Inventory Investment. Investment Decision and Expected Profit. Lecture 5
|
|
- Josephine Richardson
- 5 years ago
- Views:
Transcription
1 Invenory Invesmen. Invesmen Decision and Expeced Profi Lecure 5
2 Invenory Accumulaion 1. Invenory socks 1) Changes in invenory holdings represen an imporan and highly volaile ype of invesmen spending. 2) Three basic kinds of invenory socks: a. Primary inpus o producion b. Semi-finished goods in he course of producion. c. Finished goods ready for sale o final users.
3 Invenory Socks as a % of Toal invenory in U.S Manufacuring, % 31% 37% Primary merial work-inprocess Finished goods
4 Invenory Socks As a % of Annual Shipmens in U.S Manufacuring, As a % of annual shipmens Primary maerials Primary maerials Work-inprocess Finished goods
5 2. Firms need invenories of primary maerials o economize on he coss of producing final oupu. 3. Mos formal heories of invenory managemen focus on final goods invenories. 1) Producion smoohing 2) Avoidance of sockous The firm mus balance he coss of invenory holdings agains he coss of involunary sockous. So, i is imporan o derive a mahemaics rule for opimal invenory managemen.
6 Firms hpld finished goods invenories 1.They can mainain smooh rae of producion despie a variaable rae of demand for heir oupu; Rising MC of producion(each exra uni is more expensive o produce han he previous uni) 2. Sock ou avoidance: The firm mus balance he cos of invenory holdings agains he cos of involunary sockous. For opimal invenory managemen use some rules: i.e. Ss Rule
7 Ss Rule S and s denoes he levels of invenories. Profi maximizing firm ses producion each period according o expeced demand, plus a consan. Over ime, flucuaing invenories; If demand is higher han expeced, invenories will fall; if demand is lower han expeced invenories will rise. The firm replenishes is invenories whenever hese fall below a cerain low level, s. The firm arges producion so ha i will mee expeced demand and also increase invenory holdings back up o a level, S. where S greaer han s.
8 Empirical Invesigaions on Invesmen Expendiure 1. Even armed wih hese heories of invesmen, however, i is quie difficul o explain much less o predic paerns of invesmen spending. 2. Several economeric models have been developed o explain acual invesmen behavior. 1) The acceleraor Model of invesmen 2) The adjusmen-cos approach 3) The q heory 4) Theories based on credi raioning
9 Invesmen Decision Invesmen decisions depend on curren sales, he curren real ineres rae, and on expecaions of he fuure. The decision o buy a machine depends on he presen value of he profis he firm can expec from having his machine versus he cos of buying i.
10 Invesmen and Expecaions of Profi Depreciaion: The rae of depreciaion,, measures how much usefulness he machine loses from one year o he nex. Reasonable values for are beween 4 and 15% for machines, and beween 2 and 4% for buildings and facories.
11 The Presen value of Expeced Profis V( e ): The presen value, in year, of expeced profi in year +1 equals: 1 1 e 1 r In year +2, 1 1 ( 1 )( 1 ) ( r r ) e 1 e 2 In year, e e V( ) 1 r 1 1 ( r )( r ) ( ) e 1 e 2
12 The Presen value of Expeced Profis Compuing he Presen Value of Expeced Profis 12 of 26
13 The Invesmen Decision Denoe I as aggregae invesmen, as profi per machine (or per uni of capial) for he economy as a whole, and V( e ) as he expeced presen value of profi per uni of capial. This yields he invesmen funcion: I e I( V ( )) ( ) In words: Invesmen depends posiively on he expeced presen value of fuure profis (per uni of capial). 13 of 26
14 A Convenien Special Case Suppose firms expec boh fuure profis and fuure ineres raes o remain a he same level as oday, so ha e e 1 2 and e e 1 2 r r r Economiss call such expecaions expecaions ha he fuure will be like he presen saic expecaions. Under hese wo assumpions, we ge V( ) e r 14 of 26
15 A Convenien Special Case e Puing V( ) and e r I I V ogeher give us an equaion for invesmen: ( ( )) I I r The sum of he real ineres rae and he depreciaion rae is called he user cos or he renal cos of capial. Therefore, Renal Cos ( ) r 15 of 26
16 Curren Versus Expeced Profi Invesmen depends on expeced fuure profi, bu also moves srongly wih flucuaions in curren profi. I e I( V ( ), ) (, + ) Firms may be relucan o borrow if curren profi is low. Bu if curren profi is high, he firm may no need o borrow o finance is invesmens. Even if he firm wans o inves, i migh have difficuly borrowing. Poenial lenders may no be convinced he projec is as good as he firms says. 16 of 26
17 Curren Versus Expeced Profi Changes in Invesmen and Changes in Profi in he Unied Saes since 1960 Invesmen and profi move very much ogeher. 17 of 26
