Essays on Government Debt

Educational Institute

Research Objective The objective is to determine and examine the role of the stock market in economic development. This research would analyze data gathered and demonstrate the significance of stock markets in the development of economies. Insights would be gathered on what factors can support the notion that the stock market is an indicator of economic health and a guidepost for a better understanding of economies.

Literature Review

Kelly, 2010 The article is a direct expository address to the relation between the stock market and the economy. It focuses on the conceptual aspects rather than on the data and analysis and ...

1) GNP is equal to the sum of the values of all consumer and investment goods, government purchases, net exports to other countries. The GNP is used for many purposes, but the most important is that it determines the performance of the entire economy. A sharp decrease in the cost of goods and services produced by the economy, that is, a sharp decrease in GDP entails poverty, bankruptcy, failure of banks, the chaos and political turmoil. Gross national product (or GNP) is the most extensive measure of total national output of goods and services. This is the sum of ...

The journey towards the European Union (EU) integration has experienced several turnings. This section of the essay will detail some of the core turning points in the EU integration. Establishment of a Common Agricultural Policy (CAP) was a major turning point in EU integration. The Treaty of Rome defined the specific objectives of the CAP. The CAP was introduced in 1962 (Folmern.p). The establishment of the CAP was enshrined to the state of food shortages after World War II. The aim of the CAP was to build a common European Community market and to cut off tariffs on agricultural ...

INDICATORS:

Income level: High Income Population: 35.54 million (“Data” 2014) GDP at market prices (Current US$): $1.785 trillion (“Data” 2014).

GDP per capita (current US$):

$50,230.8 (“Data” 2014). GDP growth (annual %): 2.44 (“Data” 2014). FDI Inflows: $59.6 billion in 2014 (“Trade Policy Review” 5). FDI Outflows: $58.2 billion in 2014 (“Trade Policy Review” 5).

Balance of Payment:

Current account balance (BoP, current US $): (-) $ 37.47 billion (“Data” 2014). Current account balance (% of GDP): (-)2.1% (“Data” 2014). Import of goods and services (BoP, current US$) : $580.7 billion (“Data” 2014). Exports of goods and services (BoP, current US$) : $564.6 billion (“Data” 2014). ...

Abstract

The current paper explores the main differences of the Great Recession in 2007-2009 from other economic collapses in the history if the United States. Section I discusses the general features of a recession and describes the main responsibilities of the National Bureau of Economic Research. Section II is devoted to the comparison of the Great Recession with the recession of 1980s. The section is divided into four subsections. Subsection A presents the basic comparison of recessions in the U.S. history and explains the choice of the 1980s period for the further comparison. Subsection B explores differences in unemployment in ...

(A case for a parent firm in a net oil exporting country with subsidiaries in a net importing country that has free market economy, politically stable, positive currency speculation and possibility of government defaulting on its debt)

Oil Prices and Exchange Rate

Oil price dynamics have a bearing on the ability of multinational to precisely model the future exchange rates. In most instances, in order to manage the foreign exchange rate risk that the firm is exposed in the international business arena, most multinational will hedge against the risks that are associated with exchange rate fluctuations. As a result, these multinationals minimize the possible ...

A debt policy statement, which is also known as the long-term obligation policy, can be defined as a part of a comprehensive financing policy that shows evidence of an institution's commitment to infrastructure needs via a planned schedule of expected future financing. The key objective of this statement is to assess the conduciveness of the debt management strategy to mitigate budgetary perils and facilitate long-term debt sustainability. The key objective of a debt policy statement is to develop a framework that will guide decisions pertaining management and use of debt. In order to meet this goal, the statement should, therefore, contain several key ...

The foreign currency is usually held country's central banks and other financial institutions. This currency is used to pay the international debt and trade obligation or to influence the domestic exchange rate. In the international trade of the commodities such as the gold and oil are priced and measured in using the reserved currency. This contributes to the holding of the currency by other countries for the exchange of the products. The holding of such currency reserves helps in the exchange rates risks reduction. The purchase of the product and good is done in the manner that has ...

Business report

Financial repression can be seen in many countries. The concept of financial repression was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon. The term financial repression means a government policy which aims at lowering interest rates and restricting capital movements. The goal of such government policy, which concerns monetary policy, is to reduce the government debt. Such government measurements can be defined as “stealth tax” (Polin 3). The long-term goal of such measurements is to reduce unemployment in the country and to spur the economic growth. It can be said, that such measurements can be ...

