...The Domestic Bond Market and the Development of the Nigerian Capital Market: An Empirical Analysis Abstract The fixed income security (bond) market is an important segment of the capital market in market economies. Its importance lies in the fact that it provides short term investment opportunity for the private investors and long term financing for firms at low cost. Governments use it as a low cost financing instrument for deficit budgets. The domestic bond market is a source of huge liquidity in the financial market which eventually expands the size of the domestic capital market. Theory has it that, a combination of domestic and foreign participation in the domestic debt market generates liquidity, and lowers the national yield curve. This paper examines these theoretical assertions and relations as it applies to the Nigerian capital market. Using data from the Central Bank of Nigeria, we use the methodology of applied financial econometrics to analyse the various relationships. Keywords: Domestic bond market, bond market liquidity, capital market size, national yield curve, Nigeria Eurobond, capital market, foreign participation. Introduction This paper essentially examines how the growth of domestic bond market and foreign participation in the same market function to impact the development and growth of the Nigeria capital market and enhance financial stability. Peiris (2010) noted, “A vibrant and deep local...
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...QUESTION: Given the 'Rational Expectations Theory' a short run tradeoff between the price level and unemployment can only exist if the economy agent can distinguish arbitrary from real shock. Discuss Rational Expectations Theory What is the 'Rational Expectations Theory' The rational expectations theory is an economic idea that the people in the economy make choices based on their rational outlook, available information and past experiences. The theory suggests that the current expectations in the economy are equivalent to what the future state of the economy will be. This contrasts the idea that government policy influences the decisions of people in the economy. BREAKING DOWN 'Rational Expectations Theory' The idea is that rational expectations of the players in an economy will partially affect what happens to the economy in the future. If a company believes that the price for its product will be higher in the future, it will stop or slow production until the price rises. Because the company weakens supply while demand stays the same, price will increase. In sum, the producer believes that the price will rise in the future, makes a rational decision to slow production and this decision partially affects what happens in the future. "Inflation-Unemployment Trade-off under Adaptive Expectation and under Rational Expectation"? When agents in economy have adaptive expectations they predict future in the basis of what happened in the past. If we consider an inflation adjustment scenario...
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...Principles of Econometrics Tips for a Term Paper Topic Your work MUST BE ORIGINAL, but the issue/model/methodology need not! Money/Macro/International Economics Common Approaches 1. Apply a model or law (e.g., Phillips curve, Okun’s law, etc.) to more recent data. 2. Extend what is known for the U.S. to other countries (emerging, developing or Eastern European). Examples: 1. Outsourcing: Do firms that outsource tend to do better? Or why they outsource? 2. Trade deficit: What causes the huge US trade deficit? 3. Twin deficits: Is there a link between the trade deficit and the government budget deficit? 4. Foreign exchange: What has caused the recent drop of the US dollar? 5. Oil shocks: Have oil shocks led to recessions in the US or elsewhere? 6. Growth: Why some countries are rich while others poor? 7. Election: What determines an election outcome? 8. Big Mac Index Finance/Management/Accounting Common Approaches 1. What affects stock performance of different firms or over time? 2. Firm performance? Some Issues 1. Any link between the economy and the stock market? 2. How does monetary policy affect the financial markets? 3. Any link between stocks and bonds? Microeconomic/Socioeconomic/Marketing Issues General Approach: Apply any theory, model or concept to firms, people or markets. Some Issues 1. What affects the demand (or price) for a product? 2. Does money buy happiness? 3. Any link between market price (or profit) and quality...
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...The Role of Aggregate 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...
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...INTRODUCTION TO MACROECONOMICS E202 $ ¥ Dr. David A. Dilts Department of Economics Doermer School of Business and Management Sciences Indiana-Purdue University-Fort Wayne June 1, 1993 Revisions: May 1994, December 1995, July 1996, November, 2000, May 2003, May 2006 PREFACE This Course Guide was developed in part because of the high cost of college textbooks, and in part, to help organize students’ studying by providing lecture notes together with the reading assignments. This Guide is provided to the student online at the Department of Economics website. Jayla Heller, the Department’s secretary has been kind enough to go through all of the frustration and hard work to put the guide in the appropriate format and put it online. To her goes my gratitude. The department, neither school, nor the professor make anything whatsoever from this Guide. In fact, the department’s budget and the professor’s own resources are used in the writing of the Guide, and the numerous draft copies that are produced in the revisions of this document. Like the sign in the Mom and Pop bait shop on Big Barbee Lake says, “This is a non-profit organization, wasn’t planned to be – it just worked out that way.” Well, actually it was planned to be a non-profit enterprise in this case. The professor also wishes to acknowledge the fact that several students have proposed changes, improvements, caught errors, and helped to make this document more useful as a learning tool. Naturally, any errors of omission...
