...What is Deflation? Author Talks about The definition Of deflation & When deflation, And it is hard to Tell when deflation Actually poses a Problem-or when It is shown in price Expecations- uses Japan as example. Author Talks about The definition Of deflation & When deflation, And it is hard to Tell when deflation Actually poses a Problem-or when It is shown in price Expecations- uses Japan as example. Deflation is a persistent fall in some generally followed aggregate indicator of price movements, such as the consumer price index or the GDP deflator. Generally, a one-time fall in the price level does not constitute a deflation. Instead, one has to see continuously falling prices for well over a year before concluding that the economy suffers from deflation. How long the fall has to continue before the public and policy makers conclude that the phenomenon is reflected in expectations of future price developments is open to question. For example, in Japan, which has the distinction of experiencing the longest post World War II period of deflation, it took several years for deflationary expectations to emerge. One reason for Why deflation Can be bad for The macroeconomy, Although not necessarily linked. One reason for Why deflation Can be bad for The macroeconomy, Although not necessarily linked. Most observers tend to focus on changes in consumer or producer prices since, as far as monetary policy is concerned, central banks are responsible...
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...Table of Contents Why were Keynesian ideas revolutionary? 2 How does Keynes theory work? 4 What economic conditions in your news article that require government intervention? Do you have faith that this intervention will be effective? 7 How have the economists’ views on Keynesian economics changed over time? 9 Is Keynesian economics dead today? 12 Works Cited 14 Appendix A 15 Why you should be wary of the Japanese “revival” 15 Why were Keynesian ideas revolutionary? Keynesian economics is a macroeconomic theory developed by John Maynard Keynes, who is a British economist. According to Keynesian theory, government intervention plays an important role in the economy, and focuses on short-term goals. It is used mostly in times of recession, inflation, unemployment to stabilize the business cycle, therefore active government policy is required and government spending is a good way to put money back into the GDP. (hupii.com) Keynes is famous for his simple explanation for the cause of the Great Depression during the 1930s. His idea was based on a circular flow of money, which states that when spending increases in an economy, earnings will also increase, and the outcome it will lead to even more spending and earnings (economic growth). His ideas had led to a revolution in economic thought. (martinfrost.ws) During the period of World War 2, United States president has spent enormously huge on defence which has that helped revive the U.S economy. Besides...
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...SERIES TWO DECADES OF JAPANESE MONETARY POLICY AND THE DEFLATION PROBLEM Takatoshi Ito Frederic S. Mishkin Working Paper 10878 http://www.nber.org/papers/w10878 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 October 2004 This paper is written for the NBER 15th East Asian Seminar on Economics, June 25-27, 2004. The authors are grateful to Takeshi Kudo and Emilia Simeonova for their excellent research assistance. We also thank our discussants Ken Kuttner, and Kazuo Ueda, Kunio Okina and participants at seminars at the Bank of Japan, and the East Asian Seminar on Economics. Any views expressed in this paper are the views of the authors only and not the University of Tokyo, Columbia University or the National Bureau of Economic Research. The views expressed herein are those of the author(s) and not necessarily those of the National Bureau of Economic Research. © 2004 by Takatoshi Ito and Frederic S. Mishkin. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Two Decades of Japanese Monetary Policy and the Deflation Problem Takatoshi Ito and Frederic S. Mishkin NBER Working Paper No. 10878 October 2004 JEL No. E42, E52, E58 ABSTRACT This paper reviews Japanese monetary policy over the last two decades with an emphasis on the experience of deflation from the mid-1990s. The paper is quite critical of the conduct...
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...Global Macro Research Top of Mind November 13, 2014 Issue 29 Is Europe the Next Japan? From the editor: A slowdown in Euro area growth momentum from an already anemic pace, combined with ongoing concerns about deflation risks, has made comparisons with Japan’s so-called “lost decades” Top of Mind. We ask three experts whether the Euro area is set to repeat Japan’s prolonged period of stagnation and deflation: former BOJ Governor Masaaki Shirakawa (unclear, but Euro area recovery requires addressing the underlying problem of economic integration and not its symptom, deflation), GS Chief European Economist Huw Pill (low growth and even some deflation similar to Japan, in terms of outcome if not in terms of causes, are likely in the short term, but – also akin to Japan – a deflationary spiral is not), and LSE Professor Paul De Grauwe (there is a real risk of this outcome or worse unless policies change). We conclude that Euro area economies and assets could escape Japan’s fate but warn that Euro area stagnation would have a greater impact on the global economy than did Japan’s. Inside Interview with Masaaki Shirakawa Former Governor of the Bank of Japan 4 Headed for Japanese-style deflation? Silvia Ardagna, GS Rates Strategy 6 Interview with Huw Pill GS Chief European Economist 8 Euro area stagnation and its discontents Jose Ursua, GS Global Economics Research 10 Interview with Paul De Grauwe Professor, London School of Economics ...
