...|Exchange rate |Monetary Policy Framework | |arrangement (Number | | |of countries) | | | |Exchange rate anchor |Monetary aggregate|Inflation targeting framework |Other1 | | | |target | | | | |U.S. dollar (66) |Euro (27) |Composite (15) |Other(7) |(22) |(44) |(11) | |Exchange arrangement |Ecuador |Palau |Montenegro | |Kiribati | | | | | |with no separate |El Salvador |Panama |San Marino | | | | | | | |legal tender (10) |Marshall Islands |Timor-Leste ...
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...POLYTECHNIC OF NAMIBIA HAROLD PUPKEWITZ GRADUATE SCHOOL OF BUSINESS Case Report: Hungary Economic Crisis and a Shift to the Right Angula DiCaprio Business Economic Analysis (BEA910M) 6 August 2012 Contents Executive Summary 3 Problem Identification and Analysis 3 Floating of the Currency (Forint) 3 A shift to the Right 3 Feud with the IMF 4 Crisis Taxes 4 Renationalisation of Pensions 4 Governance 5 Monetary Policy and Central Bank Independence 5 The Media Law 5 Loophole Legislating 5 Statement of Key Problems 5 Hungary had two major problems, namely: 5 Political Climate 6 A Shift to the Right 6 Governance and Legislation 6 Economic Climate 7 Monetary Policy and Central Bank Independency 7 Crisis taxes, renationalisation of pension, and borrowing 7 Generation and Evaluation of a Range of Alternatives 7 Political climate 7 Economic climate 8 Recommendations 8 Implementation 9 Conclusion 9 References 10 Executive Summary Hungary government had gone through economic turmoil during 2008 and 2010 due to numerous political decisions, which were taken against accepted money policies and other economic performance standards. This partly happened because the government ignored the needs of the citizens, especially the minorities as well as the international entities such as Internal Monetary Fund (IMF) and European Union...
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...FIGURE 1.1 FIGURE 1.2 FIGURE 1.3 FIGURE B1.1.1 FIGURE 1.4 FIGURE 1.5 FIGURE 1.6 FIGURE 1.7 FIGURE B1.3.1 FIGURE B1.3.2 FIGURE 1.8 FIGURE 1.9 FIGURE 1.10 FIGURE 1.11 FIGURE 1.12 FIGURE 1.13 FIGURE B1.4.1 FIGURE B1.4.2 FIGURE B1.8.1 FIGURE B1.8.2 FIGURE 1.14 FIGURE 1.15 FIGURE 1.16 FIGURE 1.17 FIGURE 1.18 FIGURE 1.19 FIGURE 1.20 FIGURE 1.21 FIGURE 1.22 FIGURE 1.23 FIGURE 1.24 FIGURE 1.25 FIGURE B1.9.1 Despite some Q1 weakening, business sentiment in Europe and the US signals further expansion Economic activity is strengthening from very weak levels in Europe Inflation and unemployment trends are on divergent paths across major economies Net capital flows and net financial exposures (width of arrows proportional to amounts in billions of U.S. dollars) Developing country activity is strengthening but at a modest pace Manufacturing surveys are pointing to continued expansion in East Asia and South Asia Output gaps remain small in most developing regions Capital flows have recovered strongly after a steep fall in February Currency depreciations were more modest during the winter turmoil among countries that reduced external imbalances Distribution of changes in developing country bilateral exchange rates with the US$ Most developing country equity markets have fully recouped losses since mid-2013 Borrowing costs have fallen since the start of the year for developing countries Metal prices have extended their falls while food prices have turned up Commodity exporters have suffered...
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...Bretton woods system (1946-1971). 8 Figure1.World Trade (1929-33).............................................................................................9 1.4 Par Value system: 9 2. Classification of Exchange Rate Regimes: 10 2.1 De facto Classification (1998-2009) 11 Diagram1. De Facto Classification of Foreign Exchange Regimes (Nov 1998 – Jan 2009).......12 2.2 Revised De Facto Classification System (2009 January to Present): 15 Table1. Shares of Classifications Using the 1998 and 2009 Systems. 16 2.3 Revised Classification System Definitions: 17 Hard pegs: 17 Soft pegs: 18 Floating arrangements: 19 Residual: 20 2.4 De facto Classification of Exchange Rate Arrangements and Monetary Policy Frameworks-2014 20 Table2. Monetary Policy Frame work ...................................................................................................22 Chapter 2........................................................................................................................................................25 WTO (World Trade Organization): 25...
