Financialization - Levy Economics Institute of Bard College
... contingent claims. According to this view, expanding the scope of financial markets and the range of financial assets increases efficiency by expanding the states of nature spanned by financial instruments. This enables markets to better price future economic outcomes, improves the ex-ante allocatio ...
... contingent claims. According to this view, expanding the scope of financial markets and the range of financial assets increases efficiency by expanding the states of nature spanned by financial instruments. This enables markets to better price future economic outcomes, improves the ex-ante allocatio ...
Liquid assets, liquidity constraints and global imbalances
... that asymmetries in financial development translate into uneven ability to supply assets, in particular liquid assets. From the asset demand side, incomplete asset markets can also bear consequences for saving behaviour. Asset market completeness and liquidity can be decisive in directing capital fl ...
... that asymmetries in financial development translate into uneven ability to supply assets, in particular liquid assets. From the asset demand side, incomplete asset markets can also bear consequences for saving behaviour. Asset market completeness and liquidity can be decisive in directing capital fl ...
What the Political System Can Do to Help the Fed
... demand instability that has accumulated since the mid-1970s -- is seen by many monetary economists as a reason to pause before advocating a monetary policy strategy that focuses first and foremost on measures of the money supply. Happily, however, the second set of developments in monetary economics ...
... demand instability that has accumulated since the mid-1970s -- is seen by many monetary economists as a reason to pause before advocating a monetary policy strategy that focuses first and foremost on measures of the money supply. Happily, however, the second set of developments in monetary economics ...
Chapters 1 and 2 - Microfoundations of Financial Economics
... Economist are interested in aggregate data that we can observe and societies utility function-not necessarily in an individuals endowment and decisions. If we have an economy (u,w) with I agents – to solve for a competitive equilibrium (p,x) would be cumbersome- we need to do this for every agent. I ...
... Economist are interested in aggregate data that we can observe and societies utility function-not necessarily in an individuals endowment and decisions. If we have an economy (u,w) with I agents – to solve for a competitive equilibrium (p,x) would be cumbersome- we need to do this for every agent. I ...
Federal Reserve and Monetary Policy
... •Some observers think this is puzzling because they associate higher interest rates with lower output. Why should a recovery be associated with higher interest rates? •The simple model of the money market helps explain why interest rates can rise during an economic recovery. One key to understanding ...
... •Some observers think this is puzzling because they associate higher interest rates with lower output. Why should a recovery be associated with higher interest rates? •The simple model of the money market helps explain why interest rates can rise during an economic recovery. One key to understanding ...
What factors will influence my returns?
... interest rates affect the level of economic activity and consumer spending. Alterations to interest rates are part of monetary policy, a weapon that the Reserve Bank wields from time to time in relation to economic activity. Like any central bank, the Reserve Bank lifts interest rates to choke off a ...
... interest rates affect the level of economic activity and consumer spending. Alterations to interest rates are part of monetary policy, a weapon that the Reserve Bank wields from time to time in relation to economic activity. Like any central bank, the Reserve Bank lifts interest rates to choke off a ...
to the document.
... resources and funds are getting more limited. With the need for a more circular economy to preserve resources, our institution needs to extend the life time of assets by redistribution and/or repair. The importance of reuse The drive for reuse and repair of assets is financial, environmental and soc ...
... resources and funds are getting more limited. With the need for a more circular economy to preserve resources, our institution needs to extend the life time of assets by redistribution and/or repair. The importance of reuse The drive for reuse and repair of assets is financial, environmental and soc ...
The Federal Reserve sets the nation`s monetary policy to promote
... The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. The challenge for policy makers is that tensions among the goals can arise in the short run and that information about the economy becomes avai ...
... The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. The challenge for policy makers is that tensions among the goals can arise in the short run and that information about the economy becomes avai ...
Capital markets and economic fluctuations in capitalist economies
... A second mechanism focuses on the money market; an increase in the real supply of money lowers interest rates; elsewhere [Stiglitx (1988a)], I have provided an extensive critique of this mechanism; the most important point is simply that, over long periods of time, variations in real interest rates ...
