...John Maynard Keynes He was a famous economist born on 5th June 1883. His father was an economics professor at Cambridge. son of a Cambridge economics professor If ever there was a rock star of economics, it would be John Maynard Keynes. Keynes shares his birthday, June 5th, with Adam Smith and he was born in 1883, the year communist founder Karl Marx died. With these auspicious signs, Keynes seemed to be destined to become a powerful free market force when the world was facing a serious choice between communism or capitalism. Instead, he offered a third way, which turned the world of economics upside down. In this article, we'll examine Keynes' doctrine and its impact. (To read about Adam Smith, be sure to check out Adam Smith: The Father Of Economics.) Keynes was ultimately a successful investor, building up a private fortune. His assets were nearly wiped out following the Stock Market Crash of 1929, which he failed to foresee, but he soon recouped. At Keynes's death, in 1946, his worth stood just short of £500,000 – equivalent to about £11 million ($16.5 million) in 2009. His first prediction was a critique of the reparation payments that were levied against the defeated Germany after WWI. Keynes rightly pointed out that having to pay out the cost of the entire war would force Germany into hyperinflation and have negative consequences all over Europe. He followed this up by predicting that a return to the prewar fixed exchange rate sought by the chancellor of the exchequer...
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...ECN302 Macroeconomics Research Paper 11/22/11 Panera Bread Panera Bread is a rising company in the restaurant industry. Panera is a retail bakery-café that started in 1981 as Au Bon Pain Co., founded by Ronald Shaich. I have been an employee here for over four years, so I have a personal interest in how the company is doing. Panera was originally named Au Bon Pain Co. and later purchased the Saint Louis Bread Company. St. Louis was a chain of 20 bakery-cafés located in Missouri. The company changed their name to what it currently is. Panera has been having great success, since 1999 their stock has grown thirteen-fold and they have done over $1 billion in shareholder value. But that is not the only thing to expand. As of June 28, 2011 there are 1,493 bakery-cafés located in forty states and in Ontario Canada (Panera Bread). They are able to do this because Panera prides themselves on quick service, an inviting and welcoming atmosphere, and making connections with their customers. One thing they emphasize in training is to learn the customer’s name so everyone can be on a first name basis. One important macroeconomic indicator is real GDP. Real GDP is defined as the value of goods and services measured using a constant set of prices. This means it will measure the output valued at constant prices, or adjusted for level of prices. Real GDP can be calculated by dividing the Nominal GDP and GDP Deflator, which reflects what’s happening to the overall level of prices. When...
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...Executive Summary The Malaysian economy has been experiencing waves and waves of turmoil from multiple macroeconomics aspect for the past few years and it is no longer resilient as it used to be. There is no short cut to do a quick fix to our ailing economy and reviving it to a strong and sustainable growth path will require a long term effort. Therefore by understanding the factors that contributed to its demised will allow us to better evaluate if a particular approach to safe the economy is potentially viable or just another disastrous attempt. Thus, we have to meticulously examine every long term step that we take. The Factors According to Esther (2015a) one of the factors contributing to the fall of our economy is declining private consumption growth. Private consumption indicates the consumption of goods and services by households and it has been slowly declining over the past few years. Private consumption growth was at 8.2% in 2012, 7.2% in 2013 and drops back to 7.1% in 2014. The projection by Bank Negara for year 2015 is 6%. Consumers are holding back their spending during school holidays, festive seasons and yearend sales. This is mostly due to cautious spending by the consumers. Most of the retailers suffered a drop in their profit margin. Malaysia is still a resource-based country and the Government is heavily dependent on oil revenue. The country’s oil-related revenue is at RM63 billion in 2013, it accounts for 29.5% of the total government income. Falling...
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...effect of global economic conditions regarding trade and specialized business decisions. We discussed the influence of growth on the economy and how important it is for a country to sustain growth. We learned about the basics of currency trading with the exchange rate and the two basic types. The spot exchange rate where the current rate is at the moment, and the forward exchange rate projected for a specific time in the future, for instance 30, 90, or 120 days from now. This is beneficial to know when comparing the exchange of currency one to another. The exchange rate of one currency cannot go too high or too low from other currency as it will affect import and export trade value too drastically. Our team learned there are basic macroeconomic relationships to consider in economics. The Income-Consumption and Income-Saving relationships show income that is disposable in a household and income saved. The economy depends on the flow of income consumption spent, and income saving are non-income determinants, which also consists of wealth and borrowing money. Interest-Rate-Investments relationships show the marginal benefit for the rate of return or profit and the cost of the interest rates, which is profit for borrowing funds. The goal for businesses lending money is for the rate of return to exceed the interest rate. The multiplier effect shows the relationship in spending and changes in the GDP. Initial change in spending is a critical time in change as it creates an increase...