18 Profiabiliy Versus Cash Flow Profiabiliy refers o he expeced presen discouned value of profis. Cash flow refers o curren profi, or he ne flow of cash he firm is receiving. Boh profiabiliy and cash flow are imporan for invesmen decisions, and are likely o move ogeher. 18 of 26
19 Profis and Sales Changes in Profi per Uni of Capial Versus Changes in he Raio of Oupu o Capial in he Unied Saes since 1960 Profi and he raio of oupu o capial move largely ogeher. Y K 19 of 26
20 The Volailiy of Consumpion and Invesmen Le s look a he similariies beween our reamen of consumpion and of invesmen behavior: Wheher consumers perceive curren movemens in income o be ransiory or permanen affecs heir consumpion decisions. In he same way, wheher firms perceive curren movemens in sales o be ransiory or permanen affecs heir invesmen decisions. 20 of 26
21 The Volailiy of Consumpion and Invesmen Bu here are also imporan differences beween consumpion decisions and invesmen decisions: When faced wih an increase in income ha consumers perceive as permanen, hey respond wih a mos an equal increase in consumpion. When firms are faced wih an increase in sales hey believe o be permanen, heir presen value of expeced profis increases, leading o an increase in invesmen. 21 of 26
22 The Volailiy of Consumpion and Invesmen Raes of Change of Consumpion and Invesmen since 1960 Relaive movemens in invesmen are much larger han relaive movemens in consumpion. 22 of 26
23 The Volailiy of Consumpion and Invesmen The figure yields hree conclusions: Consumpion and invesmen usually move ogeher. Invesmen is much more volaile han consumpion. Because, however, he level of invesmen is much smaller han he level of consumpion, changes in invesmen from one year o he nex end up being of he same overall magniude as changes in consumpion. 23 of 26
24 The end Quesions Discussion
Macroeconomics. Part 3 Macroeconomics of Financial Markets. Lecture 8 Investment: basic concepts
Macroeconomics Par 3 Macroeconomics of Financial Markes Lecure 8 Invesmen: basic conceps Moivaion General equilibrium Ramsey and OLG models have very simple assumpions ha invesmen ino producion capial
More informationFINAL EXAM EC26102: MONEY, BANKING AND FINANCIAL MARKETS MAY 11, 2004
FINAL EXAM EC26102: MONEY, BANKING AND FINANCIAL MARKETS MAY 11, 2004 This exam has 50 quesions on 14 pages. Before you begin, please check o make sure ha your copy has all 50 quesions and all 14 pages.
More informationCHAPTER CHAPTER18. Openness in Goods. and Financial Markets. Openness in Goods, and Financial Markets. Openness in Goods,
Openness in Goods and Financial Markes CHAPTER CHAPTER18 Openness in Goods, and Openness has hree disinc dimensions: 1. Openness in goods markes. Free rade resricions include ariffs and quoas. 2. Openness
More informationMacroeconomics II A dynamic approach to short run economic fluctuations. The DAD/DAS model.
Macroeconomics II A dynamic approach o shor run economic flucuaions. The DAD/DAS model. Par 2. The demand side of he model he dynamic aggregae demand (DAD) Inflaion and dynamics in he shor run So far,
More informationMA Advanced Macro, 2016 (Karl Whelan) 1
MA Advanced Macro, 2016 (Karl Whelan) 1 The Calvo Model of Price Rigidiy The form of price rigidiy faced by he Calvo firm is as follows. Each period, only a random fracion (1 ) of firms are able o rese
More information1. To express the production function in terms of output per worker and capital per worker, divide by N: K f N
THE LOG RU Exercise 8 The Solow Model Suppose an economy is characerized by he aggregae producion funcion / /, where is aggregae oupu, is capial and is employmen. Suppose furher ha aggregae saving is proporional
More informationEconomics 301 Fall Name. Answer all questions. Each sub-question is worth 7 points (except 4d).
Name Answer all quesions. Each sub-quesion is worh 7 poins (excep 4d). 1. (42 ps) The informaion below describes he curren sae of a growing closed economy. Producion funcion: α 1 Y = K ( Q N ) α Producion
More informationINSTITUTE OF ACTUARIES OF INDIA
INSIUE OF ACUARIES OF INDIA EAMINAIONS 23 rd May 2011 Subjec S6 Finance and Invesmen B ime allowed: hree hours (9.45* 13.00 Hrs) oal Marks: 100 INSRUCIONS O HE CANDIDAES 1. Please read he insrucions on
More informationEconomic Growth Continued: From Solow to Ramsey
Economic Growh Coninued: From Solow o Ramsey J. Bradford DeLong May 2008 Choosing a Naional Savings Rae Wha can we say abou economic policy and long-run growh? To keep maers simple, le us assume ha he
More informationProblem Set 1 Answers. a. The computer is a final good produced and sold in Hence, 2006 GDP increases by $2,000.
