Monetary policy and asset prices
... related in several ways. Lucas (1990) already points out possible interactions between liquidity and interest rates in an economy. Therefore, the intuitive concern arises: could monetary policy indeed affect the price or return of other assets in the economy? And if so, what would be the precise mec ...
... related in several ways. Lucas (1990) already points out possible interactions between liquidity and interest rates in an economy. Therefore, the intuitive concern arises: could monetary policy indeed affect the price or return of other assets in the economy? And if so, what would be the precise mec ...
Inflation & Deflation
... – 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 ...
NBER WORKING PAPER SERIES RATIONAL INFLATIONARY BUBBLES Herschel i. Grossman
... bubble would imply that agents expect to gain utility from reducing their money holdings permanently. ...
... bubble would imply that agents expect to gain utility from reducing their money holdings permanently. ...
IS-LM-BP
... bonds: this adds to Banks’ reserves and enables them to expand lending, etc. • Similarly, Open Market bond sales can leas to a fall in Ms • The CB can also change the rate at which it is prepared to lend to banks (Refinancing Rate, Federal Funds rate, REPO rate,…) • This impacts on the cost of funds ...
... bonds: this adds to Banks’ reserves and enables them to expand lending, etc. • Similarly, Open Market bond sales can leas to a fall in Ms • The CB can also change the rate at which it is prepared to lend to banks (Refinancing Rate, Federal Funds rate, REPO rate,…) • This impacts on the cost of funds ...
Aggregate S&D
... In micro a given technology may produce an "envelop" of short run cost curves But in aggregate, technology can change and output can be expanded indefinately! ...
... In micro a given technology may produce an "envelop" of short run cost curves But in aggregate, technology can change and output can be expanded indefinately! ...
Classical Theory - McGraw Hill Higher Education
... – The AD curve illustrates how the volume of purchases varies with average prices. – With a given (constant) level of income, people will buy more goods and services at lower prices, and vice versa. – Price level is the vertical axis of the macro ...
... – The AD curve illustrates how the volume of purchases varies with average prices. – With a given (constant) level of income, people will buy more goods and services at lower prices, and vice versa. – Price level is the vertical axis of the macro ...
liquidity trap - Princeton University Press
... money multiplier and is usually greater than one. The reason for this relationship is that banks do not have any incentives to hold reserves, which typically do not earn interest, beyond the legal requirement, and therefore they lend out any excess reserves. Nonbank firms and individuals behave in p ...
... money multiplier and is usually greater than one. The reason for this relationship is that banks do not have any incentives to hold reserves, which typically do not earn interest, beyond the legal requirement, and therefore they lend out any excess reserves. Nonbank firms and individuals behave in p ...
Presentation - Federal Reserve Bank of St. Louis
... constitutes a significant risk for U.S. monetary policy, much larger than the risks associated with the zero lower bound. If a bubble in a key asset market develops, history has shown that we have little ability to contain it. A gradual normalization would help to mitigate this risk while still prov ...
... constitutes a significant risk for U.S. monetary policy, much larger than the risks associated with the zero lower bound. If a bubble in a key asset market develops, history has shown that we have little ability to contain it. A gradual normalization would help to mitigate this risk while still prov ...
Asset-based Reserve Requirements: Reasserting
... foreign country portfolio investments subject to reserve requirements, ABRRs can lower returns to such investments, thereby discouraging holdings.4 A last microeconomic advantage of ABRRs concerns their financial crisis properties. In particular, ABRRs have valuable incentive properties that can hel ...
... foreign country portfolio investments subject to reserve requirements, ABRRs can lower returns to such investments, thereby discouraging holdings.4 A last microeconomic advantage of ABRRs concerns their financial crisis properties. In particular, ABRRs have valuable incentive properties that can hel ...
Abstract
... information baked into their variables. Its basic assumption was that depression and crises cannot occur, and even if they do so, the system would automatically correct itself. While this assumption has allowed for ease of economic modeling and pricing since uncertainty (as well as potential bubbles ...
... information baked into their variables. Its basic assumption was that depression and crises cannot occur, and even if they do so, the system would automatically correct itself. While this assumption has allowed for ease of economic modeling and pricing since uncertainty (as well as potential bubbles ...
Overproduction not Financial Collapse is the Heart of
... Housing by itself accounted for almost one-third of the growth of GDP and close to half of the increase in employment in the years 2001-2005. It was, therefore, to be expected that when the housing bubble burst, consumption and residential investment would fall, and the economy would plunge. ...
... Housing by itself accounted for almost one-third of the growth of GDP and close to half of the increase in employment in the years 2001-2005. It was, therefore, to be expected that when the housing bubble burst, consumption and residential investment would fall, and the economy would plunge. ...
Consumer and Producer Surplus
... mp3 files and in the event, nearly two-thirds of down loaders paid nothing. Indeed internet monitoring company Comscore found that only 38% of down loaders willingly paid to do so and the average price paid for the album was £2.90. One person in ten was willing to pay between £3.80 and £5.71 for the ...
... mp3 files and in the event, nearly two-thirds of down loaders paid nothing. Indeed internet monitoring company Comscore found that only 38% of down loaders willingly paid to do so and the average price paid for the album was £2.90. One person in ten was willing to pay between £3.80 and £5.71 for the ...
