This article presents a brief overview of China’s growing prominence in the global economy and explores the global financial crisis’ spillover implications on China’s financial markets and macroeconomy. Alternative methods of estimating these effects are presented and critiqued. China, contrary to common belief, was hit particularly hard by the global recession brought on by the […]
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Government-issued inflation-linked bonds (ILBs) are fixed-income securities whose principal value is changed monthly according to the rate of inflation; ILBs lose value when real interest rates rise. What are the benefits of an inflation-linked bond? Over the life of the bond, an inflation-indexed bond protects both investors and issuers against the risk of inflation. 1
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Inflation expectations are essentially the pace at which individuals expect prices to rise in the futureconsumers, corporations, and investors. They’re important since actual inflation is influenced by our expectations. Businesses will seek to raise prices by (at least) 3% if everyone expects prices to grow by 3% during the following year, and workers and their
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Tokyo is Japan’s most populous metropolis and the country’s political and economic hub. With a GDP of $1,790 billion, it is the richest country in the planet. Tokyo began as a fishing village in the 1600s, but by the mid-18th century, it had grown to become the world’s most populous city. Tokyo has the highest
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In general, an economy’s expansion and growth cannot persist indefinitely. A complex, interwoven set of circumstances usually triggers a large drop in economic activity, including: Shocks to the economy. A natural disaster or a terrorist attack are examples of unanticipated events that create broad economic disruption. The recent COVID-19 epidemic is the most recent example.
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Hyperinflation is a phrase used to describe an economy’s rapid, excessive, and out-of-control price increases. While inflation is a measure of the rate at which prices for goods and services rise, hyperinflation is when prices rise at a rate of more than 50% each month. What factors contribute to rapid inflation? Inflation is the rate
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The theory of money The theory of inflation asserts that inflation is caused by an increase in the money supply. Inflation rises faster as the money supply grows faster. In specifically, a 1% increase in the money supply leads to a 1% increase in inflation. The price level is proportional to the money supply when
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AFTER NEARLY TEN YEARS OF RECOVERY FROM THE FINANCIAL CRISIS, AMERICAN MONETARY POLICYMAKERS STILL FIND INFLATION TO BE EXTREMELY QUIET. When price pressures appear to be building, they quickly vanish. The most recent high point occurred in July of 2018. Inflation was 2.4 percent, as measured by the personal consumption expenditure (PCE) index, which the
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Sales taxes and other excise taxes are examples of indirect business taxes that businesses collect but are not counted as part of their profits. As a result, indirect business taxes are included in the income approach to computing GDP rather than the spending approach. Are taxes included in the GDP? Revenues received from income and
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The bond market has had an incredible run as of 2Q2020, with TLT now exceeding the S&P 500 year-to-date. Don’t dismiss bonds the next time you see them. It’s wonderful to have better rewards with less risk. Go Long Gold Gold is a hard asset that performs well during economic downturns. Gold is a commodity
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