Social Analysis 10 Spring 2006 Problem Se 1 Answers Quesion 1 a. The compuer is a final good produced and sold in 2006. Hence, 2006 GDP increases by $2,000. b. The bread is a final good sold in 2006. 2006
More informationSupplement to Chapter 3
Supplemen o Chaper 3 I. Measuring Real GD and Inflaion If here were only one good in he world, anchovies, hen daa and prices would deermine real oupu and inflaion perfecly: GD Q ; GD Q. + + + Then, he
More informationSpring 2011 Social Sciences 7418 University of Wisconsin-Madison
Economics 32, Sec. 1 Menzie D. Chinn Spring 211 Social Sciences 7418 Universiy of Wisconsin-Madison Noes for Econ 32-1 FALL 21 Miderm 1 Exam The Fall 21 Econ 32-1 course used Hall and Papell, Macroeconomics
More informationANSWER ALL QUESTIONS. CHAPTERS 6-9; (Blanchard)
ANSWER ALL QUESTIONS CHAPTERS 6-9; 18-20 (Blanchard) Quesion 1 Discuss in deail he following: a) The sacrifice raio b) Okun s law c) The neuraliy of money d) Bargaining power e) NAIRU f) Wage indexaion
More informationFundamental Basic. Fundamentals. Fundamental PV Principle. Time Value of Money. Fundamental. Chapter 2. How to Calculate Present Values
McGraw-Hill/Irwin Chaper 2 How o Calculae Presen Values Principles of Corporae Finance Tenh Ediion Slides by Mahew Will And Bo Sjö 22 Copyrigh 2 by he McGraw-Hill Companies, Inc. All righs reserved. Fundamenal
More informationEVA NOPAT Capital charges ( = WACC * Invested Capital) = EVA [1 P] each
VBM Soluion skech SS 2012: Noe: This is a soluion skech, no a complee soluion. Disribuion of poins is no binding for he correcor. 1 EVA, free cash flow, and financial raios (45) 1.1 EVA wihou adjusmens
More informationECONOMIC GROWTH. Student Assessment. Macroeconomics II. Class 1
Suden Assessmen You will be graded on he basis of In-class aciviies (quizzes worh 30 poins) which can be replaced wih he number of marks from he regular uorial IF i is >=30 (capped a 30, i.e. marks from
More informationProcess of convergence dr Joanna Wolszczak-Derlacz. Lecture 4 and 5 Solow growth model (a)
Process of convergence dr Joanna Wolszczak-Derlacz ecure 4 and 5 Solow growh model a Solow growh model Rober Solow "A Conribuion o he Theory of Economic Growh." Quarerly Journal of Economics 70 February
More informationYou should turn in (at least) FOUR bluebooks, one (or more, if needed) bluebook(s) for each question.
UCLA Deparmen of Economics Spring 05 PhD. Qualifying Exam in Macroeconomic Theory Insrucions: This exam consiss of hree pars, and each par is worh 0 poins. Pars and have one quesion each, and Par 3 has
More informationThe macroeconomic effects of fiscal policy in Greece
The macroeconomic effecs of fiscal policy in Greece Dimiris Papageorgiou Economic Research Deparmen, Bank of Greece Naional and Kapodisrian Universiy of Ahens May 22, 23 Email: dpapag@aueb.gr, and DPapageorgiou@bankofgreece.gr.
More informationChapter Outline CHAPTER
8-0 8-1 Chaper Ouline CHAPTER 8 Sraegy and Analysis in Using Ne Presen Value 8.1 Decision Trees 8.2 Sensiiviy Analysis, Scenario Analysis, and Break-Even Analysis 8.3 Mone Carlo Simulaion 8. Opions 8.5
More informationSMALL MENU COSTS AND LARGE BUSINESS CYCLES: AN EXTENSION OF THE MANKIW MODEL
SMALL MENU COSTS AND LARGE BUSINESS CYCLES: AN EXTENSION OF THE MANKIW MODEL 2 Hiranya K. Nah, Sam Houson Sae Universiy Rober Srecher, Sam Houson Sae Universiy ABSTRACT Using a muli-period general equilibrium
More informationUnemployment and Phillips curve
Unemploymen and Phillips curve 2 of The Naural Rae of Unemploymen and he Phillips Curve Figure 1 Inflaion versus Unemploymen in he Unied Saes, 1900 o 1960 During he period 1900 o 1960 in he Unied Saes,
More informationProblem 1 / 25 Problem 2 / 25 Problem 3 / 30 Problem 4 / 20 TOTAL / 100
Deparmen of Economics Universiy of Maryland Economics 325 Inermediae Macroeconomic Analysis Final Exam Professor Sanjay Chugh Spring 2009 May 16, 2009 NAME: TA S NAME: The Exam has a oal of four (4) problems
More informationAppendix B: DETAILS ABOUT THE SIMULATION MODEL. contained in lookup tables that are all calculated on an auxiliary spreadsheet.