According to Fabozzi & Koln (2006), the Capital Asset Pricing Model (CAPM) is the works of Sharpe (1964) and Litner (1965) that marks the beginning of assets pricing theory. Dempsey (2013) asserts that CAPM still dominates the practical world in measuring systematic risk. CAPM offers a rate of return to compensate investors for taking risks. This model helps to calculate investment risk and the return on investment. CAPM reaches new heights as a model of measuring returns on securities. CAPM estimates the cost of capital for projects as well as evaluate the performance of portfolios in the financial market. Jagannathan & Meier, (2002) ...

Key Aspects of Social Inequality in the EU

Social inequality is a major threat to European Union’s progress and expansion despite its well-developed economy. Most members of European Union countries are undergoing high level of social inequality including social challenges and intensive poverty level (Kramer, 2012). The high poverty level in some members of European Union has not only destabilized the solidarity of the union, but has also increased the level of social inequality in the region. Gender inequality is one of the major aspects that describe social inequality in EU (Hadjimichalis, 2011). The EU has been experiencing gender discrimination especially on the position and status ...

For many years, financial crises have been believed to be the preserve of the developing countries which are believed to be more vulnerable than the developed country as explained in the video “The Financial Crisis & Public Debts Explained in Detail”. However, this notion was overturned in the year 2007 – 2008 financial crises that hit the ‘great’ countries in the world. From this experience, it is evident that all countries are at risk of experiencing financial crisis regardless of the policies in place. Nevertheless, the approach towards the arrest of the crisis is what defers. In developing countries, the effect ...

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3rd , November, 2013 Entitlement Spending Squeezing out Public Investments Federal Investment is that portion of Federal Budget which promotes national growth by accumulating and enhancing total stock of capital. These kinds of expenditures are intended to yield long term benefits to the economy as a whole. However, over the years, federal policies are more inclined towards providing payments to households in the form of entitlement rather than providing goods and services through Investment Expenditure. In a poll conducted by Fox News Poll, 73% of the american citizens are not satisfied with their country’s financial position. ...

The economy of Canada is among the largest economies in the world in relation market exchange rates measured in US dollars. Canada is therefore one of the wealthiest nations in the world. This country is ranked eleventh largest economies in the world and it is one of the members of the Organization for Economic Co-operation and Development (OECD).This country is also a member of Group of Eight called G8.The service industry dominates the Canadian economy like the rest of the developed nations. The service industry in Canada therefore employs around 75% of the Canadians. The Canadian economy has also ...

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7th, November, 2013 Entitlement Spending Squeezing out Public Investments Federal Investment is that portion of Federal Budget which promotes national growth by accumulating and enhancing total stock of capital. These kinds of expenditures are intended to yield long term benefits to the economy as a whole. However, over the years, federal policies are more inclined towards providing payments to households in the form of entitlement rather than providing goods and services through Investment Expenditure. In a poll conducted by Fox News Poll, 73% of the american citizens are not satisfied with their country’s financial position. ...

There are several explanations of financial crises in terms of adherents of various economic theories. Keynesian explanation is the lack of money. That time the money was tied to gold reserves that limited the money supply. Production grew and this eventually led to deflation and falling prices, which led to insolvency of many companies, decline the value of their shares and as a result - the collapse of the stock market. Proponents of the monetarist theory associated the stock market crash with such actions of the U.S. government like increasing the money supply, which led to depreciation of assets and ...

Article Review: Japan’s Growth Strategy is All Wrong

Abstract The article Japan’s growth strategy is all wrong is about the policies implemented by the Japan government led by Prime Minister Shinzo Abe that is viewed to jeopardise the country’s low interest rate environment that is conducive for spending and investment. The purpose of the student in writing this paper is to present the economic problem faced by Japan as an implication of the policies executed by the government, applying the concepts and principles that I have learned in my Economics. The article entitled Japan’s growth strategy is all wrong is about the ...

Drowning in Debt: How Does the U.S. Solve its Debt Crisis?