... A second mechanism focuses on the money market; an increase in the real supply of money lowers interest rates; elsewhere [Stiglitx (1988a)], I have provided an extensive critique of this mechanism; the most important point is simply that, over long periods of time, variations in real interest rates ...
US: thinking about the next US recession - 1
... appears to be slowing down the US economy. The export-oriented manufacturing industry is facing reduced demand from overseas, while it was already trying to deal with a stronger US dollar since the second half of last year. The reduced demand for commodities is also affecting the US commodities sect ...
... appears to be slowing down the US economy. The export-oriented manufacturing industry is facing reduced demand from overseas, while it was already trying to deal with a stronger US dollar since the second half of last year. The reduced demand for commodities is also affecting the US commodities sect ...
Outline of Lecture 1 – Basic Economics Concepts
... A lower price level in Country A lowers its interest rate investors will seek higher returns by investing abroad, increasing Country A’s net capital outflow it raises the supply of Country A’s currency, lowering the real exchange rate Country A’s goods become relatively cheaper to foreign good ...
... A lower price level in Country A lowers its interest rate investors will seek higher returns by investing abroad, increasing Country A’s net capital outflow it raises the supply of Country A’s currency, lowering the real exchange rate Country A’s goods become relatively cheaper to foreign good ...
Sticky Prices and the Phillips Curve
... difficult to reduce inflation quickly without a significant increase in unemployment. So, this Phillips curve suggests that gradualist policies are the best way to reduce inflation. But the implications of the NKPC are completely different. There may be a statistical relationship between current and ...
... difficult to reduce inflation quickly without a significant increase in unemployment. So, this Phillips curve suggests that gradualist policies are the best way to reduce inflation. But the implications of the NKPC are completely different. There may be a statistical relationship between current and ...
Forum for Social Economics Contemporary Capitalism as a New
... At the same time, the deregulation of financial markets favored the process of financialization of the economy according to three guidelines. The first was to encourage the participation of households in financial markets through the introduction of defined contribution plans and pension funds, as w ...
... At the same time, the deregulation of financial markets favored the process of financialization of the economy according to three guidelines. The first was to encourage the participation of households in financial markets through the introduction of defined contribution plans and pension funds, as w ...
Overlapping Families of Infinitely-Lived Agents
... consumer which, in spite of the infinite horizon of every agent alive, yields results traditionally associated with overlapping generation (OLG) economies: debt is non-neutral, asset bubbles can exist, and competitive equilibria may be dynamically inefficient. The model abandons the finite lifetime ...
... consumer which, in spite of the infinite horizon of every agent alive, yields results traditionally associated with overlapping generation (OLG) economies: debt is non-neutral, asset bubbles can exist, and competitive equilibria may be dynamically inefficient. The model abandons the finite lifetime ...
Journal of Financial Stability Asset prices and banking distress: A macroeconomic approach
... The model’s main appeal is the simplicity with which these links are articulated. In spite of dynamic general equilibrium, explicit solutions and balance sheet effects are found without resorting to linearization.2 For instance, we solve for the critical threshold beyond which an asset price decline ...
... The model’s main appeal is the simplicity with which these links are articulated. In spite of dynamic general equilibrium, explicit solutions and balance sheet effects are found without resorting to linearization.2 For instance, we solve for the critical threshold beyond which an asset price decline ...
Money Growth and Inflation
... • This is a resource-consuming process that takes away from other productive activities. ...
... • This is a resource-consuming process that takes away from other productive activities. ...
Research Statement Jón Steinsson March 2012 My research
... and therefore help inform debates about monetary and fiscal policy is evidence on the effects of demand shocks on output and employment. Government spending is an important source of variation in demand. Studying the effects of government spending on output is therefore potentially an important sour ...
... and therefore help inform debates about monetary and fiscal policy is evidence on the effects of demand shocks on output and employment. Government spending is an important source of variation in demand. Studying the effects of government spending on output is therefore potentially an important sour ...
PDF
... Food stocks held by the government have been rising, and the trend is likely to continue in the coming years. The costs of carrying the stocks are also rising. To quote from the Economic survey (Gov. India, 1985-86): "Foodstocks reached record levels in June 1985 (29.17 million metric tonnes) and, w ...