Appendix B: DETAILS ABOUT THE SIMULATION MODEL The simulaion model is carried ou on one spreadshee and has five modules, four of which are conained in lookup ables ha are all calculaed on an auxiliary
More informationUCLA Department of Economics Fall PhD. Qualifying Exam in Macroeconomic Theory
UCLA Deparmen of Economics Fall 2016 PhD. Qualifying Exam in Macroeconomic Theory Insrucions: This exam consiss of hree pars, and you are o complee each par. Answer each par in a separae bluebook. All
More informationEvaluating Projects under Uncertainty
Evaluaing Projecs under Uncerainy March 17, 4 1 Projec risk = possible variaion in cash flows 2 1 Commonly used measure of projec risk is he variabiliy of he reurn 3 Mehods of dealing wih uncerainy in
More informationECO 301 MACROECONOMIC THEORY UNIVERSITY OF MIAMI DEPARTMENT OF ECONOMICS PRACTICE FINAL EXAM Instructor: Dr. S. Nuray Akin
ECO 301 MACROECONOMIC THEORY UNIVERSITY OF MIAMI DEPARTMENT OF ECONOMICS PRACTICE FINAL EXAM Insrucor: Dr. S. Nuray Akin Name: ID: Insrucions: This exam consiss of 12 pages; please check your examinaion
More informationCHAPTER CHAPTER26. Fiscal Policy: A Summing Up. Prepared by: Fernando Quijano and Yvonn Quijano
Fiscal Policy: A Summing Up Prepared by: Fernando Quijano and vonn Quijano CHAPTER CHAPTER26 2006 Prenice Hall usiness Publishing Macroeconomics, 4/e Olivier lanchard Chaper 26: Fiscal Policy: A Summing
More informationEcon 546 Lecture 4. The Basic New Keynesian Model Michael Devereux January 2011
Econ 546 Lecure 4 The Basic New Keynesian Model Michael Devereux January 20 Road map for his lecure We are evenually going o ge 3 equaions, fully describing he NK model The firs wo are jus he same as before:
More informationMacroeconomics II THE AD-AS MODEL. A Road Map
Macroeconomics II Class 4 THE AD-AS MODEL Class 8 A Road Map THE AD-AS MODEL: MICROFOUNDATIONS 1. Aggregae Supply 1.1 The Long-Run AS Curve 1.2 rice and Wage Sickiness 2.1 Aggregae Demand 2.2 Equilibrium
More informationTechnological progress breakthrough inventions. Dr hab. Joanna Siwińska-Gorzelak
Technological progress breakhrough invenions Dr hab. Joanna Siwińska-Gorzelak Inroducion Afer The Economis : Solow has shown, ha accumulaion of capial alone canno yield lasing progress. Wha can? Anyhing
More informationElton, Gruber, Brown, and Goetzmann. Modern Portfolio Theory and Investment Analysis, 7th Edition. Solutions to Text Problems: Chapter 21
Elon, Gruber, Brown, and Goezmann oluions o Tex Problems: Chaper Chaper : Problem We can use he cash lows bonds A and B o replicae he cash lows o bond C. Le YA be he racion o bond A purchased and YB be
More informationLecture: Autonomous Financing and Financing Based on Market Values I
Lecure: Auonomous Financing and Financing Based on Marke Values I Luz Kruschwiz & Andreas Löffler Discouned Cash Flow, Secion 2.3, 2.4.1 2.4.3, Ouline 2.3 Auonomous financing 2.4 Financing based on marke
More informationSection 4 The Exchange Rate in the Long Run
Secion 4 he Exchange Rae in he Long Run 1 Conen Objecives Purchasing Power Pariy A Long-Run PPP Model he Real Exchange Rae Summary 2 Objecives o undersand he law of one price and purchasing power pariy
More informationa. If Y is 1,000, M is 100, and the growth rate of nominal money is 1 percent, what must i and P be?
Problem Se 4 ECN 101 Inermediae Macroeconomics SOLUTIONS Numerical Quesions 1. Assume ha he demand for real money balance (M/P) is M/P = 0.6-100i, where is naional income and i is he nominal ineres rae.
More informationConsumption and Investment. Graduate Macroeconomics I ECON Cunningham
Consumpion and Invesmen Graduae Macroeconomics I ECON 309 -- Cunningham Keynesian Theory Recall ha Keynes argues ha C= C 0 +cy, wih C 0 > 0 and he average propensiy o consume (APC = C/Y) is greaer han
More informationAggregate Demand Aggregate Supply 1 Y. f P
ublic Aairs 974 Menzie D. Chinn Fall 202 Social Sciences 748 Universiy o Wisconsin-Madison Aggregae Demand Aggregae Supply. The Basic Model wih Expeced Inlaion Se o Zero Consider he hillips curve relaionship:
More informationINSTITUTE OF ACTUARIES OF INDIA
INSTITUTE OF ACTUARIES OF INDIA EXAMINATIONS 05 h November 007 Subjec CT8 Financial Economics Time allowed: Three Hours (14.30 17.30 Hrs) Toal Marks: 100 INSTRUCTIONS TO THE CANDIDATES 1) Do no wrie your
More information15 Theories of Investment Expenditures
Economics 314 Coursebook, 2014 Jeffrey Parker 15 Theories of Invesmen Expendiures Chaper 15 Conens A. Topics and Tools... 2 B. How Firms Inves... 2 Wha invesmen is and wha i is no... 2 Financing of invesmen...
