...Chapter 12 - Macroeconomic and Industry Analysis CHAPTER TWELVE MACROECONOMIC AND INDUSTRY ANALYSIS CHAPTER OVERVIEW This is the one of three chapters that covers fundamental security valuation. This chapter introduces a topdown approach to fundamental security analysis. It covers the first two components: macroeconomic and industry analysis. The textbook begins with a global analysis, particularly with respect to how the performance of domestic firms is influenced by international economic performance. The chapter’s main focus however is on aspects of the U. S. economy that affect security returns, including fiscal and monetary policy. In addition, a brief presentation of the determinants of interest rates is covered. The chapter concludes with a discussion of industry analysis that includes classifications of industries, information sources, the industrial life cycle and a Porter framework that can be used to analyze industry competition. LEARNING OBJECTIVES Upon reading this chapter, you should have a basic understanding of some of the macroeconomic factors that affect security prices. That is, how fiscal and monetary policy affect interest rates and security prices. And some industry groups are more affected by macroeconomic factors than others and the characteristics of an industry that affect its competitiveness. CHAPTER OUTLINE The top-down approach to fundamental analysis begins with analyzing the economy. Expected economic performance will influence the choice...
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...and instability of the financial system, erosion of business and investors’ confidence, slowing down of real economic activities, investment, economic growth and employment. Inflation is known as a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, there is a decline in the real value of money and purchasing power. Inflation is an indicator of a country’s macro economic stability and provides important insight on the state of the economy and the sound macroeconomic policies that govern it. A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. A numerous supply side and demand side factors could be responsible for this surge in inflation. Inflation can be a result of shocks to the supply of certain food items and to world oil markets. Rising oil prices can pose risk of increase in prices of almost all other commodities of the consumer basket. Such supply-side shocks are very volatile and can cause large fluctuations in food and oil prices. The effects of this on overall inflation at times can be so excessive that these cannot be countered through demand management, including monetary policy. The demand side...
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...Marshallian supply- demand synthesis of stable equilibrium T H A T with Marshall the price point o f view delimits the economic field, does not precisely Commit him to the demand-And-supply approach in price analysis. He is, however, .a and-supply economist. This, to be sure, is not much to say. All economists are so, no matter what they may accept, or purport to accept, as the principle, or the problem, or the group of problems, defining the economic field. Always and everywhere with all economists, price is the point of equilibrium or adjustment OJi equilibration between demand and supply. It is, then, safe as far as it goes-but always in the sense of the commonplace or the obvious-to announce that price is determined by demand and supply. It is merely an oracular way of asserting an undisputed thing. Knowing not even so much as the question One may always refer the solution to demand and supply. Never is the argument thereby advanced excepting, perhaps, in the sense of a formal indication of a desirable or necessary line of procedure. No. Influence that does not report itself in demand or in supply terms, or in both, is relevant to price determination. The demand- and-supply expression is merely a formula of the signboard sort pointing to the terms to which all economic analyses must finally get reduced. Difficulties appear only with the attempt to trace out the various influences that finally report themselves in demand and in supply terms-to render an account of these...
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...Energy Economics Shuddhasattwa Rafiq Greenpeace Video on Sustainable Energy.mp4 Presentation Plan • Motivation • Research areas • Papers and proposals in different research areas Motivations To undertake meaningful academic and professional research in the field of energy economics which would ultimately lead to delivering key sustainability principles in regional, national and international levels. Pure data driven analytical studies based on recent quantitative research underpinnings strengthen sustainable energy planning to ensure community involvement, inter-generational equity, biological diversity, ecological integrity, and precautionary social and environmental investment. Research Areas • • • • Energy Conservation Renewable Energy Sustainable Mining Community Oil Price Volatility Energy Conservation (a) Rafiq, S. and Salim, Ruhul A. 2010, ‘The Linkage between energy consumption and income: A multivariate cointegration analysis in developing economies,’ International Journal of Emerging Markets, forthcoming. (b) Rafiq, S. and Salim, Ruhul A. 2009. ‘Temporal causality between energy consumption and income in six Asian emerging countries,’ Applied Economics Quarterly, Vol. 55, no. 4, 335-350. Objective: • Identifying energy conservation possibilities in emerging economies by implementing a multivariate demand side time series econometric analysis. (c) Rafiq, S., Salim, Ruhul A. and Bloch, H. 2010, ‘Relationship between oil consumption and economic growth:...
