their finger on the pulse and their eye on the data, they had made two related diagnostic mistakes: the error of extrapolation and the (rather ... work (and they were by no means in the majority) saw their labour diverted from the farms to the workshops and the factories There, separated from the countryside of their ancestors by the tall ... anxiety: would the crop allow them to pay their debts to the landlord and the banker? Would something be left over for their own families after the produce was sold? Would the weather be kind?...

Ngày tải lên: 03/11/2014, 13:49

... scarce, and the role of government is to make the economy more efficient and to help the poor and those who can’t fend for themselves These payments to companies made the economy less efficient The ... meant that the banks didn’t know whether what they owed to their depositors and bondholders exceeded the value of their assets And they realized accordingly that they couldn’t know the position ... actually holding the assets They, and their regulators, might have thought that they had passed the unsavory risks they had created on to others, but when the day of reckoning came—when the markets collapsed—it...

Ngày tải lên: 03/11/2014, 15:42

... spending and taxes increase equilibrium output Explain and demonstrate this graphically  Size of the balanced budget fiscal multiplier is in the goods market  Will it hold the same magnitude if the ... aggregate demand?  Describe (a) channel(s) through which lowered interest rate reduces the aggregate demand Exercises for the IS-LM Framework  Question Using the IS-LM model, show graphically and explain ... Framework  Question Using the IS-LM model, show graphically and explain the effects of a monetary contraction (1) What is the effect on the equilibrium interest rate and level of output? (2) Monetary...

Ngày tải lên: 23/12/2015, 15:54

... against the U.S dollar and three against the euro The euro rates begin in 1999 when the currency was introduced The yen, pound, and Canadian dollar all float against the U.S dollar The pound and ... the euro The euro rates begin in 1999 when the currency was introduced The yen, pound, and Canadian dollar all float against the U.S dollar The pound and yen float against the euro The Danish ... rates for the euro in dollars per euro in the year 2008 The spot and forward rates closely track each other 3 The Market for Foreign Exchange Derivatives • In addition to the spot contract there...

Ngày tải lên: 23/12/2015, 15:57

... another key building block in the theory of how exchange rates are determined  The theory we develop here has two parts The first part involves the theory of purchasing power, which links the ... vary with the nominal interest rate  We consider the links between inflation and the nominal interest rate in an open economy, and then return to the question of how best to understand what determines ... Inflation, and Exchange Rate Depreciation On the right of Equation (14-1), the rate of change of the ratio of two price levels equals the rate of change of the numerator minus the rate of change of the...

Ngày tải lên: 23/12/2015, 16:02

... authorities pick the exchange rate E In the long run, the choice of E determines the price level P via PPP, and also the interest rate i via UIP; these, in turn, determine the necessary level of the money ... Money Demand The figure summarizes the equilibria in the two asset markets in one diagram In panel (a), in the home (U.S.) money market, the home nominal interest rate i1$ is determined by the levels ... determines the interest rate i in the money market; in turn, via UIP, the level of i determines the exchange rate E The money supply is an input in the model (an exogenous variable), and the exchange...

Ngày tải lên: 24/12/2015, 14:40

... against the discretionary part(=e(t)) in revenue side   Tax Bases are mostly the performances (earnings) in the previous year On the other hand, the right hand side graph shows comovement of the ... Before and After the GFC 3) The third identification strategy, utilizing the institutional information, borrows the restrictions on β1 and (β =0) from the budget data in addition to α , based on the ... study    to measure the contributions of the fiscal stimulus package to the recovery of Korean economy from the GFC to discuss how the fiscal stance is redirected toward the pre-crisis state...

Ngày tải lên: 24/12/2015, 15:01

... grow quickly and others not That is, the variation in the dependent variables comes from both the time series and the cross-sections, and some pooling of data is necessary to address the questions ... and liberalization, on the one hand, and growth and growth volatility, on the other, were tradeoffs in democracies We explore briefly both lines of inquiry as a guide to further research 13 The ... many of the prior state variables lead to large reductions in the sample In particular, the experiences of the 1960s are sometimes lost with the use of the prior state variables: for the financial...

Ngày tải lên: 24/10/2012, 08:50

... zero even at the 95% level in Canada, Finland, the Netherlands, Norway, Sweden, Switzerland, the UK and the US Moreover, while in some countries, (including Finland, the UK and the US) residential ... Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Spain, Sweden, Switzerland, the UK and the US The sample starts in 1986 in order to avoid the more turbulent, ... the whole sample period are available for Australia, Canada, Switzerland, Denmark, Finland, France, the Netherlands, Sweden, the UK and the US For, Belgium we link an older series for small and...