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...UNIVERSITY OF NAIROBI INSTITUTE OF DIPLOMACY AND INTERNATIONAL STUDIES Implications of Global International Monetary Policy Decision on Economic Systems in East Africa: A Case Study of Kenya NAME: LILLIAN WACHIRA REG NO: R50/63875/2010 Supervisor: Dr. Gerrishon Ikiara A Research Proposal submitted in partial fulfillment of the Degree of Masters of Arts in International Studies (MA IS) DECLARATION I declare that this research proposal is my original work and has not been presented for a degree in any other university. NAME: LILLIAN WACHIRA REG. NO: R50/63875/2010 Sign: ………………………………… Date: ……………………… This research proposal has been submitted for examination with my approval as university supervisor SUPERVISOR: Sign: ……………………………… Date: …………………………. DEDICATION I dedicate my project to my lovely mother Beatrice, my brothers Edwin and Eric whose prayers words of encouragement and push for tenacity ring in my ears. ACKNOWLEDGEMENT I would like to express my sincere gratitude to my supervisor Dr. Gerrsihon Ikiara for the continuous support and guidance while carrying out my project, for his patience, motivation and immense knowledge. I would also like to thank the participants in my survey, who have willingly shared their precious time during the process of interviewing. I...
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...Question 1 1. In the dynamic model, the demand for goods and services will ______ as the natural level of output increases and ______ as the real interest rate increases. Answer | A. | increase; increase | | B. | decrease; decrease | | C. | decrease; increase | | D. | increase; decrease | 1 points Question 2 1. In the dynamic model, changes in fiscal policy are captured in changes in the: Answer | A. | natural rate of interest. | | B. | random demand shock. | | C. | natural level of output. | | D. | expected rate of inflation. | 1 points Question 3 1. A higher real interest rate (r↑) reduces the demand for goods and services by: Answer | A. | decreasing the natural level of output. | | B. | shifting the dynamic aggregate supply curve. | | C. | reducing investment and consumption spending. | | D. | increasing inflation expectations. | 1 points Question 4 1. Which of the following would be represented by a positive value of the random demand shock (εt > 0)? Answer | A. | a decrease in government spending | | B. | an increase in the central bank's inflation target | | C. | an aggressive increase in oil prices by a cartel | | D. | an irrational wave of optimism among investors | 1 points Question 5 1. Which of the following would be represented by a negative value of the random demand shock (εt < 0)? Answer | A. | an irrational wave of optimism among investors | ...
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...balance of payment disequilibrium lies in earning more foreign exchange through additional exports or reducing imports. Quantitative changes in exports and imports require policy changes. Such policy measures are in the form of monetary, fiscal and non-monetary measures. Monetary Measures for Correcting the BoP ↓ The monetary methods for correcting disequilibrium in the balance of payment are as follows :- 1. Deflation Deflation means falling prices. Deflation has been used as a measure to correct deficit disequilibrium. A country faces deficit when its imports exceeds exports. Deflation is brought through monetary measures like bank rate policy, open market operations, etc or through fiscal measures like higher taxation, reduction in public expenditure, etc. Deflation would make our items cheaper in foreign market resulting a rise in our exports. At the same time the demands for imports fall due to higher taxation and reduced income. This would built a favourable atmosphere in the balance of payment position. However Deflation can be successful when the exchange rate remains fixed. 2. Exchange Depreciation Exchange depreciation means decline in the rate of exchange of domestic currency in terms of foreign currency. This device implies that a country has adopted a flexible exchange rate policy. Suppose the rate of exchange between Indian rupee and US dollar is $1 = Rs. 40. If India experiences an adverse balance of payments with regard to U.S.A, the Indian demand...
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...Monetary Policy Design in a DSGE Model 1. A simple model 1.1 Households The utility function of a representative household is ∞ ⎛ ξ C1−σ L1+η ⎞ Et ∑ β s ⎜ t + s t + s − t + s ⎟ 1+η ⎠ s =0 ⎝ 1−σ (1) The dynamics of the demand shock is ζ t = ζ t −1 + eζ ,t , where ξt = eζ . The consumption is t θ −1 ⎡ 1 ⎤ θ −1 composed of lots of goods. It is composed in a CES function Ct = ⎢ ∫ Ct (i ) θ di ⎥ . The i =0 ⎣ ⎦ 1 1−θ 1−θ consumer price index is P = ⎡ ∫ P (i ) di ⎤ . Then the demand function of each good is t t ⎢ i =0 ⎥ ⎣ ⎦ 1 θ ⎡ P (i ) ⎤ Ct (i ) = ⎢ t ⎥ Ct ⎣ Pt ⎦ The budget constraint is −θ PCt + Bt = Wt Lt + Π t + Rt −1 Bt −1 t The first order condition for Ct , Lt , and Bt are Ct−σ = λt Pt Lη = λtWt t λt = Rt λt +1|t After some calculation, we have the Euler equation and labor supply equation ξt +1Ct−+σ / Pt +1 1 β Rt Et =1 −σ ξt Ct / Pt ξt Ct−σ Pt 1.2 Firms (2) = Lη t Wt (3) Assume there is a type of price stickiness in the economy, that each firm has a probability φ that cannot change its price, and fixed the level as the last time. And it has a probability 1 − φ that can re-optimal its price. The problem of a firm which can re-optimal its price in time t is 1 Et ∑ (βφ ) s Λ t + s [ Pt* (i )Yt (i ) − Wt Lt (i )] s =0 ∞ ⎡ Pt * ⎤ s.t.Yt + s (i ) = ⎢ ⎥ Ct and Yt (i ) = At Lt (i ) ⎣ Pt + s ⎦ The dynamics of the technology shock is at = ρ a at −1 + ea ,t , where at = ln( At ) . The first order condition is ...