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... A Skeptic's Guide to Computer Models by John D. Sterman This article was written by Dr. John D. Sterman, Director of the MIT System Dynamics Group and Professor of Management Science at the Sloan School of Management, Massachusetts Institute of Technology, 50 Memorial Drive, Cambridge, MA 02139, USA; email: jsterman@mit.edu. Copyright © John D. Sterman, 1988, 1991. All rights reserved. This paper is reprinted from Sterman, J. D. (1991). A Skeptic's Guide to Computer Models. In Barney, G. O. et al. (eds.), Managing a Nation: The Microcomputer Software Catalog. Boulder, CO: Westview Press, 209-229. An earlier version of this paper also appeared in Foresight and National Decisions: The Horseman and the Bureaucrat (Grant 1988). A S KEPTIC'S GUIDE TO COMPUTER MODELS 2 The Inevitability of Using Models........................................................................3 Mental and Computer Models..............................................................................2 The Importance of Purpose..................................................................................3 Two Kinds of Models: Optimization Versus Simulation and Econometrics.......4 Optimization.............................................................................................4 Limitations of Optimization..........................................................5 When To Use Optimization....................
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...BRITISH UNEMPLOYMENT AND MONETARY POLICY Dr Sushil Wadhwani Member, Monetary Policy Committee Bank of England Speech to be delivered to the Society of Business Economists on 2 December 1999. I am extremely grateful to Damon Clark, Joanne Cutler, Mark Dean, John Henderson and Duncan Melville for their help and advice on this work. I have also learnt a great deal by talking to William Brown, Richard Layard and Stephen Nickell. Ian Bond, Phil Evans, Paul Fisher, Mike Joyce, DeAnne Julius, Mervyn King and John Vickers provided me with helpful comments on an earlier version. The views expressed in this paper are personal and do not necessarily reflect any views held by either the Monetary Policy Committee or the Bank of England. 2 INTRODUCTION Many economists use a notion like the so-called ‘natural’ rate of unemployment (or the allied concept of the non-accelerating inflation rate of unemployment – the NAIRU, hereafter) in thinking about the labour market. Of course, the NAIRU is extremely difficult to measure, and, often, there is significant disagreement about where it is at a given moment in time. As I discuss below (in Section 2), since 1992, British economic forecasters have displayed a tendency to over-predict the level of unemployment, while simultaneously also over-predicting inflation. It is likely that these forecast errors have come from having been too gloomy about the NAIRU. In Section 3, I discuss econometric evidence suggesting that, in the 1990s...
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...Inquiries: Postal address: Institute of Social Studies P.O. Box 29776 2502 LT The Hague The Netherlands Kortenaerkade 12 2518 AX The Hague The Netherlands +31 70 426 0460 +31 70 426 0799 Location: Telephone: Fax: 2 Table of Content Chapter 1 INTRODUCTION 1.1 BACKGROUND AND STATEMENT OF THE PROBLEM The period 1980-1984 The period 1985-1989 The period 1990-2007 1.2 OBJECTIVE AND SCOPE OF THE PAPER 1.3 APPROACH OF THE PAPER AND DATA 1.4 STRUCTURE OF THE PAPER Chapter 2 THE THEORETICAL AND EMPERICAL FRAMEWORK 2.1 THEORETICAL CONSIDERATION 2.1.1 Demand-pull inflation 2.1.2 Cost-push inflation 2.2 APPLICABILITY OF THE THEORIES IN THE CASE OF VIETNAM 2.3 EMPERICAL EVIDENCES Chapter 3 ANALYSING INFLATION IN VIETNAM AN OVERVIEW OF VIETNAM’S ECONOMY FROM 1990-2007 VIETNAM’S INFLATION OVER THE PERIOD 1990-2007 3.1 INFLATION IN VIETNAM IN COMPARISON TO THAT OF THE WORLD 3.2 INFLATION INDICATORS AND SOME RELEVANT MACROECONOMIC 25 25 26 27 7 7 7 8 9 10 11 11 13 13 13 16 18 18 22 21 24 24 3.2.1 Broad money and inflation 3.2.2 Lending rate and inflation 3.2.3 Nominal exchange rate and inflation 3 3.2.4 Real GDP growth and inflation...