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...Economic Critique ECO/372 University of Phoenix Economic Critique Aggregate supply and demand are two of the most important elements to consider in all of macroeconomic, regardless of which of the many theories or models one applies. Understanding how various economic factors influence supply and demand is very important particularly vital to the government while determining economic policy. Factors like unemployment, expectations, consumer income, and interest rates all have an affect on the aggregate supply and demand. These factors will be discussed from both the Keynesian and Classical macroeconomic perspective. Current State of Unemployment, Expectations, Consumer Income, and Interest Rates Unemployment The unemployment rate has been steadily dropping over time. As of the summer of 2012 the unemployment rate was at 8-1/4 percent, and fell to a little below 8 percent as of January 2013 (Board of Governors of the Federal Reserve System, 2013). However, this improvement is still well above unemployment rates pre-recession. Also, a larger portion of the unemployed have been so for six months or longer (Board of Governors of the Federal Reserve System, 2013). In more recent months according to "Bureau Of Labor Statistics" (2013), “the unemployment rate edged down to 7.4 percent as of July 2013” (News Release USDL-13-1527 ). Economists try to interpret this information in order to better determine which way government policy should go. According economist, John...
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...EC 301 Intermediate economics | The American Economy | Keynesian and Monetary Theories, Budget Deficits, Trade Deficits, and Supply-side Economics | | Nathan Johnson | 5/5/2013 | | The past twenty years has seen a great shift in economics of this country. In the early 1990’s the U.S. economy was struggling and was a major topic of the previous presidential election. Fast forward twenty years and an economic boom and bust later, the presidential election again was based on a struggling economy. By taking a closer look at the policies and practices that took place in that span we might be able to find a better understanding of how our government can influence our economy. In the field of economics there are several varying sets of ideals of how policies should be implemented. Two of those groups are the Keynesian theorists and the monetary theorists. These two groups offer different perspectives of what is “right” in the world of economics. Each option provides its positives and negatives, but it is up to each economist to determine which negatives are worth giving up. The Keynesian theorists believe in correcting economic downturns with fiscal policy actions. Actions that would please Keynesian theorists would include changes in government spending, changes in the amount of taxes, and changes made to investments in long term productive growth. During the most recent fiscal crisis, these theorists were happy with the stimulus package that was created by the...
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...ECONOMICS EXAMINATION GUIDELINES GRADE 12 2014 These guidelines consist of 25 pages. Copyright reserved Please turn over Economics 2 Examination Guidelines DBE/2014 INDEX PAGE 3 1. INTRODUCTION 2. ASSESSMENT IN GRADE 12 2.1 Format of the question papers 2.2 Detail of question papers 4 4 4 3. CONTENT 6 4. CONCLUSION Copyright reserved 25 Please turn over Economics 1. 3 Examination Guidelines DBE/2014 INTRODUCTION The Curriculum and Assessment Policy Statement (CAPS) for Economics outlines the nature and purpose of the subject Economics. This guides the philosophy underlying the teaching and assessment of the subject in Grade 12. The purpose of these Examination Guidelines is to: • • Provide clarity on the depth and scope of the content to be assessed in the Grade 12 National Senior Certificate (NSC) Examination in Economics. Assist teachers to adequately prepare learners for the examinations. This document deals with the final Grade 12 external examinations. It does not deal in any depth with the School-Based Assessment (SBA). This guideline should be read in conjunction with: • • • The National Curriculum Statement (NCS) Curriculum and Assessment Policy Statement (CAPS): Economics The National Protocol of Assessment: An addendum to the policy document, the National Senior Certificate: A qualification at Level 4 on the National Qualifications Framework (NQF), regarding the National Protocol for Assessment (Grades R–12) The national policy pertaining...
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...Report 2010 Economics GA 3: Examination GENERAL COMMENTS This was the first year of the new VCE Economics Study Design 2010–2014. It was evident that students found Section A of the 2010 Economics examination more challenging than in recent years. The quality of written answers in Section B was generally good and the majority of students attempted all question parts. It is commendable that students had prepared well and kept abreast of current developments in the Australian economy, and thus gave themselves the best chance to score high marks on the examination. Students responded confidently to a number of questions that related to the current context, such as Section B, Questions 1d., 3b., 4a., 4b., 4c. and 4d. Students need to improve their understanding of key economic concepts and terms such as ‘scarcity’ (multiple-choice Question 3), ‘real’, ‘nominal and money terms’ (multiple-choice Question 11), ‘relative prices’, ‘production’ and ‘productivity’, and ‘personal disposable income’. There was also evidence of the need for students to engage more with the new aspects of the study such as living standards (multiple-choice Question 6) and price elasticities (multiple-choice Question 8) in order to maximise their performance. Students should practise their key skills, in particular the interpretation and analysis of statistical and graphical data, so that they are better prepared to answer questions which require this interpretation and analysis, such as multiple-choice...