Ngày tải lên: 24/10/2012, 09:40

... Banking and Financial c the lower the expected return relative to alternative assets, the greater will be the demand d all of the above e only (a) and (b) of the above The liquidity premium theory ... flat d all of the above e only (a) and (b) of the above 15 The theory of efficient capital markets suggests that allocating your funds in the financial markets on the advice of a financial analyst ... Banking and Financial b The return can be expressed as the difference between the current yield and the rate of capital gains c The rate of return will be greater than the interest rate when the...

Ngày tải lên: 13/12/2013, 07:05

... Canadian Financial Crises: Stage • Worsening business conditions and uncertainty leads depositors to withdraw their funds • Decreases the number of banks and worsens both adverse selection and moral ... adverse selection and moral hazard problems in the credit markets • Further spiralling down of the economy Copyright  2011 9-7 Dynamics of Past Canadian Financial Crises: Stage • Economic downturn ... Canadian Financial Crises: Stage I Stage One: Initiation of Financial Crisis • Mismanagement of Financial Liberalization and Innovation – Credit boom – Deleveraging • Asset Price Boom and Bust...

Ngày tải lên: 05/01/2014, 16:56

... to the Regulatory Regime in the Aftermath of the Liberalization of the Financial System and the Capital Account Financial sector liberalization and the opening of the capital account changed the ... management and the financial sector in the context of growing financial integration and liberalization Given the ongoing deep financial and economic crisis in Thailand, it is obvious—with the benefit ... extent the macro-policy mix and financial sector policy measures, pursued by the government during the capital inflow period, avoided overheating of the economy and strengthened the institutional and...

Ngày tải lên: 27/01/2014, 11:20

... is, they have essentially assumed the expectations hypothesis Assessing the variability as well as the level of the term premium, and the relationship between the term premium and the macroeconomy, ... orthodoxy Therefore, it also seems likely that the recent financial and economic crisis the Great Panic and Recession of 2008 and 2009—will both rearrange the economic landscape and affect the focus ... solved and responses given Quarters of the term premium and the other variables of the model to economic shocks can be computed Figures and show the impulse response functions of the term premium and...

Ngày tải lên: 17/02/2014, 03:20

... producing in the next period and, therefore, there is no wage bargaining in the current period However, before entering the next period, the newly created firm chooses the debt bt+1 and pays the dividend ... from the previous period In addition, it knows the current productivity zt and the financial variable φt Given the states, the firm bargains the wage wt with the worker and output zt is produced The ... choice of the new debt bt+1 and the payment of dividends arise after wage bargaining After the payments of dividends and wages and after contracting the new debt, the firm observes whether the match...

Ngày tải lên: 17/02/2014, 21:20

... taxes but also by the quantity and quality of the labor force The indicators of the quantity and quality of the labor force include the change in the proportion of the population in their prime-age ... 0.01% Source: Piketty and Saez Note: The vertical axis is the share of total income The observed relationship between the top tax rates and the income share of the top 0.1% and the top 0.1% are displayed ... for the analysis (i.e., the one year change in the variable is used in the analysis) The other explanatory variables included in the analyses have been used by other researchers The right-hand...

Ngày tải lên: 20/02/2014, 19:20

... sector of the economy, the sector that includes the securities firms Broker-dealers are at the heart of the market-based financial system, as they make markets for tradable assets, they originate ... municipal bonds, and corporate bonds However, the bulk of the credit financing in the economy is intermediated through the banking system, interpreted broadly Understanding the workings of financial ... financial crises We describe the changing nature of financial intermediation in the market-based financial system, chart the course of the recent financial crisis, and outline the policy responses that...

Ngày tải lên: 14/03/2014, 23:20

... misaligned and the monetary policy shock is the catalyst that drives them back to their fundamental value Agents may then adjust their savings to restore their desired wealth In comparing the wealth ... issued by the financial sector Private bonds are also issued almost exclusively by financial institutions in Italy, while they are evenly distributed across the financial and the non -financial ... in the euro area The response of the value of a bond portfolio to horizontal shifts in the yield curve depends on the maturity of the portfolio The longer the average maturity of a portfolio, the...

Ngày tải lên: 15/03/2014, 14:20

... in the United States and France, and was propagated throughout the world by the international monetary standard.4 If monetary contraction propagated by the gold standard was the source of the ... (Australia and New Zealand); 2) countries abandoning the full gold standard in 1931 (14 countries); 3) countries abandoning the gold standard between 1932 and 1935 (Rumania in 1932, the United ... 1934, and Belgium in 1935); and 4) countries still on the full gold standard as of 1936 (France, Netherlands, Poland).7 Tables 2.2 and 2.4 give the data for each country, as well as averages for the...

Ngày tải lên: 22/03/2014, 20:21