...Introduction Stock market is a place for listed companies to raise capital .Companies can use the capital for continuing operating activities and expand business. However, the investors are explained to get a positive return from dividend and capital gain in the stock market. Based on the history, the economic condition will influence stock market. For instances, Malaysia faced deflation during the Asian crisis in years 1997. It caused the KLCI index sharply reduced from 1207.43 to 470.43. It have been shown that the investors need to predict the stock prices based on the macro factors to get an abnormal return from stock market There were a lot of researches to study the relationship between macroeconomics variables and stock returns. It is important to study the interaction of macroeconomics factor and stock return. Based on the study, the public can identify which factors can influence the stock market and use the knowledge to predict movement of stock price. According to Wongbangpo & Sharma (2002), the research can reveal the functions of stock market in identify the change in economic condition and also can predict the future performance of stock market. Besides, the study will be useful for the stock market participators. Clare & Priestley (1998) said that the study of the risk factor relationship of stock market will be useful for corporate manager to undertake cost of capital calculation. Moreover, the fund managers can use the information from the result of study to make...
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...CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY For decades now, Nigeria has been experiencing disappointing performance in terms of growth in gross domestic product (GDP) and the general development of her economy. As a result, there’s no improvement in the level of poverty. In the 90s, came the era of globalization which connotes external opening and increased role of markets domestically (i.e. the market economy). To the developing world, market economy is a modern way of turning the economy around. The essence of globalization is to move the economy towards external liberation, focusing on market oriented economic system, export-led strategy and stabilization of the economy. In Nigeria, it was the era of structural adjustment programme in collaboration with the IMF and World Bank. The governments in the developing world, believes that it is more desirable to globalize which simply means to open up the economy and penetrate international markets. In time past, the world economy has undergone a fundamental shift towards an integrated and coordinated global division of labour in production and trade. In the 1950s and 1960s, productions were within national boundaries. The increase of oil prices in the late 1970s and the contractionary monetary policies of the United States during 1979 and 1982 period led to the increased interest rates and consequently indebted developing countries found they unable to service their debts. Continual refinancing was the only...
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...sector & Stock Exchange and Conceptual framework – Macroeconomic variable |3.1 An overview of Banking sector and Stock market of Bangladesh | We are interested in investigating the relationship between stock prices and macroeconomic variables because individual investors can earn abnormal profits by exploiting this relationship and the existence of this utilizable opportunity would then dangerously distort the market’s ability to proficiently allocate scarce resources. In other word, the stock market will lose its informational efficiency. Informational efficiency is defined as at any given time, stock prices fully reflect all available information of the market. Thus, no investor has an advantage in predicting a return on a stock price because no one has access to information not already available to everyone else. Identifying the relationship or informational efficiency thus can be used to correct the current economic stabilization policies. Therefore, the issue of whether stock prices and macroeconomic variables are related or not have received considerable attention. This paper provides empirical evidence of the relationship between stock prices with each of the macroeconomic variables: exchange rate, inflation rate, money supply variables and so on. The knowledge of the prevailing relationship between stock prices one the one hand, and micro variables like market price/ earnings, growth rate in market...
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...What are the key macroeconomic variables for an economy? How have these variables changed in your economy over the last 5 years? The key macroeconomic variables for an economy are: GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Inflation rate - indicator that describes the changes in the general level of prices of goods and services purchased by the population for non-productive consumption. Unemployment rate is the percentage of the working population that is not currently employed. Interest rate is a reflection of the risk of borrowing. Changes in variables in Ukrainian ecomony over 2010-2014 y. Inflation rate As we can observe, the graph reveals that the inflation rate declined slightly from 2009 until 2012. However, it rised in 2013, showing a rate at 100,5 %. Inflation rate in Ukraine in September 2014 year amounted to 102.9%. GDP The Gross Domestic Product (GDP) in Ukraine was worth 177.43 billion US dollars in 2013. The GDP value of Ukraine represents 0.29 percent of the world economy. GDP in Ukraine averaged 85.27 USD Billion from 1987 until 2013, reaching an all time high of 179,99 USD Billion in 2009. Unemployment rate Unemployment Rate in Ukraine reached an all time high of 9,6 Percent in 2009 and there was a decrease in 2010 to 8.8.Unemployment...