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...Causes of Euro debt crisis 1. Profligacy of the European Government & Unsustainable Fiscal Policy Countries including Greece, Portugal, Ireland, Spain and Italy in Europe are now paying a heavy price on their profligate way of spending, as reflected by the Euro debt crisis starting from late 2009. Fiscal policy is the use of government expenses and taxation income so as to influence the economy, while the average fiscal deficits had grown from 0.6% in 2007 to 7% at the beginning of the debt crisis across the Europe (Économistes Atterrés, 2010). Therefore, more and more debts were being issued by the above governments so as to support their national expenses, leading to an excessive rise in government debt levels. For instance, the average government debts per GDP had raised from 66% to 84% in the same period (Krugman, 2012).Basically, government debt is the money owed by the central government to the debt holders. As a result, with a high level of the debt-to-GDP ratio may imply that the country is less likely to repay the debt holders but higher chance to default on its debt obligations. Greece, contributing about 3.3% of the annual GDP towards the European Union (Central Intelligence Agency, 2012), with a 165.3 % of debt-to GDP ratio in 2011, was responsible for the outbreak of the Euro debt crisis. Historically, Greece Government’s Debt to GDP ratio was already at a relatively high level across Europe (McAuley, 2011)(Graph 1). Following by the adoption of the...
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...Subject: ECO 550 Professor Name: DR. Yasmeen Student Name: Sayed Rohullah Week 3: Check your understanding 1. The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned ride snowmobiles. The model specifies that the S vary jointly with disposable personal income Y and the population between ages 15 and 40,Z, and inversely with the price of the snowmobiles P. Based on the past data, the best estimate of this relationship is S= K *YZ/P Where k has been estimated (with the pst data) to equal 100. If Y=$11,000, Z= $1,200, and P=$20,000 a. What value would you predict for S? Answer: The given function is S=K*YZ/P k=100 Y=$11,000 Z=$1,200 P=$20,000 S=100(11000*1200)/20000= $66,000 Problem 5 5. A firm experienced the demand shown in the following table. a. Fill in the table by preparing forecasts based on a five-year moving average, a three-year moving average, and exponential smoothing (with a w = 0.9 and a w = 0.3). The exponential smoothing forecasts may be begun by assuming Ŷt+1 = Yt. b. Using the forecasts from 2005 through 2009, compare the accuracy of each of the forecasting methods based on the RMSE criterion. c. Which forecast would you have used for 2010? Why? 5- year 3-Year Exponential Exponential Actual Moving Moving Smoothing Smoothing Year Demand Average Acverage (W= 0.9) 2000 800 xxxx xxxx xxxx Xxxx 2001 925 xxxx xxxx 687.5 762.5 2002 900 xxxx Xxxx 947.5 932.5 2003 1025...
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...required to give gold or silver to for dollar bills. Federal Reserve currency is legal tender in the US, which means that the federal government requires that it be accepted in payment of debts and requires hat cash or checks denominated in dollar bills be use dint he payment of taxes. 4.1 The reason Congress set up a Federal Reserve System in 1913 is because those who deposited money into their accounts weren’t able to get their money back due to the fact that banks loan less than 100 percent of deposits and then loans the rest of the money to someone else. They set this up in order for the nation to have a safer, more flexible, and more stable monetary and financial system 4.2 In order for the Feds to control the money supply, the Feds use these policy tools to control the money supply (1) open the market operations (2) discount policy and (3) reserve requirements. The most important tool is checking account deposits. 4.3 The reason why an open market purchase of Treasury securities by the Federal Reserve increases bank reserves is because when the sellers of the treasury deposit the funds in their bank, the reserves of the banks rise. The reason why an open market sale of treasury securities by the Federal Reserve decreases bank reserves is because the FOMC directs the trading desk to sell treasury securities, causing the reserves of the bank to fall. 4.4 The shadow banking system is non financial institutions that borrow money in the short term and take that money to invest in long-term...