Financial Cycle, Financial Stability and Monetary Policy
... • Economic community in general was aware that the pre-crisis decade was a period of rapid global economic growth on the one hand and the build-up of significant risks due to financial market developments on the other, but there was not much open debate in central banks about making fundamental chan ...
... • Economic community in general was aware that the pre-crisis decade was a period of rapid global economic growth on the one hand and the build-up of significant risks due to financial market developments on the other, but there was not much open debate in central banks about making fundamental chan ...
8892950 MSLO 0417 First 100 Days Macro Insight_FINAL.indd
... Sovereign debt securities are subject to default risk. Mortgage and asset-backed securities are sensitive to early prepayment risk and a higher risk of default and may be hard to value and difficult to sell (liquidity risk). They are also subject to credit, market and interest rate risks. The curren ...
... Sovereign debt securities are subject to default risk. Mortgage and asset-backed securities are sensitive to early prepayment risk and a higher risk of default and may be hard to value and difficult to sell (liquidity risk). They are also subject to credit, market and interest rate risks. The curren ...
Mankiw 5/e Chapter 5: The Open Economy
... A price reduction by one firm causes the overall price level to fall (albeit slightly). This raises real money balances and increases aggregate demand, which benefits other firms. ...
... A price reduction by one firm causes the overall price level to fall (albeit slightly). This raises real money balances and increases aggregate demand, which benefits other firms. ...
Housing market in China`s growth recovery and house price
... The role housing market in China’s growth rate recovery is closely related to the increase of house prices. On one hand, the booming housing market helped achieve an over 8% GDP growth rate; on the other hand, there are concerns about bubbles in the housing market. Many academics think that the pric ...
... The role housing market in China’s growth rate recovery is closely related to the increase of house prices. On one hand, the booming housing market helped achieve an over 8% GDP growth rate; on the other hand, there are concerns about bubbles in the housing market. Many academics think that the pric ...
MONEY AND PRICE
... consists of paper currency 110,2 mld., demand deposits 321 mld., time deposits 504,8 mld and the value of final production is 1205,5 mld. ...
... consists of paper currency 110,2 mld., demand deposits 321 mld., time deposits 504,8 mld and the value of final production is 1205,5 mld. ...
PPT
... If permits are valid for several years, only the portion representing the current year is a tax. The remainder is a financial asset for the purchaser and a liability for the government. Permits that are transferable or that can be returned to the issuing government for a refund of the unexpired port ...
... If permits are valid for several years, only the portion representing the current year is a tax. The remainder is a financial asset for the purchaser and a liability for the government. Permits that are transferable or that can be returned to the issuing government for a refund of the unexpired port ...
Test #1 - Employees Csbsju
... Other financial intermediaries do have (and create) liabilities, but these other instruments are not very liquid and, thus, are not used as monies; this is one feature that makes banks “different” from other financial institutions. However, the high level of integration (within financial firms and a ...
... Other financial intermediaries do have (and create) liabilities, but these other instruments are not very liquid and, thus, are not used as monies; this is one feature that makes banks “different” from other financial institutions. However, the high level of integration (within financial firms and a ...
No: 2011 -24 Meeting Date: July 21, 2011
... still persist. Especially, mounting problems regarding sovereign debt of the euro area peripheral economies have increased the downside risks on the global economy. The Committee members indicated that it would be appropriate to narrow the interest corridor gradually should the sovereign debt proble ...
... still persist. Especially, mounting problems regarding sovereign debt of the euro area peripheral economies have increased the downside risks on the global economy. The Committee members indicated that it would be appropriate to narrow the interest corridor gradually should the sovereign debt proble ...
Bubbles, Banks and Financial Stability
... (2008) show, using their rich time-series and cross-country data set, the resulting insolvency of the financial system leads to a deep downturn in real activity. The one bubble episode that stands in clear contrast to all the costly boom-bust cycles described above is the 1998-2000 ‘technology bubbl ...
... (2008) show, using their rich time-series and cross-country data set, the resulting insolvency of the financial system leads to a deep downturn in real activity. The one bubble episode that stands in clear contrast to all the costly boom-bust cycles described above is the 1998-2000 ‘technology bubbl ...
SET2 - CBSE
... Purchase of a refrigerator by a firm for own use is investment expenditure and thus included. (No marks if reason is not given) ...
... Purchase of a refrigerator by a firm for own use is investment expenditure and thus included. (No marks if reason is not given) ...
Balance Mechanics and Macroeconomic Paradoxes
... the same ’level’ to the extent that the complementary group is prepared to sell/buy the asset to/from the group immediately at the pre-existing market price. ...
... the same ’level’ to the extent that the complementary group is prepared to sell/buy the asset to/from the group immediately at the pre-existing market price. ...
Macroeconomic Issues and Vulnerabilities in the Global
... • What will the ECB policy be in 2007-2008? The ECB started raising policy rate in 2006 all the way to 4%; how far will it go? • Are ECB’s concerns about inflation valid? Will it pause now that there is market turmoil? • Will European growth weaken now that the Euro has strengthened again relative t ...
... • What will the ECB policy be in 2007-2008? The ECB started raising policy rate in 2006 all the way to 4%; how far will it go? • Are ECB’s concerns about inflation valid? Will it pause now that there is market turmoil? • Will European growth weaken now that the Euro has strengthened again relative t ...
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.