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...What are the trends in growth, inflation, unemployment, and debt? Over the last ten years Japan had a tremendous growth. It is no surprise for a country like Japan to have an increase in GDP among the last ten years; it had a GDP of $4.3 trillion in 2004 and kept increasing till it reached $5.96 trillion in the end of 2013 (Trading Economics, 2013). This significant increase in in the GDP is due to the increase in the net exports, since nowadays Japan is known as the world’s second largest developed economy. Japan exports a lot of automobiles because it is one of the leading countries in the production of automobiles that are spread all over the world. Moreover, Japan is the largest creditor nation while running an annual trade surplus. The GDP per capita increased from $29369.49 in 2004 to $31425.49 in 2013 (Trading Economics, 2013) meaning that the economy is vigorous since people are earning more so they have more disposable income to spend which vitalities the economy and the services thus leading the economy to thrive. All these conditions led the growth rare to increase from 0.1% in 2004 to 0.3% in 2013 (Trading Economics), however it is still considered low since it only increase 0.2%. In general we can come to a conclusion that the Japanese economy is healthy and is experiencing a positive growth. Since we already know that the economy in Japan is booming it would be rational to say that there are new opportunities for new positions in the market, the demand for workers...
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...provides an insight to the fluctuations experienced in the currency of Japan, Yen from the late 1990’s to recent years. Japan follows the floating currency monetary policy due to which there is no measures taken on to control the fluctuations. Japan experienced magnificent growth through the 60's, 70's, and 80's leading into the 90's beginning. In the late 1990's, Japan’s economy marked its growth significantly slower, which had then come to be known as the 'lost decade' due to Japanese Asset Price bubble that collapsed. Eventually the nation faced major issues regarding environmental disasters, hollowing out of industries, etc. The past events which have caused the rise and downfall of Japanese Yen has been illustrated for examining the causes of the appreciation and depreciation of this currency. The influence of this floating currency on Japan's economy has been depicted in this case study. This paper also provides some applications of the measures that can maintain the stability of the Japanese Yen. Japan experienced tremendous growth throughout the 1960s, 1970s, and 1980s leading into the leading into the early 1990s. After World War II, Japan underwent a period of restoration followed by the events in 1978 where Japan excelled as a manufacturer partnering with the United States which helped to make its economy world's second largest economy until 2010, where it was surpassed by China, moving Japan to the world's third position. Japan’s economy saw growth slow significantly...
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...QUESTION 1: Name: Derek M Grubbs Student ID: 44055574 The two objectives of the FOMC are to maximum employment and price stability. With the inflation at around 2% and the latest unemployment rate being 5.9%, it is time for the Fed to start to return the monetary policy back to normal. In September of 2012, Fed chair Ben Bernanke announced an indefinite program of $40bn per month in asset purchases. Some feared this quantitative easing would never come to an end. However, under new chair, the Fed plans to stop quantitative easing. The Fed’s balance sheet is around 4.4 trillion, up from 900 billion before the crisis; this was caused by the bond purchasing . At this point in the economic recovery, the growth and job creation has some momentum, which can be expected to continue without this stimulus. The issue with this monetary policy is that it may in fact...
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...Ensures stability of national monetary system * Fiscal Policy * Government changing taxes and/or government spending in effort to increase or decrease business activity * Expansionary FP leads to increased spending but downside is budget deficits * Contractionary FPleads to budget surpluses or smaller deficits * AKA Austerity (attempt to shrink growing deficits) * Monetary Policy * Central Banks changing the MS to increase or decrease the availability of credit in an effort to increase or decrease business activity * Primary tool is Open Market Operations * Buying and Selling short term securities * Dual Mandate Inflation & Unemployment * ECB does not have a dual mandate like the Fed THE EUROPEAN UNION (EU) * Explain the purpose of an “economy” from a European perspective * Equity & Leisure more important than consumption * Social goals more important than individual goals * Market for production; Government for...