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...A-LEVEL ECONOMICS ECON4/Unit 4: Mark scheme 2140 June 2014 Version 1.0 Final The National and International Economy Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all associates participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the students’ responses to questions and that every associate understands and applies it in the same correct way. As preparation for standardisation each associate analyses a number of students’ scripts: alternative answers not already covered by the mark scheme are discussed and legislated for. If, after the standardisation process, associates encounter unusual answers which have not been raised they are required to refer these to the Lead Assessment Writer. It must be stressed that a mark scheme is a working document, in many cases further developed and expanded on the basis of students’ reactions to a particular paper. Assumptions about future mark schemes on the basis of one year’s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. Further copies of this Mark Scheme are available from aqa.org.uk Copyright © 2014 AQA and its licensors. All...
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...Demand and Supply Shocks in a Low-Income Country: Evidence from Bangladesh Omar H.M.N. Bashar The Journal of Developing Areas, Volume 44, Number 2, Spring 2011, pp. 243-264 (Article) Published by Tennessee State University College of Business DOI: 10.1353/jda.0.0095 For additional information about this article http://muse.jhu.edu/journals/jda/summary/v044/44.2.bashar.html Access Provided by Bangladesh University of Professionals at 05/29/11 5:42AM GMT THE ROLE OF AGGREGATE DEMAND AND SUPPLY SHOCKS IN A LOW-INCOME COUNTRY: EVIDENCE FROM BANGLADESH Omar H.M.N. Bashar Deakin University, Australia ABSTRACT This paper explores the relative role of aggregate demand and supply shocks in affecting the output level and inflation rate in a low-income country vulnerable to various economic shocks. The study uses Bangladesh data, and following Cover et al (2006), employs a modification of the BlanchardQuah (BQ) approach, in which the two shocks are allowed to be correlated. Strong evidence is found for the hypothesis that aggregate demand and supply shocks are interrelated in Bangladesh. For the case in which causality is assumed to be running from demand to supply shocks, it was found that an independent supply shock plays significant role for fluctuations in inflation, which was absent in the standard BQ model. The results suggest that a tightening of monetary policy may lead to an adverse effect on the long-run growth potential and some supply-side policies may be required...
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...Urban Housing Markets in China Yongzhou Hou Stockholm 2009 Report 88 Building and Real Estate Economics Department of Real Estate and Construction Management Royal Institute of Technology Kungliga Tekniska Högskolan © Yongzhou Hou 2009 Royal Institute of Technology (KTH) Building & Real Estate Economics Department of Real Estate and Construction Management SE – 100 44 Stockholm Printed by Tryck & Media, Universitetsservice US-AB, Stockholm ISSN 1104-4101 ISRN KTH/BFE/M-09/88-SE ISBN 978-91-977302-5-9 Abstract This thesis focuses on problems of prices and risks in the housing markets of urban China. What drives the dynamics of housing prices across regions is not only of great interest for academic researchers but also of first importance for policy makers. It is also interesting to pay attention to the issue of housing bubbles at a city level and risk allocations from an institutional view. To address the issues, the thesis applies both qualitative and econometric approaches in analyzing the urban housing markets of China. The first paper reviews articles mainly published in Chinese core journals. The existing studies are mainly concerned with such six topics as institutions, policy, land, finance, price and market. The first three topics involve the public housing allocation system reform, such fiscal and monetary tools as tax and interest rate, and the land reserve system. The housing finance treats such subjects of mortgages, bubbles and financial systems...