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...Macroeconomics Questions for Review 1. Microeconomics is the study of how individual firms and households make decisions, and how they interact with one another. Microeconomic models of firms and households are based on principles of optimization—firms and households do the best they can given the constraints they face. For example, households choose which goods to purchase in order to maximize their utility, whereas firms decide how much to produce in order to maximize profits. In contrast, macroeconomics is the study of the economy as a whole; it focuses on issues such as how total output, total employment, and the overall price level are determined. These economy-wide variables are based on the interaction of many households and many firms; therefore, microeconomics forms the basis for macroeconomics. 2. Economists build models as a means of summarizing the relationships among economic variables. Models are useful because they abstract from the many details in the economy and allow one to focus on the most important economic connections. 3. A market-clearing model is one in which prices adjust to equilibrate supply and demand. Market-clearing models are useful in situations where prices are flexible. Yet in many situations, flexible prices may not be a realistic assumption. For example, labor contracts often set wages for up to three years. Or, firms such as magazine publishers change their prices only every three to four years. Most macroeconomists believe that price flexibility is a...
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...2010, 35 - 50 THE EFFECTS OF MACROECONOMIC EVILS ON PROPERTY AND VIOLENT CRIMES IN MALAYSIA Chor Foon Tang♣ University of Malaya ABSTRACT The main objective of this study is to investigate the effects of macroeconomic evils – unemployment and inflation on different categories of crime rates – property and violent crimes in Malaysia via the multivariate Johansen-Juselius and Granger causality techniques. This study used annual data from 1970 to 2006. Johansen-Juselius cointegration tests revealed that property and violent crimes are cointegrated with unemployment and inflation. Furthermore, the empirical evidence exhibit that unemployment and inflation are the driving factors for crimes in Malaysia. Therefore, supply-side economy may be an ideal choice of policy to reduce crime rates in Malaysia. Keywords: Crime, Inflation, Unemployment, Malaysia 1. INTRODUCTION Recent deliberation on whether “Malaysia is a safe haven for travel and investment?” was frequently asked by the international tourists and foreign investors owing to the increasing trend of crime rates in Malaysia. From the visual inspection in Figure 1, both property and violent crime rates in Malaysia has increased quite significantly between 1970 and 2006. Over a decade from 1970 to 1980, both property and violent crime rates in Malaysia increased more than two folds. The property crime rate increased drastically from 25 thousand cases in 1970 to 66 thousand cases in 1980. In the similar...
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...maintain stable prices? Why do all countries experience recessions and depressions—recurrent periods of falling incomes and rising unemployment—and how can government policy reduce the frequency and severity of these episodes? Macroeconomics, the study of the economy as a whole, attempts to answer these and many related questions. To appreciate the importance of macroeconomics, you need only read the newspaper or listen to the news. Every day you can see headlines such as INCOME GROWTH SLOWS, FED MOVES TO COMBAT INFLATION, or STOCKS FALL AMID RECESSION FEARS. Although these macroeconomic events may seem abstract, they touch all of our lives. Business executives forecasting the demand for their products must guess how fast consumers’ incomes will grow. Senior citizens living on fixed incomes wonder how fast prices will rise. Recent college graduates looking for jobs hope that the economy will boom and that firms will be hiring. Because the state of the economy affects everyone, macroeconomic issues play a central role in political debate.Voters are aware of how the economy is doing, and they know that government policy can affect the economy in powerful ways.As a result, the popularity of the incumbent president rises when the economy is doing well and falls when it is doing...
