Inflation Essays (Examples)
Study Document
The Phillips Cure And Unemployment
The Short-Run and Long-Run Relationship between Unemployment and Inflation
Introduction
Phillips observed a consistent inverse relationship between wage inflation and unemployment when he analyzed data from the UK spanning nearly a century from 1861 to 1957. The explanation Phillips gave was simple: … laborers are linked to prices businesses charge consumers (Lucas & Rapping, 1969), it was not long before economists applied the Phillips curve to inflation in general rather than to only wages. It became evident that monetary policy could be determined by using the Phillips curve as a … would adjust so that supply and demand forces could operate in labor. The rate of unemployment, in other words, was not tied to inflation but rather to real wages. Friedman (1977) objected to the central bank’s idea that it could higher inflation for lower unemployment. By trying to manipulate the labor market below where the natural forces of supply……
References
References
Amadeo, K. (2019). Unemployment rate by year since 1929 compared to inflation and GDP. Retrieved from https://www.thebalance.com/unemployment-rate-by-year-3305506
FRED. (2019). FRED Graph. Retrieved from https://fred.stlouisfed.org/series/LNU04000024#0
Friedman, M. (1977). Nobel lecture: inflation and unemployment. Journal of political economy, 85(3), 451-472.
Heller, R. (2017). Monetary mischief and the debt trap. Cato Journal, 37(2), 247-261.
Lucas, R. E., & Rapping, L. A. (1969). Price expectations and the Phillips curve. The American Economic Review, 59(3), 342-350.
Stiglitz, J. (1997). Reflections on the natural rate hypothesis. Journal of Economic Perspectives, 11(1), 3-10.
Wulwick, N. J. (1987). The Phillips curve: which? whose? to do what? how?. Southern Economic Journal, 834-857.
Study Document
The Government S Economic Policies Effect Good Or Bad Economy
… businesses or begin new enterprises. This helps in creating more jobs in different sectors of the economy.
Additionally, the expansionary policy causes demand-pull inflation and reduces net exports. The contractionary monetary policy reduces the money supply and increases interest rates within an economy. When the Fed implements … interest rates within an economy. When the Fed implements this policy, it intends to stabilize the economy and reduce aggregate demand to reduce inflation. Contractionary monetary policy also causes deflation and an increase in net exports.
Goals of Monetary Policy
The Feds have two goals that guide … goals that guide its monetary policy: maximum employment and price stability (McGraw-Hill Education, n.d.) All economies suffer from the effects of deflation and inflation. Extreme inflation harmful to the economy because it reduces real wages. That is, each dollar earned by a worker has low purchasing power. Low and … to the economy……
References
References
Federal Reserve. (2020, March 15). Federal open market committee. Retrieved March 30, 2020, from https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
Labonte, M. (2020). Monetary policy and the Federal Reserve: Current policy and conditions (RL30354). Retrieved from Congressional Research Service website: https://fas.org/sgp/crs/misc/RL30354.pdf
Madimutsa, C. (2008). The Policy Formulation Process. Retrieved from https://www.researchgate.net/publication/336927323_The_Policy_Formulation_Proce ss
McGraw-Hill Education. (n.d.). The role of government. Retrieved from https://www.jasonsclassroom.com/social-studies/cc-basics/chapter-5/lesson-5.3/
Suman, S. (2015, October 26). Monetary policy: Objectives, advantages, and disadvantages. Retrieved from https://www.economicsdiscussion.net/monetary-policy/advantages/monetary-policy-objectives-advantages-and-disadvantages/12768
Study Document
How Interest Rates Compare Over The Last Decade Within The United
...Inflation Interest rates form the basis for valuation models around the world. They are used in almost every industry, country, and geography. Interest rates can also influence corporate and consumer behaviors. For example, depending on the inherent risk of a consumer, credit card rates determine how much an individual must pay on a month basis to the financial institution. Corporations looking to borrow funds to expand their market share must consider the variable interest rates being changed and their ability to service the debt. Even governments must be mindful of the extent of their borrowers and the corresponding impact of interest rates on their ability to services the debt. Due primarily to their importance in key elements of human civilization, interest rates are a closely watched tool by individual investors, general consumers, and corporations. Banks in particular are heavily influenced by the change in interest rates as they operate as financial……
References
References
1. Goodhard, C and E Perotti, 2008 “Maturity mismatch stretching: Banking has taken a wrong turn”, CEPR Policy Insight 81, 6-July
2. Holston, Laubach, and Williams. 2017. “Measuring the Natural Rate of Interest: International Trends and Determinants,” Journal of International Economics 108, supplement 1 (May): S39–S75
3. Laubach and Williams. 2003. “Measuring the Natural Rate of Interest,” Review of Economics and Statistics 85, no.4 (November): 1063-70.