More informationChapter 4 Introduction to Valuation: The Time Value of Money
Chaper 4 nroducion o Valuaion: The Time Value of Money A dollar oday is worh more han a dollar omorrow!!! How much more, ha is he quesion. Fuure Value Suppose you have $00 and inves i for year a 0%. How
More information2. Quantity and price measures in macroeconomic statistics 2.1. Long-run deflation? As typical price indexes, Figure 2-1 depicts the GDP deflator,
1 2. Quaniy and price measures in macroeconomic saisics 2.1. Long-run deflaion? As ypical price indexes, Figure 2-1 depics he GD deflaor, he Consumer rice ndex (C), and he Corporae Goods rice ndex (CG)
More informationCh. 10 Measuring FX Exposure. Is Exchange Rate Risk Relevant? MNCs Take on FX Risk
Ch. 10 Measuring FX Exposure Topics Exchange Rae Risk: Relevan? Types of Exposure Transacion Exposure Economic Exposure Translaion Exposure Is Exchange Rae Risk Relevan?? Purchasing Power Pariy: Exchange
More informationAlemayehu Geda. Investment Based on Eklund(2013), Hibs Lectures & David Romer (2012) Book
Advanced and onemporary Topics in Macroeconomics Alemayehu Geda Email: ag2526@gmail.com Web Page: www.alemayehu.com lass Lecure Noe 7 nvesmen Based on Eklund(203, Hibs Lecures & David Romer (202 Book Addis
More informationCHAPTER 3 How to Calculate Present Values. Answers to Practice Questions
CHAPTER 3 How o Calculae Presen Values Answers o Pracice Quesions. a. PV $00/.0 0 $90.53 b. PV $00/.3 0 $9.46 c. PV $00/.5 5 $ 3.5 d. PV $00/. + $00/. + $00/. 3 $40.8. a. DF + r 0.905 r 0.050 0.50% b.
More informationTwo ways to we learn the model
Two ways o we learn he model Graphical Inerface: Model Algebra: The equaion you used in your SPREADSHEET. Corresponding equaion in he MODEL. There are four core relaionships in he model: you have already
More informationOPTIMUM FISCAL AND MONETARY POLICY USING THE MONETARY OVERLAPPING GENERATION MODELS
Kuwai Chaper of Arabian Journal of Business and Managemen Review Vol. 3, No.6; Feb. 2014 OPTIMUM FISCAL AND MONETARY POLICY USING THE MONETARY OVERLAPPING GENERATION MODELS Ayoub Faramarzi 1, Dr.Rahim
More informationA Simple Method for Consumers to Address Uncertainty When Purchasing Photovoltaics
A Simple Mehod for Consumers o Address Uncerainy When Purchasing Phoovolaics Dr. Thomas E. Hoff Clean Power Research 10 Glen C. Napa, CA 94558 www.clean-power.com Dr. Rober Margolis Naional Renewable Energy
More information(a) Assume that the entrepreneur is willing to undertake the project, and analyze the problem from the point of view of the outside investor.
Problem Se # Soluions Course 4.454 Macro IV TA: Todd Gormley, gormley@mi.edu Disribued: November 9, 004 Due: Tuesday, November 3, 004 [in class]. Financial Consrains (via Cosly Sae Verificaion) Consider
More informationVERIFICATION OF ECONOMIC EFFICIENCY OF LIGNITE DEPOSIT DEVELOPMENT USING THE SENSITIVITY ANALYSIS
1 Beaa TRZASKUŚ-ŻAK 1, Kazimierz CZOPEK 2 MG 3 1 Trzaskuś-Żak Beaa PhD. (corresponding auhor) AGH Universiy of Science and Technology Faculy of Mining and Geoengineering Al. Mickiewicza 30, 30-59 Krakow,
More informationMONOPOLISTIC COMPETITION IN A DSGE MODEL: PART II OCTOBER 20, 2015
MONOPOLISTIC COMPETITION IN A DSGE MODEL: PART II OCTOBER 20, 2015 Dixi-Sigliz Model BUILDING THE EQUILIBRIUM Puing hings ogeher impose symmery across all i 1 pz f ( k, n ) r k & 1 pz f ( k, n ) w n &
More informationThis specification describes the models that are used to forecast
PCE and CPI Inflaion Differenials: Convering Inflaion Forecass Model Specificaion By Craig S. Hakkio This specificaion describes he models ha are used o forecas he inflaion differenial. The 14 forecass
More informationUNSW Business School Working Paper
Business School / School of Economics UNSW Business School Working Paper UNSW Business School Research Paper No. 2017 ECON 14 Alernaive User Coss, Produciviy and Inequaliy in US Business Secors W. Erwin
More informationMoney in a Real Business Cycle Model
Money in a Real Business Cycle Model Graduae Macro II, Spring 200 The Universiy of Nore Dame Professor Sims This documen describes how o include money ino an oherwise sandard real business cycle model.