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...Case study A : Ryanair Part 1 In November of 2006, the Irish Airline company Ryanair announced a record half-year profit of 326 million euros. In order to understand how they managed to reach such profitability in the overloaded European Airline industry, we will use the business model framework. First, Ryanair’s customers benefit from low fares and punctuality. Offering the lowest fares in every market is the company main goal. As no competitors manage to outperform Ryanair in terms of price, we can say that their value proposition is superior. The second step of the business model framework is to emphasize the architecture of the business and how it enables the company to achieve its aims. Let’s focus on each of the six components of the company infrastructure. ✓ Ryanair aims at offering the lowest prices of the market. Low fares are the main competitive advantage of the company, so whatever the context is they try not to raise prices. Even when fuel costs soared, the company CEO, Michael O’Leary declared that they would be “no fuel surcharges not today, not tomorrow, not ever”. ✓ Ryanair’s flights are point to point only, in order to reduce costs (fuel charges, airport cost…). On those flights, there is no business class. Moreover, the company chose secondary airports as airport charges are lower than in main airports. We can Ryanair also offers ancillary services including non-flight services such as hotels or car rental...
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...Balanced Budget Todd Driscoll ECO 203 Principles of Macroeconomics Instructor: Jason Friedline October 23, 2012 Balanced Budget Economists generally agree that high budget deficits today will reduce the growth rate of the economy of the future. The difference between what a government spends and what it collects in taxes in a given period is known as a budget deficit. There are many reasons why this might happen. One might be that if our government keeps spending money that does not exist obviously the more debt will accumulate. The government cannot keep this up without creating more debt. It the same as budgeting you personal accounts. If you get a new credit card or loan to consolidate old debt and then re-use your old cards, it rather defeats the purpose of getting out of debt. Another reason might be that due to the enormous loss of jobs there are less taxes being paid to pay our nations bills or to re-invest back into the economy. There is no point to list these reason in number order there are so many. If the deficit is growing it affects the nation savings, in turn, reduces national income. This may become possible if interest rates go up or domestic investments fall. Economists agree these a few things on when it comes to a high deficit. Deficits over a short period do not really have much affect, because the United States can borrow to cover these gaps due to the dollar’s value as the leading currency. If the deficit is sustained over a long period...
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...government. Budget Preparation A full understanding of the budget planning and preparation system is essential, not just to derive expenditure projections but to be able to advise policymakers on the feasibility and desirability of specific budget proposals, from a macroeconomic or microeconomic perspective. It is much easier to control government expenditures at the "upstream" point of budget preparation than later during the execution of the budget. Thus, fiscal economists and general budget advisors need to know: * what is the framework in which budget decisions are made; * who is responsible for planning and preparing the budget; * what are the basic steps; * what are the typical weaknesses in procedures and how can these be overcome; and * how can changes in budget plans be programmed and targeted? Answers to these questions are set out in the subsections below. Budget planning and preparation are (or should be) at the heart of good public expenditure management. To be fully effective, public expenditure management systems require four forms of fiscal and financial discipline: 1. control of aggregate expenditure to ensure affordability; that is, consistency with the macroeconomic constraints; 2. effective means for achieving a resource allocation that reflects expenditure policy priorities; 3. efficient delivery of public services...
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...Name Professor Course Date Economics The Federal Reserve Bank has been mandated by the Congress to execute monetary policies on behalf of the government in a meticulous manner such that the system remains liquid at all times. The FEDS has two specific mandates assigned by the Congress; one, to ensure that there is the sustainability of employment opportunities and output and two, to stabilize prices of commodities (or stabilize the rate of inflation), (Engen, Laubach and Reifschneider 2-3). To ensure that these mandates are met, the FEDS sets achievable and sustainable targets for the interest charged on loans as well as the Federal Reserve funds, which are overnight credit facilities advanced to banks and other financial institutions. It is on these rates that the other banks and financial institutions set their interest rates that they charge to their customers. It is the duty of the Federal Reserve Bank to ensure that these rates are revised every fortnight. To achieve its goals, the Federal Reserve Bank uses certain tools to determine the best way to advance its mandate. It is important to note that the FEDS cannot directly control inflation and unemployment. The liquidity of the market also makes it nearly impractical to set the rates for long-term interest rates, (Labonte 7). However, the influence it has on the Federal Reserve Funds rates makes it possible to exert some indirect influence on these variables of the economy. In a receding economy, the FEDS can implement...