Scott Walterhoefer Abstract Can the United States solve its debt crisis? That is the daunting question that currently confronts our nation and the manner in which the “powers that be” attempt to deal with this problem will dictate the political and economic landscape for the foreseeable future. The sheer size of this debt (roughly $16 trillion) is so massive and seemingly out of control that it is nearly impossible to fathom. This paper will examine this debt and the factors that caused its exponential rise over ...

Introduction

The budget deficit and the amount of public debt is an important indicator of an economy. This area of concern has traditionally received much attention. The budget process involves the balancing of public revenues and expenditures. Budget imbalance means quantitative disparity between income and expenditure budget. The excess of expenditure over budget revenues is called the “budget deficit.” The unbalanced budget could lead to the emergence of a surplus, ie excess of income over the expenditure. However, in practice, almost all countries now, there is significant scope for excess government expenditure over income. The result is a rapid increase in budget ...

Abstract

Germany has been a model economy for the Euro zone with its fiscal frugality which has maintained the country on an impressive growth while the other European countries were struggling with debt crisis. However, despite a favorable GDP growth and low unemployment, the country is facing challenges with high inflation. The current situation is a result of combination of both poor decision making and market sentiments in the region. In addition, the country’s greatest debt is in the hands of the financials and non financial corporations with each having 87% of the debt while government holds 83%. In relation to the ...

ABSTRACT 3

INTRODUCTION Background 4 Information Sources 4 Limitations 4 ANALYSIS Quantitative Easing 5 Third Round of Quantitative Easing 7 Fiscal Cliff 8 European Debt Crisis 9 CONCLUSION 12

REFERENCES 13

Abstract In is an analysis of the government’s role in the economy is presented. The articles from Economist.com namely, The Federal Reserve launches QE3 and The ECBs Bond-Buying Plan were analyzed in light of the theories and principles in Economics. The themes of the two articles focused on the two Central Banks’ (the Federal Reserve and the European Central Bank) ...

Third Round of Quantitative Easing (QE3)

QE3 or the third round of quantitative easing is a central bank (i.e., Federal Reserve) open-ended bond-buying policy directed towards lowering the interest rates and mortgage rates to stimulate demand in the economy. The QE3 in the US that started on September of this year involves buying of mortgage-backed securities (MBS) worth $40 billion every month. This is done by injecting a pre-determined quantity of newly created money in the economy through the purchase of debts (bonds) from banks. The graph shows what’s happening in the bonds market with the QE3 policy of the Central Bank. As the government ...

Introduction

The Great Depression Before the Great Depression occurred, US faced an economic boom in 1920s and then there was a depression period (Iranj, 2012). In Great Depression, many companies went bankrupt. Unemployment rate was 25% in Great Depression as well and today there are a lot of states in America that are facing the problem of unemployment (David, 2011). One of the main factors the current economic crises and the Great Depression is the risky investments. Same was the case in 2008. Europe and UK also faced the similar problems. People are still in a sense of déjà-vu as ...

Fiscal cliff is expected to take place next year after some laws that have existed for some time have expired. It is expected that the deficit financing by federal government will reduce by half. This is important in reducing the total the government debt. This will mean that the government is expected to reduce expenditure. The tax cuts that have existed are expected to expire hence people and institutions are expected to pay more taxes. These events will have negative effects on the economy to an extent. Economists have predicted that if these events happen, there are chances that ...

Introduction: History of the National Debt

A debt crisis is a national problem of countries with regards to their ability to repay borrowed funds. It deals with national economies, national finances or budget and international loans. The meaning of a "debt crisis" has changed over time. The main definition comes from the main financial institutions such as Standard and Poor's or the International Monetary Fund (IMF). Basically, a debt crisis is defined as an occurrence where a national government cannot pay its debts and it the process, asks some assistance (Zuckerman, 2011).

The US national debt represents an "existential threat" to its federal finances. It evidences the country’s ...

There have been concerns from economic experts and scholars on the increasing rate of federal budget deficits and government debt. An analysis of the history of the Federal budget shows that the budget has been in deficit more times than it has been operating at a surplus. The country has been in the red for quite a while over the years.

Deficits and Surpluses in the US Federal Budget

The US treasury was established in 1789. From 1789 to the year 2011, the country has operated on a total of 222 budgets throughout the years. History shows in total that the budget has experienced 115 deficits and 107 surpluses. Analysing ...