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...MACROECONOMICS & THE GLOBAL ECONOMY Instructor SATYENDRA TIMILSINA What is Macroeconomics? • It is that branch of economics, which deals economic affairs at large i.e. total or aggregates • Concerns itself with variables such as – – – – Aggregate output of the economy Extent to which its resources are used Size of National Income General Price Level Introduction • Managers have to deal with economic environment at two levels – micro level and macro level • Micro level includes market structure and the strength of competitors. Firm’s decision making is mostly influenced by the activities of its rival forms. The following are some factors that affect firms decision at micro level – Level of competition – Cost of production and – Product differentiation Introduction • Macro level includes the overall system. This is something that the firm assumes to the given. • Decision making of the firm is affected by the macroeconomic environment. • The following macroeconomic factors have a strong effect on firm’s decision making – Overall Demand – Price Level – Rate of interest – Tax policies and – Exchange Rates Introduction • It is important for managers to know the macroeconomics because an unprecedented change in any of these factors can upset the revenue and cost of the firm, affecting the profitability and returns. • The problem can be minimized or managed if managers know the working of an economy and thereby, judge the...
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...of Macroeconomics by Smriti Chand Macro Economics The Nature and Scope of Macroeconomics! Introduction: The term ‘macro’ was first used in economics by Ragner Frisch in 1933. But as a methodological approach to economic problems, it originated with the Mercantilists in the 16th and 17th centuries. They were concerned with the economic system as a whole. In the 18th century, the Physiocrats adopted it in their Table Economies to show the ‘circulation of wealth’ (i.e., the net product) among the three classes represented by farmers, landowners and the sterile class. Malthus, Sismondi and Marx in the 19th century dealt with macroeconomic problems. Walras, Wicksell and Fisher were the modern contributors to the development of macroeconomic analysis before Keynes. Certain economists, like Cassel, Marshall, Pigou, Robertson, Hayek and Hawtrey, developed a theory of money and general prices in the decade following the First World War. But credit goes to Keynes who finally developed a general theory of income, output and employment in the wake of the Great Depression. Contents: Nature of Macroeconomics Difference between Microeconomics and Macroeconomics Dependence of Microeconomic Theory on Macroeconomics Dependence of Macroeconomics on Microeconomic Theory Macro Statics, Macro Dynamics and Comparative Statics Transition from Microeconomics to Macroeconomics Stock and Flow Concepts 1. Nature of Macroeconomics:________________________________________ Macroeconomics is the...
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...Economic Modelling 30 (2013) 643–662 Contents lists available at SciVerse ScienceDirect Economic Modelling journal homepage: www.elsevier.com/locate/ecmod The effects of fiscal spending shocks on the performance of simple monetary policy rules Ali K. Malik ⁎ Karachi School for Business and Leadership (KSBL), Bahadurabad, National Stadium Road, Karachi 74800, Pakistan a r t i c l e i n f o Article history: Accepted 26 August 2012 JEL classification: E50 E52 E58 Keywords: Fiscal policy Monetary policy Inflation targeting Impulse response analysis Macroeconomic variables 1. Introduction a b s t r a c t We examine the effects of fiscal shocks on the performance of alternative monetary policy rules in a small dynamic general equilibrium framework. We explicitly consider the interaction between fiscal and monetary policy rules which may be present in the real world. We use a simple specification for the fiscal policy rule and various specifications for the (simple) monetary policy rule. Our analysis suggests that some form of flex- ible inflation targeting regime would perform well in response to fiscal shocks compared to other forms of policy regimes. © 2012 Elsevier B.V. All rights reserved. monetary policy has developed largely in isolation. The terminology ‘fiscal theory of the price level’ does however correspond to some ear- Monetary policy rules have come under extensive examination in the literature on monetary...