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...was used, and a mathematical model with the aid of a graph, was also developed to aid estimated calculation of Naira’s value. We also deduced from this study that increase in fuel pump price has an adverse effect on the standard of living of the people, since fuel is essential for the transportation of major Nigerian commodities, such as Agricultural produce and other market product. The significant impact of the upsurge of petroleum pump price on the price of goods transport initiates this study; with the aim of checking its effect on the purchase value of naira. Though this study is totally neutral about the subsidy removal, its just to enlighten us on the topic and let viewers decide. Keywords GDP, Subsidy, Data, Scarcity calls for a quick intervention. In a bid to averting the continual occurrence of this problem, Nigeria government have decided to intervene by deregulating the petroleum sector in the form of subsidy removal. The aim of the government for doing this is to minimize, if not totally eradicate petroleum scarcity. Subsidy removal may however sound nice polite and beneficial, it is essential that there be a critical evaluation of the proposed mechanism for petroleum scarcity alleviation. Lessons from developed countries where this commodity has become...
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...EViews Workshop Program: MSc in Finance 2011-2012 Instructor: Dimitris Tsouknidis, MSc, MBA, PhD Email: dtsouknidis@gmail.com Course Description • Workshop 1 – Introduction, Regression Analysis, Multiple Regression Analysis • Workshop 2 – Issues with the Classical Linear Regression Model and Univariate Time-series Modeling in Finance • Workshop 3 – Multivariate Time-Series Modeling in Finance and Modeling Long-run Relationships in Finance MSc Finance - EViews Workshop 1 - 2012 2 Workshop 1 Introduction, Classical Linear Regression Analysis and Multiple Regression Analysis 19 January 2012 Agenda • • • • • • • Introduction to EViews Importing Data Loading and Saving Datasets Graphical and Statistical Analysis Regression Analysis Multiple Linear Regressions Case Studies – January Effect MSc Finance - EViews Workshop 1 - 2012 4 Introduction • EViews is a menu-driven econometric software. • Open EViews requires: – Start/All Programs/EViews 7 • EViews organizes data, graphs, output, etc. as objects. • Each of these objects can be copied, saved and/or cut-andpasted. • EViews is not case sensitive e.g. INDEX = index. • EViews is producing workfiles (.wf1). • You can import data from Microsoft Excel (.xls) and create workfiles (.wf1). MSc Finance - EViews Workshop 1 - 2012 5 Creating a Workfile • Click: File/New/Workfile. • You can select the type of your workfile (Dated – regular frequency, Balanced panel, Unstructured/Undated ), the frequency...
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...India and the Global Financial Crisis What Have We Learnt? 1 - Duvvuri Subbarao _________________________________________________________ Thank you for inviting me to deliver the 2011 K R Narayanan Oration. It is an honour to which I attach a lot of value. President Narayanan 2. Late President Narayanan was a distinguished diplomat, a reputed parliamentarian, a capable minister and above all an erudite scholar. Born at the very bottom of India’s social pyramid, he rose on to occupy the highest office in the country with no assets other than hard work, integrity and humility. ‘A working President’, as he described himself, he never allowed dogma to overwhelm his beliefs and convictions. 3. President Narayanan was in office from 1997 to 2002, a time when globalization, as we are experiencing it in the current times, was taking root. At the banquet he hosted for the visiting US President Bill Clinton in New Delhi in March 2000, President Narayanan remarked: “Mr. President, we do recognise and welcome the fact that the world has been moving inevitably towards a one-world... But, for us, globalization does not mean the end of history and geography, and of the lively and exciting diversities of the world.” This was a thoughtful remark. As much as globalization may be inevitable, history and geography need not be destiny. If we learn the lessons of experience, we will not repeat the same mistakes. This indeed is the topic for my 1 K.R. Narayanan Oration by Dr. Duvvuri...