More informationVolatility and Hedging Errors
Volailiy and Hedging Errors Jim Gaheral Sepember, 5 1999 Background Derivaive porfolio bookrunners ofen complain ha hedging a marke-implied volailiies is sub-opimal relaive o hedging a heir bes guess of
More informationEconomics 2450A: Public Economics Section 9: Linear Capital Taxation
Economics 2450A: Public Economics Secion 9: Linear Capial Taxaion Maeo Paradisi November 7, 206 In his secion we inroduce a framework o sudy opimal linear capial axaion. We firs focus on a wo-period model,
More informationHow Risky is Electricity Generation?
How Risky is Elecriciy Generaion? Tom Parkinson The NorhBridge Group Inernaional Associaion for Energy Economics New England Chaper 19 January 2005 19 January 2005 The NorhBridge Group Agenda Generaion
More informationAn Introduction to PAM Based Project Appraisal
Slide 1 An Inroducion o PAM Based Projec Appraisal Sco Pearson Sanford Universiy Sco Pearson is Professor of Agriculural Economics a he Food Research Insiue, Sanford Universiy. He has paricipaed in projecs
More informationEstimating a DSGE model with Firm and Bank
How Bad was Lehman Shock?: Esimaing a DSGE model wih Firm and Bank Balance Shees in a Daa-Rich Environmen* (wih H. Iiboshi, T. Masumae, and R. Namba) SWET Conference Augus 7, 2011 Shin-Ichi Nishiyama (Tohoku
More information(1 + Nominal Yield) = (1 + Real Yield) (1 + Expected Inflation Rate) (1 + Inflation Risk Premium)
5. Inflaion-linked bonds Inflaion is an economic erm ha describes he general rise in prices of goods and services. As prices rise, a uni of money can buy less goods and services. Hence, inflaion is an
More informationModels of Default Risk
Models of Defaul Risk Models of Defaul Risk 1/29 Inroducion We consider wo general approaches o modelling defaul risk, a risk characerizing almos all xed-income securiies. The srucural approach was developed
More informationReconciling Gross Output TFP Growth with Value Added TFP Growth
Reconciling Gross Oupu TP Growh wih Value Added TP Growh Erwin Diewer Universiy of Briish Columbia and Universiy of New Souh Wales ABSTRACT This aricle obains relaively simple exac expressions ha relae
More informationSan Francisco State University ECON 560 Summer 2018 Problem set 3 Due Monday, July 23
San Francisco Sae Universiy Michael Bar ECON 56 Summer 28 Problem se 3 Due Monday, July 23 Name Assignmen Rules. Homework assignmens mus be yped. For insrucions on how o ype equaions and mah objecs please
More informationMeasuring the Effects of Exchange Rate Changes on Investment in Australian Manufacturing Industry
Measuring he Effecs of Exchange Rae Changes on Invesmen in Ausralian Manufacuring Indusry Auhor Swif, Robyn Published 2006 Journal Tile The Economic Record DOI hps://doi.org/10.1111/j.1475-4932.2006.00329.x
More informationBusiness Cycle Theory I (REAL)
Business Cycle Theory I (REAL) I. Inroducion In his chaper we presen he business cycle heory of Kydland and Presco (1982), which has become known as Real Business Cycle heory. The real erm was coined because
More informationDiscussion of Reserve Requirements for Price and Financial Stability: When Are They Effective?
Discussion of Reserve Requiremens for Price and Financial Sabiliy: When Are They Effecive? Carl E. Walsh Deparmen of Economics, Universiy of California, Sana Cruz Since he onse of he 2008 financial crisis,
More informationEmpirical analysis on China money multiplier
Aug. 2009, Volume 8, No.8 (Serial No.74) Chinese Business Review, ISSN 1537-1506, USA Empirical analysis on China money muliplier SHANG Hua-juan (Financial School, Shanghai Universiy of Finance and Economics,
More informationPrinciples of Finance CONTENTS
Principles of Finance CONENS Value of Bonds and Equiy... 3 Feaures of bonds... 3 Characerisics... 3 Socks and he sock marke... 4 Definiions:... 4 Valuing equiies... 4 Ne reurn... 4 idend discoun model...