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...factors impact the demand of your chosen product or service. 3. Explain how two nonprice factors impact the supply of your chosen product or service. 4. Define the industry and the market equilibrium associated with the product or service. 5. Predict the effect of changes in supply and demand on the market equilibrium. 6. Describe the decisions related to supply and demand for the product or service that you would make based on the predicted changes in supply and demand on the market equilibrium. 5-2 Final Project Part I Milestone Two: Production and Costs This milestone, which covers Section III of Final Project Part I, should be a paper structured as follows: 1. Describe three key inputs (or factors of production) and fixed and variable costs involved in the production of your chosen product or service. 2. Analyze the factors that impact your choice of inputs to produce the chosen product or service. 3. Examine the production decisions that you would make based on the analysis of the factors impacting the choice of inputs to produce the chosen product or service. 7-1 Final Project Part I Final Submission: Microeconomic Analysis Paper The microeconomic analysis paper should be a complete, polished artifact containing all of the critical elements of Final Project Part I, including Sections I and IV , which...
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...States Adam Rose* and Noah Dormady** This paper provides a meta-analysis of a broad set of recent studies of the economic impacts of climate change mitigation policies. It evaluates the infiuences of the impacts of causal factors, key economic assumptions and macroeconomic linkages on the outcome of these studies. A quantité regression analysis is also performed on the meta sample, to evaluate the robustness of those key factors throughout the full range of macro findings. Results of these analyses suggest that study results are strongly driven by data inputs, economic assumptions and modeling approaches. However, they are sometimes affected in counterintuitive ways. 1. INTRODUCTION The macroeconomic impacts of climate change mitigation policies are controversial among both scholars and the policy-making community. Results range from predictions of severe economic harm to significant overall economic gains. Given the unresolved nature of this debate, this paper seeks to shed light on it by evaluating a wide range of macroeconomic studies through a metaanalytic approach. Meta-analysis is a method for evaluating a cross-section of studies on a given topic, and evaluating the impacts of assumptions, input variables and modeling approaches on the overall findings of the studies. In essence, meta-analysis is a study of studies (Borenstein et al., 2009; Lipsey and Wilson 2001). The Energy Joumai, Vol. 32, No. 2. Copyright ©2011 by the IAEE. All rights reserved. * ** ...
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...1.4 The macroeconomic impacts of oil price shocks 1.4.1 A short history of a controversial topic Since the 1973 OPEC (Organization of Petroleum Exporting Countries) oil embargo, the role of rapid, unanticipated increases in oil prices has been a topic of intense interest, among both economists and the lay public. Considering the magnitude of widespread national recessions during the 1970s, the controversy surrounding research on the macroeconomics of oil price shocks may seem surprising: why would anyone doubt the capacity of oil price shocks to cause the major movements in GDP (Gross Domestic Product) which have been observed in so many countries? Possibly most important in fueling the controversy is the small share of GDP that oil and its close substitutes have comprised in most economies: 1.5% to 3% prior to the 1973 episode. Experienced macroeconomists doubted that even a sizeable shock to such a small part of the economy could have the observed effects. Second, the 1973 episode itself was not a clean experiment because a number of other major factors were emerging at the same time. The world economy was just getting off the post-Bretton Woods fixed exchange rate regime. A number of countries, including the United States, was teetering on the brink of recession at the time of the 1973 shock; in the United States in particular, monetary policy tightened right around the time of the 1973 shock. Separating these effects and deciding the role ...
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...Macroeconomic Theory: Econ 2220 1 Math For Econ 2220 B 1 1.1 Shifts of a Curve vs. Movement along a Curve Parameter and variable y = f (x, a) (1) Suppose y is a function of x, and where a is a parameter, which represents the impact of other exogenous variables. Given a certain value of a, we can plot the function y = f (x, a) as a curve in a two-dimension graph. A change in x implies a movement along the curve, while a change in a means a shift of the curve. 1.2 An example Suppose the firm’s daily output, Y , depends on both the number of workers that the firm employs, N , and the number of machines that the firm uses, K. The relation between input and output is specified as the following, √ √ Y =2 K N (2) Output Y is a function of both the number of machines, K, and the number of workers, √ √ N . For example, if there are 100 machines and 4 workers, the output Y = 2 100 4 = 2 × 10 × 2 = 40. Now suppose we are concerned with the relation between output and the number of workers employed. That means that we hold the number of machines constant and study the relation between Y and N . Graphically, we plot Y against N , where N is on the horizontal axis. If we hold K constant at 100, the relation reduces to √ √ √ Y = 2 100 N = 20 N (3) It is shown as the solid curve in Figure 1. If the firm increases the number of workers employed from 4 to 9, the output would increase from 40 to 60. In the graph, the combination of Y and N moves along the solid curve...