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...American University in Bosnia and Herzegovina International Finance and Banking BSAD 120 Principle of Banking GROUP PROJECT Financial Crises: Asia 1997 and Global Recession 2008 Group members: Professor: Vesna Plakalovic Faris Njemcevic Ibrahim Music Avdo Halilovic Sabit Ceho 1. Explain both crises in your own words As for the Asian crisis which has occurred in year 1997/1998 we can say that something that looked really small, and not important has impacted most of the Asian countries but the World as well. As for the crisis beginning, we can say that it has begun in the Thailand. Problems started in the USA where was a lot of loans and credits that lead towards the collapse and bankruptcy of most of the banks and financial institutions in the USA. Looking for the investment and good return of investments, Americans banks and investors have decided that the Middle East and Asian countries are perfect investing area. When American companies started to invest into Asian countries like Thailand ,which has really low GDP and standard of life, big money income into poor countries it has only one possible outcome. GDP in Thailand and other surrounding countries started to appreciate really fast which was almost uncontrollable. Problem was that many experts have noticed and put a warning on ,was that GDP...
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...3 ECONOMIC & SOCIOECONOMIC FORCES ...………………………...........… p. 4 SOCIOCULTURAL FORCES …………………………………………........…..... p. 5 COMPETITIVE & DISTRIBUTIVE FORCES …………………………...........… p. 6 MARKETING & MANAGEMENT ASSESSMENT …………………….........… p. 8 APPENDIX ……………………………………………………………........…….. p.9-11 BIBLIOGRAPHY …………………………………………………………............ p. 12 PHYSICAL FORCES Location: Next door neighbor to the huge market that will be created under the North American Free Trade Agreement: Mexico, United States, Canada (with 360 million consumers), and member of the Central American market (with 30 million consumers). This geographic proximity substantially lowers time and costs of communications and transportation and makes a "quick response " framework possible. Political Relationship: Congressional, municipal, and first-round presidential elections took place on September 9, 2007. The final round of presidential elections took place on November 4, 2007. Inauguration for the new president and the new Congress took place on January 14, 2008. The next presidential elections are scheduled for September 2011. Common and violent crime, aggravated by a legacy of violence and vigilante justice, presents a serious challenge. Impunity remained a major problem, primarily because democratic institutions, including those responsible for the administration of justice, have developed only a limited capacity to cope with this legacy. Guatemala's judiciary is independent; however...
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...“unequal footing” ¾ A common cause of Asian crises: “incompatible opening” ¾ The Lessons from Asia crisis: Speed up the reform and Balance the globalization and domestic restructuring ¾ Case of China: Gradual liberalization II. China: Opening process and benefits from the globalization II. 1 Trade. II. 2 Foreign Investment II. 3 Service sectors III. Potential negative impacts of further market liberalization III. 1. Unemployment in general III. 2 Agriculture III. 3 SOEs and Manufacture industries III. 4 Service sectors III. 5 Inter-region and inter-group income disparity IV. Impacts of Asia crisis and corresponding policies V. How to achieve further “Compatible opening” ¾ Will the quick market liberalization solve the problems? ¾ Reforms and opening ¾ “Compatible opening” vs. “sequencing” ¾ Timetable for opening? ¾ No universal solution China has quickly opened its economy in the past 20 years. It is became the largest FDI recipient developing country since 1993 and the trade is already equivalent to about 40% of its GDP. It is not fully opened and is under the international pressures to open further. Nevertheless, it seems that a consensus has been building up among Chinese that China has to open further to catch up the path of globalization and become a constructive and equal partner in the world market; but at the same time, China has to think its path (strategies, game...
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...“unequal footing” A common cause of Asian crises: “incompatible opening” The Lessons from Asia crisis: Speed up the reform and Balance the globalization and domestic restructuring Case of China: Gradual liberalization II. China: Opening process and benefits from the globalization II. 1 Trade. II. 2 Foreign Investment II. 3 Service sectors III. Potential negative impacts of further market liberalization III. 1. Unemployment in general III. 2 Agriculture III. 3 SOEs and Manufacture industries III. 4 Service sectors III. 5 Inter-region and inter-group income disparity IV. Impacts of Asia crisis and corresponding policies V. How to achieve further “Compatible opening” Will the quick market liberalization solve the problems? Reforms and opening “Compatible opening” vs. “sequencing” Timetable for opening? No universal solution China has quickly opened its economy in the past 20 years. It is became the largest FDI recipient developing country since 1993 and the trade is already equivalent to about 40% of its GDP. It is not fully opened and is under the international pressures to open further. Nevertheless, it seems that a consensus has been building up among Chinese that China has to open further to catch up the path of globalization and become a constructive and equal partner in the world market; but at the same time, China has to think its path (strategies, game tactics,...
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