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...Saurav Goswami (ABM08012) Saurav Goswami (ABM08012) Sub Sub ABE-II Assignment Submitted to: Prof. M.K Awasthi ABE-II Assignment Submitted to: Prof. M.K Awasthi Table of Contents Introduction 2 History of Palm Oil 2 History of Palm Oil in Malaysia 2 Importance of Palm Oil in the World 3 Analysis of Economic Environment 5 Supply-Side Environment 5 Demand Side Environment 7 Palm Oil Economy in Malaysia 7 Key Inferences 8 Analysis of Political, Legal & Institutional Environment 8 FELDA, FELCRA & RISDA 9 Government Policies 9 Analysis of Social & Environmental Impact 11 Analysis of Technological Environment 12 Skills & Knowledge Development 12 Research & Development 12 Overview of Business Environment & Conclusions 13 Introduction History of Palm Oil The oil palm tree (Elaeis Guineensis Jacq.) is said to have originated in West Africa, somewhere between Angola and Senegal. The earliest archaeological evidence of palm oil has been found in an Egyptian Tomb in Abydos. These two facts point to two inferences. One, that palm oil production was happening even 5000 years ago. Secondly, as no palm oil was produced in Egypt, this means that Palm Oil trading also was prevalent at that time. Thus, Palm Oil has been used by mankind since historical times. A basic description of the palm oil extraction process is shown below: (Source: Malaysian Oil Palm Publication Annual Report...
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...Introduction As we know Bangladesh is a country of middle income. Nearly 65% of total population income is less than $1. Bangladesh is primarily an agrarian economy. 66% of in Bangladesh people are work in agriculture sector. Nowadays price hike is one of the main concerns of Bangladeshi people. Though their income is not increase as much as need but their expenses are increases day by day. As a result people consume more than their income. And poor people are getting poorer day by day. Government has taken some short-term policies but those are not paying off. In this report we try to understand that why price hike in Bangladesh, what is the reason behind it an, what consequent are arises among Bangladesh people for these unsustainable price hike in consumption goods and what are the initiative measures government can take to at least make the price level sustainable. What is Inflation? Inflation is the rise in general level of prices of goods and services. It can be said in other ways that inflation is the decrease in value of money. It means that • Each dollar can purchase fewer amounts of goods and service then previous. • It reduces the purchasing power of the currency. Inflation does not mean that all prices are increasing, even during period of rapid inflation; some prices may be relatively constant while others are falling. The troublesome aspect of inflation is that prices rise unevenly, some raises sharply, some slowly and some don’t rise at all. The main...
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...incidence in bargaining 2.4 The general equilibrium incidence of environmental taxes 2.5 The tax system incidence on unemployment: A country specific analysis for the OECD economies: 2.6 Tax and subsidy incidence equivalence theories: experimental evidence from competitive markets 2.7 Tax incidence under oligopoly: a comparison of policy approaches 2.8 The incidence of income tax on wages and labour supply 2.9 The incidence of personal income taxation: evidence from the tax reform act of 1986: 2.10 Tax incidence when individuals are time-inconsistent: the case of cigarette excise tax 3. Conclusion References 1. Introduction: Government generally collect taxes to generate revenue and question arise here is that after imposition of taxation, which group will bear the tax burden. After implementation of tax, there would be the division of tax burden between byres and sellers which is known as tax incidence. Tax incidence is linked to the price elasticity of demand and supply. If supply is more elastic than demand then the tax burden falls upon the buyers and when the demand is more elastic than supply then the producers will bear the cost of the tax. Tax incidence is basically the analysis of the effect of taxation on the distribution of economic welfare. Tax incidence expose that which group either consumer or producer is going to pay the price of new tax and it falls mostly on the group that has the...
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...DOES MONETARY POLICY INFLUENCE ECONOMIC GROWTH IN PAKISTAN? Haji Saif Ullah (Author) Email: hajisaif@live.com Muhammad Ashraf (coordinator) Department of Management Sciences University Of Gujrat, Gujrat ABSTRACT This study examines the impact of monetary policy on economic growth in Pakistan. The study uses time-series data covering the range of 1991 to 2011.The effects of stochastic shocks of each of the endogenous variables are explored using Error Correction Model (ECM). The study shows that Long run relationship exists among the variables. Also, the core finding of this study shows that inflation rate, exchange rate and external reserve are significant monetary policy instruments that drive growth in Pakistan. It is therefore recommended that the establishment of primary and secondary government bond markets that can also increase the efficiency of monetary policy and reduce the government’s need to rely on the central bank for direct financing. Keywords: Policy instruments, Economic Growth, GDP, Money supply, monetary policy INTRODUCTION The aim of this study is to examine the impact of monetary policy on economic growth. Economic growth is an important macroeconomic objective for any country. Monetary policy has direct relation with economic growth. Folawewo and Osinubi (2006) stated monetary policy as the arrangements which are planned to control supply of money in a country. In many countries the basic aims of the monetary policy are to stabilize prices...
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