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.... 1 Introduction The real estate market, like other markets, is subject to the pressure of supply and demand. When speculation runs wild, prices can inflate rapidly. This is a "housing bubble." The danger in this situation is that the market will not be capable of sustaining the inflated prices, so the value of properties begins to come down, sometimes rapidly. Definition of a Housing Bubble * A "housing bubble" is a cyclical economic event where high trade volumes inflate prices, which ultimately become unsustainable, causing a lowering, or "crash" in values. Economic bubbles may be called by a variety of terms, including a speculative bubble, a market bubble or a balloon. Economic cycles of this nature are not exclusive to real estate. They have occurred throughout history in a variety of markets, including stocks, tulips and pottery. Contributing Factors to Unstable Housing Conditions * It could be argued that a housing bubble is really an example of a credit bubble. Although real estate is the underlying commodity, most house buyers use credit -- in the form of a mortgage -- to secure the property. Lax lending guidelines, rapidly inflating values, speculative buyers and the use of adjustable rate mortgages (ARMs), which can adjust to higher rates, are all factors in accelerating the likelihood of borrowers defaulting...
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...1.Recent Developments in the Implementation of Abenomics 2.What are ‘three arrows of Abenomics’? 3.Fundamental Principles of the Third Arrow and its Strategies for the Future 4.Examples of Individual Measures of the Third Arrow 5.Heading toward… Appendix: Improvement in Economic Conditions Primary economic indicators P3 P21 P26 P29 P50 P53 2 3 What’s New on ‘Abenomics’ Revision of the Japan Revitalization Strategy (P5-20) To realize sustainable economic growth from the positive economic momentum being generated by the three arrows of Abenomics, the Government has formulated a revised growth strategy. This includes several breakthrough solutions for issues outstanding from the initial Japan Revitalization Strategy formulated last year, such as labor market reform, improving agricultural productivity, and transforming the health-related sector into a growth market. In addition, the revised strategy provides direction on the resolution of important issues that Prime Minister Abe has promised to tackle at Davos Meeting in January, including further corporate tax reform, easing regulations in National Strategic Special Zones, forward-looking reform of GPIF's management and the advancement of women's roles in society. Approval of 30 bills related to the Growth Strategy Some 30 bills related to the Growth Strategy were approved during the ordinary diet session up to June 2014, including a bill for partial revision of the Electricity Business Act to liberalize the retail electricity...
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...LESSON 7. THE FIRST WORLD WAR AND THE INTERWAR CRISIS THE FIRST WORLD WAR The 1st WW was debated between two opposing blocks: The Allies: France, UK and the Russian Empire (with the collaboration of Italy, Japan, Belgium and the USA) And the Central Powers: Germany and Austria-‐Hungary (together with the Ottoman Empire and Bulgaria) It was a global war centred in Europe that began on 28th July 1914 and lasted until 11th November 1918, the moment the Allies obtained the victory. By the end of the war the map of Europe was redrawn with several independent nations restored or created, and as a result of the Paris Peace Conference that ended the First World War (the Treaty of Versailles), an intergovernmental organisation was founded with the aim of preventing any repetition of such a terrible conflict (the League of Nations). PROBLEM: This aim failed and, as a result, the renewed European nationalism (together with the German feeling of humiliation) contributed to the rise of fascism that gave birth to the Second World War some years later (1939). The First World War represented the break with the 19th century and a dramatic change...
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...Goes to China UBurger is a fast-casual food chain that is committed to serving fresh high quality products to a discerning populace. They specialize in a selection of burgers topped with fresh produce and sauces with three choices of protein - beef, chicken, and vegetarian patties. In addition to their staple burgers, they also serve french fries and milkshakes. We would like to take UBurger to Shanghai, China to profit from the market for American fast food which has emerged in the industrialized country. UBurger is not the first to follow down this path; many others such as McDonald’s and YUM! Brands have done the same. We feel that these other brands have left an opportunity for a healthier line of food to strive. Given that UBurger does not have the same network of international support as these other brands, a joint-venture would be the best mode of entry to this new market. Real Kung Fu - China’s largest fast food restaurant - would become partners with UBurger in this new venture. As the UBurger Brand grows, we will open additional stores across the nation. Within three years, we will have opened a new location in Beijing and then spread out from there, eventually opening locations in the capitals of all of China’s provinces. UBurger serves signature burgers that are topped with a variety of fresh produce and sauces in its fast-casual food chain locations. The addition of and attention to this produce and these sauces creates separation from traditional fast food chains...