4. Rachel, L. and Smith, T.D., 2017. Are low real interest rates here to stay?. International Journal of Central Banking, 13(3), pp.1-42.
5. Schularick, M, and A M Taylor, (2009), “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008”, NBER DP 15512
6. Stock, J.H. and Watson, M.W., 2007. Why has US inflation become harder to forecast?. Journal of Money, Credit and banking, 39, pp.3-33
Study Document
The Future Of Corporate
Interest Rates and Inflation
The macroeconomic variable that corporate financial managers should be preparing for in the next 5 to 10 years is the interest rate. If … continue to rise because rates continue to fall and the Federal Reserve also continues to pump new money into the market, which causes inflation. As the value of the dollar declines, investors seek assets that will maintain the value of their wealth—so they jump into precious metals … or bonds or real estate, which sends the prices of these asset classes soaring.
Thus it can be seen that interest rates and inflation are essentially tied at the hip: low rates keep the debt scheme going, liquidity injections cause inflation but also allow banks to print the debt away. Financial managers will require the skill needed to monitor real inflation and find assets that can preserve their wealth. The key will be to……
References
References
Hall, M. (2019). How do interest rates affect the stock market? Retrieved from https://www.investopedia.com/investing/how-interest-rates-affect-stock-market/
Study Document
Labor Market Wages And Income Inequality
… paper looks at the concepts of the labor market, wage growth and income inequality in the U.S. and discusses them in terms of inflation (caused by the injection of $4 trillion worth of liquidity into the financial markets by the Federal Reserve after the global economic crisis … be true—and those signs can be seen in terms of how one interprets labor market data (unemployment vs. labor participation rate), wages vs. inflation, and income inequality. Since the Federal Reserve along with the other central banks of the world engaged in unconventional monetary policy aka quantitative … exponentially—whether one is looking at the S&P 500, housing costs, healthcare costs, education costs, or even precious metals (which are known for tracking inflation). Now, with the President calling for rate cuts and the Fed responding with a 25 basis point mid-cycle cut at the end of ……
References
References
BBC. (2019). US economy under Trump: Is it the greatest in history? Retrieved from https://www.bbc.com/news/world-45827430
Bernstein, J. (2019). A tight job market is a potent force against inequality and wage stagnation. Retrieved from https://www.washingtonpost.com/outlook/2019/02/01/tight-job-market-is-potent-force-against-inequality-wage-stagnation/?utm_term=.0a531cf24efb
Cox, J. (2019). Private payroll growth tops estimates as job market shows signs of tightening. Retrieved from https://www.cnbc.com/2019/07/31/private-payrolls-up-156k-in-july-vs-150k-est-adpmoodys.html
Harwood, J. (2019). 5 reasons why income inequality has become a major political issue. Retrieved from https://www.cnbc.com/2019/06/05/5-reasons-income-inequality-has-become-a-major-political-issue.html
Study Document
Risk Management And Insurance
…
iv. The Variable Annuity
v. Index Annuities
vi. The Contingent Deferred Annuity
vii. Survivorship or Reversionary Annuity
Q3
Investors have to account for inflation when projecting the future value of their investments. The Variable Annuity helps investors cope with the effects of inflation on investment portfolios. The underlying theory is that while the value of a dollar will change over time, a diversified investment portfolio will … will change over time, a diversified investment portfolio will adjust to reflect the prevailing prices of commodities and services in the economy with inflation factored in. Common stocks represent the value of companies offering goods and services in the economy and their value will generally move in ……
References
References
Vaughan, E. J., & Vaughan, T. (2007). Fundamentals of risk and insurance. John Wiley & Sons.
Study Document
Understanding The Factors Affecting The Success Of Credit Risk In
… influence on the economy of a nation as a whole and comprise of different variables including the prevailing interest rates, the rate of inflation in the country, unemployment rates, the level of consumer consumption, and also gross domestic product (GDP). Research conducted by Vazquez et al. (2012) … contrast, the findings of the study established that there exists a positive correlation between non-performing loans and macro-economic variables including high rate of inflation, the rate of unemployment, and the interest rates. High inclinations of credit risk go in tandem with high rate of inflation, high interest rates, in addition to high unemployment rate. This is largely for the reason that they restrict the capacity of borrowing in ……
References
References
Bhattarai, Y. R. (2016). Effect of credit risk on the performance of Nepalese commercial banks. NRB Economic Review, 28(1), 41-64.