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...CERTIFIED ORGANISATION) (Rs. 40/- per annum) Committed to professional excellence Volume No. : 5 Issue No. : 6 January 2013 Mid-Quarter Monetary Policy Review - 18th Dec., 2012 Monetary and Liquidity Measures q The Cash Reserve Ratio (CRR) of scheduled banks remains unchanged at 4.25% of their Net Demand and Time Liabilities (NDTL). q Repo Rate under the Liquidity Adjustment The Facility (LAF) remains unchanged at 8%. qReverse Repo Rate under the LAF remains The unchanged at 7%. q The Marginal Standing Facility (MSF) and Bank Rate stands at 9%. Growth In Q2 of 2012-13, GDP growth at 5.3% was marginally lower than 5.5% recorded in Q1. On the domestic front, GDP growth is evolving along the baseline projection of 5.8% for 2012-13. Industrial activity rose sharply in October due to a low base and festive demand, propelling the growth of both consumer durables and non-durables into double digits. Significantly, capital goods production recorded a growth of 7.5% after 13 successive months of decline. Inflation Headline WPI inflation edged down to 7.2% in November due to softening of prices of vegetables, minerals and fuel. The new combined (rural and urban) CPI (Base : 2010 = 100) inflation increased in November, reflecting sustained food inflation pressures, particularly for vegetables, cereals, pulses, oils and fats. Monetary and Liquidity Conditions Money Supply (M3) growth remained below its indicative trajectory due to lower deposit growth; non-food credit growth rose...
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...10 years the EGP has undergone some fluctuation. As of December 10, 2002, the value of the EGP when compared to the US dollar was .21563. As of today when the EGP is compared to the US dollar the value is now .16385 (XE, 2012). However, the value was only up at .21563 for a brief period of time, it dropped sharply at the end of January from close to .22 by almost 3 points and continued to fall until the end of 2004 bottoming out at a low of .15852. Over the course of the next 4 years, the value of the EGP steadily grew until it topped out close to .19 in early August of 2008. Unfortunately, the value of the EGP has not seen a steady increase since (Figure 1). (XE, 2012) The reasons for the initial drop in the EGP can be attributed to monetary pressures overvaluing the EGP causing the Egyptian government to float the currency which also lead to an increase inflation of the EGP (Egypt Economy, 2012). A reason that there was another drop in value of the EGP in 2010 could have been attributed to the...
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...status of the euro crisis, relative attractiveness of other market (such as Mexico, Africa, South East Asia) etc., However it would be ideal if the real was stable in the range of R$2 +/- 10% This would ensure stability in the economy and capital markets. A strong currency would encourage imports while a weak currency would discourage investments. Further a weak currency would also make the corporates in Brazil nervous as they will need to pay more reals for every $ of debt on their books. Would these be adverse developments for Brazil? Why? I think it is important to have stability in the currency before allowing it to float freely. Brasil is still an emerging economy and needs to have a scrupulous approach to its currency & monetary policy. It not only needs foreign capital for development but also needs to have a balanced current account. Further given the financial crisis Brasil went though in 80s due high inflation any sudden change could be detrimental. 2. Were the newly elected Brazilian President Dilma Rousseff and he...
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...Fed’s Fisher Says Too-Big-to-Fail Banks Should Be Shrunk Federal Reserve Bank of Dallas President Richard Fisher said the government should break up the biggest U.S. banks rather than allow them to hold a “too-big- to-fail” advantage over smaller firms. The 12 largest financial institutions hold almost 70 percent of the assets in the nation’s banking system and profit from an unfair implicit guarantee that the government would bail them out, Fisher said today in a speech at the Conservative Political Action Conference in National Harbor, Maryland. The biggest banks enjoy a “significant” subsidy, enabling them “to grow larger and riskier,” he said. “These institutions operate under a privileged status,” Fisher said. “They represent not only a threat to financial stability, but to fair and open competition.” The biggest banks came under scrutiny yesterday at a Senate hearing on JPMorgan Chase & Co. (JPM), which hid trading losses, according to a report by the Senate’s Permanent Subcommittee on Investigations. The New York-based firm under Chief Executive Officer Jamie Dimon lost more than $6.2 billion last year in a credit derivatives bet by Bruno Iksil, known as the London Whale. Fisher said in a phone interview with Bloomberg News that his proposal “will not lead to the denial of credit for U.S. corporations.” The cost from big banks “far exceeds the benefits,” and the U.S. doesn’t need “to have the largest banks in the world to compete,” Fisher said after his speech. ...
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