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...Price Forecast 2013 Predictions and Estimates from Multiple Analysts The Gold price forecast for the year 2013 has been covered by multiple analysts. Here is their consensus: While the price of Gold has a gamut of forecast ranges for 2013, most experts remain bullish on the yellow metal for the year, though some have scaled back their estimates slightly over the past few months. A compilation of their predictions are listed below. Bank of America Merrill Lynch In a December 2012 report, Bank of America Merrill Lynch stated that Gold would average $2,000 in 2013, with the metal climbing to $2,400 in 2014. “Large-scale policy easing by the U.S. Federal Reserve and European Central Bank positions Gold as a useful hedge against global macro and inflation risks taking the commodity to $2000/ oz levels”, said the bank. The bank added that, “We have a sixmonth [Gold price] target of $2000 an ounce, but see scope as well for prices to rise to $2400 an ounce by the end of 2014. These targets reflect our view that the Fed will maintain mortgage purchases until the end of 2014 and will move to buy Treasuries following the end of Operation Twist in December 2012.” BNP Paribas BNP Paribas expects Gold to average $1,865 an ounce for the year. “Market sentiment towards Gold has been much more uncertain in 2012 than was the case in previous years. Yet, we expect Gold to achieve a new record high in 2013 due to further monetary easing, less tail risk related to a breakup of the euro...
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...old Price Forecast 2013 Predictions and Estimates from Multiple Analysts The Gold price forecast for the year 2013 has been covered by multiple analysts. Here is their consensus: While the price of Gold has a gamut of forecast ranges for 2013, most experts remain bullish on the yellow metal for the year, though some have scaled back their estimates slightly over the past few months. A compilation of their predictions are listed below. Bank of America Merrill Lynch In a December 2012 report, Bank of America Merrill Lynch stated that Gold would average $2,000 in 2013, with the metal climbing to $2,400 in 2014. “Large-scale policy easing by the U.S. Federal Reserve and European Central Bank positions Gold as a useful hedge against global macro and inflation risks taking the commodity to $2000/ oz levels”, said the bank. The bank added that, “We have a sixmonth [Gold price] target of $2000 an ounce, but see scope as well for prices to rise to $2400 an ounce by the end of 2014. These targets reflect our view that the Fed will maintain mortgage purchases until the end of 2014 and will move to buy Treasuries following the end of Operation Twist in December 2012.” BNP Paribas BNP Paribas expects Gold to average $1,865 an ounce for the year. “Market sentiment towards Gold has been much more uncertain in 2012 than was the case in previous years. Yet, we expect Gold to achieve a new record high in 2013 due to further monetary easing, less tail risk related to a breakup of the euro...
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...dollar today. A) present value B) future value C) interest D) deflation Answer: A Ques Status: Previous Edition 2) The present value of an expected future payment ________ as the interest rate increases. A) falls B) rises C) is constant D) is unaffected Answer: A Ques Status: Previous Edition AACSB: Reflective thinking skills 3) An increase in the time to the promised future payment ________ the present value of the payment. A) decreases B) increases C) has no effect on D) is irrelevant to Answer: A Ques Status: Previous Edition AACSB: Reflective thinking skills 4) With an interest rate of 6 percent, the present value of $100 next year is approximately A) $106. B) $100. C) $94. D) $92. Answer: C Ques Status: Previous Edition AACSB: Analytic skills 5) What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent? A) $453.51 B) $500.00 C) $476.25 D) $550.00 Answer: A Ques Status: New AACSB: Analytic skills 6) If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is A) 5 percent. B) 10 percent. C) 12.5 percent. D) 15 percent. Answer: B Ques Status: Previous Edition AACSB: Analytic skills 7) To claim that a lottery winner who is to receive $1 million per year for twenty years has won $20 million ignores the process of A) face value. B) par value. C) deflation. D) discounting the future. Answer: D Ques Status: Previous...
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