... Food stocks held by the government have been rising, and the trend is likely to continue in the coming years. The costs of carrying the stocks are also rising. To quote from the Economic survey (Gov. India, 1985-86): "Foodstocks reached record levels in June 1985 (29.17 million metric tonnes) and, w ...
M x V = P x Q
... People decide to continue to hold money, rather than buy bonds, because they feel that bond prices have nowhere to go but down. In other words, at very low interest rates, people are “trapped” holding money. (Hence the name “liquidity trap”: people are trapped holding a liquid asset (money) rather t ...
... People decide to continue to hold money, rather than buy bonds, because they feel that bond prices have nowhere to go but down. In other words, at very low interest rates, people are “trapped” holding money. (Hence the name “liquidity trap”: people are trapped holding a liquid asset (money) rather t ...
Macroeconomic Adjustment and Structural Reform
... Then, to reduce deficit, try to stimulate supply (shift AS right) in addition to reducing demand End result is point E with balance of payments equilibrium (B = 0). Level of GNP is unchanged, but its composition has changed. Price level is lower. ...
... Then, to reduce deficit, try to stimulate supply (shift AS right) in addition to reducing demand End result is point E with balance of payments equilibrium (B = 0). Level of GNP is unchanged, but its composition has changed. Price level is lower. ...
Kiss Me Deadly: From Finnish Great Depression to Great Recession
... drop of real GDP from its peak in 4Q 1989 to trough in 1Q 1993 was 12.6 percent. The depression was preceded by major credit and asset price booms which came to an abrupt end in late 1989. The episode also witnessed a collapse of the Finnish–Soviet trade in 1991, a currency devaluation and a full-fl ...
... drop of real GDP from its peak in 4Q 1989 to trough in 1Q 1993 was 12.6 percent. The depression was preceded by major credit and asset price booms which came to an abrupt end in late 1989. The episode also witnessed a collapse of the Finnish–Soviet trade in 1991, a currency devaluation and a full-fl ...
Lecture 3 and 4 I.F
... This theory basically states that governments can manipulate (influence and control) the level of aggregate demand in the economy by increasing or decreasing tax levels and public spending. While monetary policy manipulates the money supply in order to reach its aims. This influence, in turn, contro ...
... This theory basically states that governments can manipulate (influence and control) the level of aggregate demand in the economy by increasing or decreasing tax levels and public spending. While monetary policy manipulates the money supply in order to reach its aims. This influence, in turn, contro ...
AP Economics – Objectives: Microeconomics: Unit 1 Unit 2.1
... 39. Define and contrast the definitions of M1, M2, and M3 40. Define and compare Required Reserves and Excess Reserves 41. Explain how the banking system creates money 42. Calculate the Money Multiplier and money growth possible from a given value of Excess Reserves 43. Describe the organizational s ...
... 39. Define and contrast the definitions of M1, M2, and M3 40. Define and compare Required Reserves and Excess Reserves 41. Explain how the banking system creates money 42. Calculate the Money Multiplier and money growth possible from a given value of Excess Reserves 43. Describe the organizational s ...
New Keynesian macroeconomics: Entry For New Palgrave
... were the time-dependant models of pricing, which focussed on the notion of staggered wage and price setting: Taylor (1979) and Calvo (1983). Indeed, these two models have become the work horses of the New Neoclassical synthesis framework. John B Taylor’s model focussed on wage-setting: the empirical ...
... were the time-dependant models of pricing, which focussed on the notion of staggered wage and price setting: Taylor (1979) and Calvo (1983). Indeed, these two models have become the work horses of the New Neoclassical synthesis framework. John B Taylor’s model focussed on wage-setting: the empirical ...
Secular Stagnation, Rational Bubbles, and Fiscal
... commands a higher price than the NPV of its expected future dividends. Tirole considers an overlapping generations model similar to that of Peter Diamond (1965) and Olivier Blanchard (1985). He shows that rational bubbles can be sustained along a balance growth path when the return on capital r is ...
... commands a higher price than the NPV of its expected future dividends. Tirole considers an overlapping generations model similar to that of Peter Diamond (1965) and Olivier Blanchard (1985). He shows that rational bubbles can be sustained along a balance growth path when the return on capital r is ...
Economic bubble
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.