Das, A. and Ghosh, S. (2007). Determinants of Credit Risk in Indian State-owned Banks: An Empirical Investigation. Economic Issues, 12(2): 48-66.
Derelio?lu, G., & Gürgen, F. (2011). Knowledge discovery using neural approach for SME’s credit risk analysis problem in Turkey. Expert Systems with Applications, 38(8), 9313-9318
Garr, D. K. (2013). Determinants of credit risk in the banking industry of Ghana. Developing Country Studies, 3(11), 64-77.
Gizaw, M., Kebede, M., & Selvaraj, S. (2015). The impact of credit risk on profitability performance of commercial banks in Ethiopia. African Journal of Business Management, 9(2), 59-66.
Johnson, B., & Christensen, L. (2008). Educational research: Quantitative, qualitative, and mixed approaches. New York: Sage.
Kithinji, A. M. (2010). Credit risk management and profitability of commercial banks in Kenya. (Doctoral dissertation, University of Nairobi).
Limam, I. (2001). Measuring technical efficiency of Kuwaiti banks. Kuwait: Arab Planning Institute.
Study Document
SEC Enforcement Of Goldman Sachs And AIG
… (2010) as triggering the wave of financial distress that led to central banking intervention (unconventional monetary policy—also known as quantitative easing) and the inflation of asset bubbles currently seen today (Huston & Spencer, 2018). Goldman Sachs settled with the SEC and agreed to pay $550 million on ……
References
References
Baer, J. (2014). Former Goldman Trader Tourre Won't Appeal Fraud Verdict. Retrieved from https://www.wsj.com/articles/former-goldman-trader-tourre-wont-seek-appeal-of-securities-fraud-verdict-1401221556
Huston, J. H., & Spencer, R. W. (2018). Quantitative easing and asset bubbles. Applied Economics Letters, 25(6), 369-374.
Lewis, M. (2010). The Big Short. NY: W. W. Norton.
McDonald, R., & Paulson, A. (2015). AIG in Hindsight. Journal of Economic Perspectives, 29(2), 81-106.
Murray, N., Manrai, A. K., & Manrai, L. A. (2018). The role of incentives/punishments, moral hazard, and conflicts of interests in the 2008 financial crisis. The bi-annual academic publication of Universidad ESAN, 22(43).
SEC. (2010). Litigation Release No. 21489 / April 16, 2010. Retrieved from https://www.sec.gov/litigation/litreleases/2010/lr21489.htm
Weisenthal, J. (2009). Goldman Sachs made billions shorting AIG. Retrieved from https://www.businessinsider.com/goldman-sachs-made-billions-shorting-aig-2009-3
Study Document
Income Inequality And Poverty
...Inflation Poverty and Income Inequality
Introduction
Poverty and income inequality draw a great deal of attention from activists, scientists, and politicians who are attempting to propose a permanent solution to these two socio-economic issues. State intervention is often anticipated in this area. There is, however, no agreement regarding the most effective instruments and techniques, as well as regarding the extent of public outlay for the sole purpose of reducing inequality and poverty. Various researches have, as an outcome, been carried out to develop the efficiency of different intervention that is intended to solve the issue of income inequality and poverty that exists in most economies, both in the developing and developed countries. Given the different challenges that are posed by income inequality and poverty within the society, together with the numerous opinions on the various proposed solutions, there is no doubt that there is a need for additional research. This paper……
References
References
Bonito, J. D. M., Daantos, F. J. A., Mateo, J. C. A., & Rosete, M. A. L. (2017). Do entrepreneurship and economic growth affect poverty, income inequality, and economic development. Review of Integrative Business & Economics Research, 6(1), 33-43.
Chiazor, I. A., Egharevba, M. E., & Ozoya, M. I. (2016). Widening Inequality and Poverty in the Developing World-Micro-Financing as a Viable Solution. The Social Sciences, 11(13), 3286-3293.
Chotia, V., and Rao, N.V.M. (2017). Investigating the interlinkages between infrastructure development, poverty, and rural-urban income inequality: Evidence from BRICS nations. Studies in Economics and Finance, Vol. 34 No. 4, pp. 466-484.
Cyrek, M. (2019). Government social spending in the EU countries: efficiency in poverty and income inequality reduction. Equilibrium. Quarterly Journal of Economics and Economic Policy, 14(3), 405-424.
Omar, M. A., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structures, 9, 1-25.
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