More informationt=1 C t e δt, and the tc t v t i t=1 C t (1 + i) t = n tc t (1 + i) t C t (1 + i) t = C t vi
Exam 4 is Th. April 24. You are allowed 13 shees of noes and a calculaor. ch. 7: 137) Unless old oherwise, duraion refers o Macaulay duraion. The duraion of a single cashflow is he ime remaining unil mauriy,
More informationBond Prices and Interest Rates
Winer erm 1999 Bond rice Handou age 1 of 4 Bond rices and Ineres Raes A bond is an IOU. ha is, a bond is a promise o pay, in he fuure, fixed amouns ha are saed on he bond. he ineres rae ha a bond acually
More informationReview of Network Economics
Review of Nework Economics Volume 10, Issue 2 2011 Aricle 2 On he Relaionship Beween Hisoric Cos, Forward Looking Cos and Long Run Marginal Cos William P. Rogerson, Norhwesern Universiy Recommended Ciaion:
More informationProblem 1 / 25 Problem 2 / 25 Problem 3 / 11 Problem 4 / 15 Problem 5 / 24 TOTAL / 100
Deparmen of Economics Universiy of Maryland Economics 35 Inermediae Macroeconomic Analysis Miderm Exam Suggesed Soluions Professor Sanjay Chugh Fall 008 NAME: The Exam has a oal of five (5) problems and
More informationInventory Behavior with Permanent Sales Shocks
Invenory Behavior wih Permanen Sales Shocks Louis J. Maccini Barholomew Moore (Corresponding auhor) Deparmen of Economics Deparmen of Economics Fordham Universiy Johns Hopkins Universiy 44 Eas Fordham
More informationFinal Exam Answers Exchange Rate Economics
Kiel Insiu für Welwirhschaf Advanced Sudies in Inernaional Economic Policy Research Spring 2005 Menzie D. Chinn Final Exam Answers Exchange Rae Economics This exam is 1 ½ hours long. Answer all quesions.
More informationOptimal Tax-Timing and Asset Allocation when Tax Rebates on Capital Losses are Limited
Opimal Tax-Timing and Asse Allocaion when Tax Rebaes on Capial Losses are Limied Marcel Marekwica This version: January 15, 2007 Absrac Since Consaninides (1983) i is well known ha in a marke where capial
More informationAid, Policies, and Growth
Aid, Policies, and Growh By Craig Burnside and David Dollar APPENDIX ON THE NEOCLASSICAL MODEL Here we use a simple neoclassical growh model o moivae he form of our empirical growh equaion. Our inenion
More informationTHE TWO-PERIOD MODEL (CONTINUED)
GOVERNMENT AND FISCAL POLICY IN THE TWO-PERIOD MODEL (CONTINUED) MAY 25, 20 A Governmen in he Two-Period Model ADYNAMIC MODEL OF THE GOVERNMENT So far only consumers in our wo-period framework Inroduce
More informationIssues in the Measurement of Capital Services, Depreciation, Asset Price Changes and Interest Rates
1 Issues in he Measuremen of Capial Services, Depreciaion, Asse Price Changes and Ineres Raes W. Erwin Diewer, Discussion Paper 04-11, Deparmen of Economics, Universiy of Briish Columbia, Vancouver, B.C.,
More informationCh. 1 Multinational Financial Mgmt: Overview. International Financial Environment. How Business Disciplines Are Used to Manage the MNC
Ch. Mulinaional Financial Mgm: Overview Topics Goal of he MNC Theories of Inernaional Business Inernaional Business Mehods Inernaional Opporuniies Exposure o Inernaional Risk MNC's Cash Flows & Valuaion
More informationMACROECONOMICS I UPF
MACROECONOMICS I UPF 2007-2008 LECTURE SLIDES SET 2 Professor Anonio Ciccone UPF Macroeconomics I, 2007-08 Slide SET 2 Slide 1 5. SAVINGS, INVESTMENT AND THE CREDIT MARKET EQUILIBRIUM OR FROM THE RENTAL
More informationGrowth, Welfare, and Public Infrastructure: A General Equilibrium Analysis of Latin American Economies
Volume 26, Number 2, December 2001 Growh, Welfare, and Public Infrasrucure: A General Equilibrium Analysis of Lain American Economies Felix K. Rioja Empirical sudies have found infrasrucure invesmen imporan
More informationChapter 7 Monetary and Exchange Rate Policy in a Small Open Economy
George Alogoskoufis, Inernaional Macroeconomics, 2016 Chaper 7 Moneary and Exchange Rae Policy in a Small Open Economy In his chaper we analyze he effecs of moneary and exchange rae policy in a shor run
More informationWelfare Gains of Aid Indexation in Small Open Economies
WP/08/101 Welfare Gains of Aid Indexaion in Small Open Economies Anubha Dhasmana 2008 Inernaional Moneary Fund WP/08/101 IMF Working Paper African Deparmen Welfare Gains of Aid Indexaion in Small Open
More informationFiscal policy & public debt.