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...Differentiate between Microeconomics and Macroeconomics Name Institution Differentiate between Microeconomics and Macroeconomics According to (Krugman, 2005), Microeconomics involves analysis of individual economic units such as households, demand, and supply and market equilibrium. Macroeconomics, on the other hand, includes analysis of aggregate economic variables such as national income, inflation, unemployment and interest rates. My primary objective in this paper, therefore, is to differentiate between macroeconomics and microeconomics. This fact alone cannot distinguish macro and microeconomics. Nevertheless, microeconomics and macroeconomics are interdependent. While analyzing macroeconomics an economist has to ask questions which affect the standards of living of an entire country. Such issues will be related to inflation, unemployment, national income, product markets, fiscal policies, international trade, economic growth and interest rates (Mankiw, 2007). On the other hand, an economist while analyzing Microeconomics will look at individual’s purchasing power, demand, supply, income, utility level, labor markets, production, consumption and opportunity cost. Macroeconomics is concerned with the national income and the gross domestic product while Microeconomics is concerned with the impact of an increase or decrease in a single economic variable (Krugman, 2005). Microeconomics works on the principle that prices of goods and services are determined by the...
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...2010-01 http://www.frbsf.org/publications/economics/papers/2010/wp10-01bk.pdf The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System. Macro-Finance Models of Interest Rates and the Economy Glenn D. Rudebusch∗ Federal Reserve Bank of San Francisco Abstract During the past decade, much new research has combined elements of finance, monetary economics, and macroeconomics in order to study the relationship between the term structure of interest rates and the economy. In this survey, I describe three different strands of such interdisciplinary macro-finance term structure research. The first adds macroeconomic variables and structure to a canonical arbitrage-free finance representation of the yield curve. The second examines bond pricing and bond risk premiums in a canonical macroeconomic dynamic stochastic general equilibrium model. The third develops a new class of arbitrage-free term structure models that are empirically tractable and well suited to macro-finance investigations. This article is based on a keynote lecture to the 41st annual conference of the Money, Macro, and Finance Research Group on September 8, 2009. I am indebted to my earlier co-authors, especially Jens Christensen, Frank Diebold, Eric Swanson, and Tao Wu. The views expressed herein are solely the responsibility of the author. Date: December...
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...|VI Learning activity questions: Scope of Managerial Economics | | | | | |1. What is managerial economics all about? | | | |Managerial economics applies economic theory and methods to business and administrative decision making. Managerial economics | |prescribes rules for improving managerial decisions also helps managers recognize how economic forces affect organizations and | |describes the economic consequences of managerial behavior. It links traditional economics with the decision sciences to develop | |vital tools for managerial decision making. Managerial economics identifies ways to efficiently achieve goals. For example, suppose| |a small business seeks rapid growth to reach a size that permits efficient use of national media advertising. Managerial economics | |can be used to identify pricing and production strategies to help meet this short-run objective quickly and effectively. | | ...
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...The Mathematics of Simple Macroeconomic Models There are several advantages in presenting economic models in the form of equations. Equations are very concise; they readily give quantitative answers; and they are the language of most practising economics. Unfortunately, for a large proportion of students beginning the study of macroeconomics, the first sight of equations in the course is a traumatic experience. Old fears about their mathematical ability can make them doubt their capacity to cope with macroeconomics. It may even result in their premature withdrawal from the subject. Fortunately, in the vast majority of cases such doubts are unfounded. Consequently, once fears are removed, these students cope quite happily with the equations in macroeconomics. This chapter is designed to allay these old fears about mathematics. It does this by means of a step-by-step examination and manipulation of the equations that a student first meets in macroeconomics. Once the student has mastered these equations, the new-found confidence should enable him or her to tackle most of the elementary mathematics that macroeconomics requires. THE FIRST MODEL The first model in equation form seen by macroeconomics students is usually: Y = C + 1 (16-1) C = Co + cY (16-2) I = Io (16-3) It is convenient to think of the symbols in these equations as words, and the equations themselves as sentences. Thus it is possible to translate an English sentence into an...
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