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...maintain stable prices? Why do all countries experience recessions and depressions—recurrent periods of falling incomes and rising unemployment—and how can government policy reduce the frequency and severity of these episodes? Macroeconomics, the study of the economy as a whole, attempts to answer these and many related questions. To appreciate the importance of macroeconomics, you need only read the newspaper or listen to the news. Every day you can see headlines such as INCOME GROWTH SLOWS, FED MOVES TO COMBAT INFLATION, or STOCKS FALL AMID RECESSION FEARS. Although these macroeconomic events may seem abstract, they touch all of our lives. Business executives forecasting the demand for their products must guess how fast consumers’ incomes will grow. Senior citizens living on fixed incomes wonder how fast prices will rise. Recent college graduates looking for jobs hope that the economy will boom and that firms will be hiring. Because the state of the economy affects everyone, macroeconomic issues play a central role in political debate.Voters are aware of how the economy is doing, and they know that government policy can affect the economy in powerful ways.As a result, the popularity of the incumbent president rises when the economy is doing well and falls when it is doing...
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...of the science debate, test and discover better and more efficient way to “analyze the data.” Perhaps more than any other time in our nation’s history, people have personally seen the effects of economics. One of the most visible areas seen in the market place today is the economics of unemployment. Unemployment is currently 8.2% as measured by the United States Bureau of Statistics. I believe that most people are familiar with the term “Unemployment Rate”, but I imagine that only a handful understand the significance of what this “number” is telling us. Economics is similar to mathematics, physics and chemistry in the sense that all disciplines require thought, equations, observations and experiments to be performed in order to get an “observable” end result. And from that result we make conclusion about the very thing we are testing. So it is with unemployment; a “mathematical equation” that has the possibility of helping us understand the underlying causes of the problem. And once we begin to understand those; we are better able to work on a solution. Over the years this has been the task of many influential economists such as David Ricardo, John Maynard Keynes, Karl Marx and Milton Friedman. We will rely on them and others for the countless theoretical observations that have been created, while trying to understand the types,...
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...Objectives Error! Bookmark not defined. Significance of the study………………………………………………………………………………………………………………………..11 Research Methodology………………………………………………………………………………………………………………………….15 Research philoshophy…………………………………………………………………………16 Research Design…………………………………………………………………………………………………………………………………18 Data Collection…………………………………………………………………………………………………………………………………..22 Data Analysis…………………………………………………………………………………………………………………………………….28 literature review……………………………………………………………………………………………………………………………………36 References ……………………………………………………………………………………………………………………………………………42 Dissertation Title “To study the impact of oil price shocks on the macroeconomic performance of China” 1. Introduction Higher oil prices might affect the global economy through a variety of channels, including transfer of wealth from oil consumers to oil producers, a rise in the cost of production of goods and services, and impact on inflation, consumer confidence, and financial markets. In a pioneer work, Hamilton (1983) indicated that higher oil prices were responsible for almost all U.S recessions after World War II. Later other researchers extended Hamilton’s basic findings using alternative data and estimation procedures (such as Burbidge and Harrison, 1984; Gasser and Goodwin, 1986). Most of research on the mechanisms of oil price shocks has focused on either products or labor markets. However, analysis on real locative role effects of oil value shocks in capital markets has lagged behind....
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...Industry Analysis Oil Company Table of Contents I. Introduction and Background 3 II. Dominant Economic Characteristics 4 Market Size 4 Scope of Competitive Rivalry 5 Market Growth Rate 5 Numbers of Companies in the Industry 6 Customers 7 Degree of Vertical Integration 8 Easy of Entry/Exit 9 Technology/Innovation 9 Product Characteristics 10 Scale Economies 10 Experience Curve Effects 11 Capacity Utilization 11 Industry Profitability 11 III. Six Forces of Competition 11 Force 1: Buyer Bargaining Power 12 Force 2: The Threat of Substitutes 12 Force 3: Supplier Power 12 Force 4: Rivalry among Existing Firms 12 Force 5: The Threat of Entry 13 Force 6: Relative Power of Other Stakeholders 13 IV. Competitive Position of Major Companies and Competitor Analysis 14 Royal Dutch Shell 15 ExxonMobil 17 British Petroleum 19 Chevron 20 Total 22 ConocoPhillips 24 V. Key Success Factors 26 Oil Demand 26 Prices 26 Technological Advancements 27 Maintaining Partnerships 27 Industry Matrix 28 VI. Industry Prospects and Overall Attractiveness 28 Trends 28 Potential Threats 29 VII. Conclusion 29 References 31 I. Introduction and Background What is crude oil? Crude oil is a dark, sticky liquid which, scientifically speaking, is classified as a hydrocarbon. This means crude oil is a compound containing carbon and hydrogen, with or without non metallic elements such as oxygen and sulfur...
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