Fiscal policy & public deb. Plan of oday s lecure Definiions Public deb dynamics Fiscal policy & aggregae demand a shor reminder. The size of he public secor in XX cenury. Kraj 93 920 937 960 970 980 990
More informationPrivate Saving in Mexico,
Sepember 3, 998 Privae Saving in Mexico, 98-95 Craig Burnside The World Bank * Sepember 998 Absrac This paper analyzes he behavior of privae saving in Mexico from 98 o 995 using quarerly daa. Simple regressions
More informationCommentary: Housing, Credit and Consumer Expenditure
Commenary: Housing, Credi and Consumer Expendiure Sydney C. Ludvigson The subjec of his working session is housing and consumer behavior. As emphasized by John Muellbauer, one possible way in which house
More informationAn inventory model for Gompertz deteriorating items with time-varying holding cost and price dependent demand
Inernaional Journal of Mahemaics rends and echnology (IJM) Volume 49 Number 3 Sepember 7 An invenory model for Gomperz deerioraing iems wih ime-varying holding cos and price dependen demand Absrac Nurul
More informationTHE USE OF CHAIN INDICES IN THE NETHERLANDS. Sake de Boer. Jan van Dalen. Piet Verbiest
THE USE OF CHAIN INDICES IN THE NETHERLANDS Sake de Boer Jan van Dalen Pie Verbies December, 1996 Paper o be presened a he Conference on Measuremen problems and economeric modeling, Isiuo Nazionale di
More informationDevelopment of MEGA-D: A DSGE Model for Policy Analysis
Developmen of EGA-D: A DGE odel for Policy Analysis David Florian and Carlos onoro Banco Cenral de Reserva del Peru (BCRP) ay 2009 (preliminary) Absrac This paper summarizes he developmen of a DGE model
More informationDynamic Programming Applications. Capacity Expansion
Dynamic Programming Applicaions Capaciy Expansion Objecives To discuss he Capaciy Expansion Problem To explain and develop recursive equaions for boh backward approach and forward approach To demonsrae
More informationNOMINAL RIGIDITIES IN A DSGE MODEL: THE PERSISTENCE PUZZLE OCTOBER 14, 2010 EMPIRICAL EFFECTS OF MONETARY SHOCKS. Empirical Motivation
NOMINAL RIGIDITIES IN A DSGE MODEL: THE PERSISTENCE PUZZLE OCTOBER 4, 200 Empirical Moivaion EMPIRICAL EFFECTS OF MONETARY SHOCKS Hump-shaped responses o moneary shocks (Chrisiano, Eichenbaum, and Evans
More informationChapter 10: The Determinants of Dividend Policy
Chaper 10: The Deerminans of Dividend Policy 1. True True False 2. This means ha firms generally prefer no o change dividends, paricularly downwards. One explanaion for his is he clienele hypohesis. Tha
More informationProblem 1 / 25 Problem 2 / 25 Problem 3 / 30 Problem 4 / 20 TOTAL / 100
Deparmen of Economics Universiy of Maryland Economics 325 Inermediae Macroeconomic Analysis Final Exam Suggesed Soluions Professor Sanjay Chugh Spring 2009 NAME: TA S NAME: The Exam has a oal of four (4)
More informationSession 4.2: Price and Volume Measures
Session 4.2: Price and Volume Measures Regional Course on Inegraed Economic Saisics o Suppor 28 SNA Implemenaion Leonidas Akriidis Office for Naional Saisics Unied Kingdom Conen 1. Inroducion 2. Price
More informationChapter 12 Fiscal Policy, page 1 of 8
Chaper 12 Fiscal olicy, page 1 of 8 fiscal policy and invesmen: fiscal policy refers o governmen policy regarding revenue and expendiures fiscal policy is under he capial resources secion of he ex because
More informationMarket and Information Economics
Marke and Informaion Economics Preliminary Examinaion Deparmen of Agriculural Economics Texas A&M Universiy May 2015 Insrucions: This examinaion consiss of six quesions. You mus answer he firs quesion
More informationMacroeconomics. Typical macro questions (I) Typical macro questions (II) Methodology of macroeconomics. Tasks carried out by macroeconomists
Macroeconomics Macroeconomics is he area of economics ha sudies he overall economic aciviy in a counry or region by means of indicaors of ha aciviy. There is no essenial divide beween micro and macroeconomics,
More informationSubdivided Research on the Inflation-hedging Ability of Residential Property: A Case of Hong Kong
Subdivided Research on he -hedging Abiliy of Residenial Propery: A Case of Hong Kong Guohua Huang 1, Haili Tu 2, Boyu Liu 3,* 1 Economics and Managemen School of Wuhan Universiy,Economics and Managemen
More informationSession IX: Special topics
Session IX: Special opics 2. Subnaional populaion projecions 10 March 2016 Cheryl Sawyer, Lina Bassarsky Populaion Esimaes and Projecions Secion www.unpopulaion.org Maerials adaped from Unied Naions Naional
More informationErwin Diewert Department of Economics University of British Columbia. August Discussion Paper No.: 05-12
ON MEASURING INVENTORY CHANGE IN CURRENT AND CONSTANT DOLLARS by Erwin Diewer Deparmen of Economics Universiy of Briish Columbia Augus 2005 Discussion Paper No.: 05-12 DEPARTMENT OF ECONOMICS THE UNIVERSITY
More informationCapital Flows, Institutions, and Financial Fragility
Capial Flows, Insiuions, and Financial Fragiliy By Wipawin Promboon Kenan-Flagler Business School UNC-Chapel Hill February 11, 2009 Model Esimaion Globalizaion Liberalizaion Greaer volume of capial flows:
More information