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McCallum Rule
In monetary policy, the McCallum rule specifies a target for the monetary base (M0) which could be used by a central bank. The McCallum rule was proposed by Bennett T. McCallum at Carnegie Mellon University's Tepper School of Business. It is an alternative to the well known Taylor rule and performs better during crisis periods. Rule The rule gives a target for the monetary base in the next quarter (about 13 weeks). The target is: : m_ = m_t - \overline _ + 1.5 \left( + _D + \overline \right) - 0.5 _ \,, where :m_t\, is the natural logarithm of M0 at time ''t'' (in quarters); :\overline _\, is the average quarterly increase of the velocity of M0 over a four-year period from ''t''-16 to ''t''; :_D\, is desired rate of inflation, i.e. the desired quarterly increase in the natural logarithm of the price level; :\overline \, is the long-run average quarterly increase of the natural logarithm of the real GDP; and :_\, is the quarterly increase of the natural logarithm of the nominal ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monetary Policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often as an attempt to reduce inflation or the interest rate, to ensure price stability and general trust of the value and stability of the nation's currency. Monetary policy is a modification of the supply of money, i.e. "printing" more money, or decreasing the money supply by changing interest rates or removing excess reserves. This is in contrast to fiscal policy, which relies on taxation, government spending, and government borrowing as methods for a government to manage business cycle phenomena such as recessions. Further purposes of a monetary policy are usually to contribute to the stability of gross domestic product, to achieve and maintain low unemployment, and to maintain predictable exchange rates with other currencies. Monetary ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Equation Of Exchange
In monetary economics, the equation of exchange is the relation: :M\cdot V = P\cdot Q where, for a given period, :M\, is the total money supply in circulation on average in an economy. :V\, is the velocity of money, that is the average frequency with which a unit of money is spent. :P\, is the price level. :Q\, is an index of real expenditures (on newly produced goods and services). Thus ''PQ'' is the level of nominal expenditures. This equation is a rearrangement of the definition of velocity: ''V'' = ''PQ'' / ''M''. As such, without the introduction of any assumptions, it is a tautology. The quantity theory of money adds assumptions about the money supply, the price level, and the effect of interest rates on velocity to create a theory about the causes of inflation and the effects of monetary policy. In earlier analysis before the wide availability of the national income and product accounts, the equation of exchange was more frequently expressed in transactions form: :M\ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fisher Effect
In economics, the Fisher effect is the tendency for nominal interest rates to change to follow the inflation rate. It is named after the economist Irving Fisher, who first observed and explained this relationship. Fisher proposed that the real interest rate is independent of monetary measures (known as the Fisher hypothesis), therefore, the nominal interest rate will adjust to accommodate any changes in expected inflation. Derivation The ''nominal'' interest rate is the accounting interest rate – the percentage by which the amount of dollars (or other currency) owed by a borrower to a lender grows over time. While the ''real'' interest rate is the percentage by which the real purchasing power of the loan grows over time. In other words, the real interest rate is the nominal interest rate adjusted for the effect of inflation on the purchasing power of the outstanding loan. The relation between nominal and real interest rates, and inflation, is approximately given by the Fish ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monetary Policy Reaction Function
The monetary policy reaction function is a function that gives the value of a monetary policy tool that a central bank chooses, or is recommended to choose, in response to some indicator of economic conditions. Examples One such reaction function is the Taylor rule. It specifies the nominal interest rate set by the central bank in reaction to the inflation rate, the assumed long-term real interest rate, the deviation of the inflation rate from its desired value, and the log of the ratio of real GDP (output) to potential output. Alternatively, Ben Bernanke and Robert H. Frank Robert Harris Frank (born January 2, 1945) is the Henrietta Johnson Louis Professor of Management and a professor of economics at the Samuel Curtis Johnson Graduate School of Management at Cornell University. He contributes to the "Economic View" ...Bernanke, Ben, and Frank, Robert. ''Principles of Economics'', 3rd edition. present the function, in its simplest form, as an upward-sloping relationship betw ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monetary Policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often as an attempt to reduce inflation or the interest rate, to ensure price stability and general trust of the value and stability of the nation's currency. Monetary policy is a modification of the supply of money, i.e. "printing" more money, or decreasing the money supply by changing interest rates or removing excess reserves. This is in contrast to fiscal policy, which relies on taxation, government spending, and government borrowing as methods for a government to manage business cycle phenomena such as recessions. Further purposes of a monetary policy are usually to contribute to the stability of gross domestic product, to achieve and maintain low unemployment, and to maintain predictable exchange rates with other currencies. Monetary ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Federal Reserve Bank Of St Louis
The Federal Reserve Bank of St. Louis is one of 12 regional Reserve Banks that, along with the Board of Governors in Washington, D.C., make up the United States' central bank. Missouri is the only state to have two main Federal Reserve Banks ( Kansas City also has a bank). Located in downtown St. Louis, the St. Louis Fed is the headquarters of the Eighth Federal Reserve District, which includes the state of Arkansas and portions of Illinois, Indiana, Kentucky, Mississippi, the eastern half of Missouri and West Tennessee. It has branches in Little Rock, Louisville and Memphis. Its building, at 411 Locust Street, was designed by St. Louis firm Mauran, Russell & Crowell in 1924. The Eighth District serves as a center for local, national and global economic research, and provides the following services: supervisory and regulatory services to state-member banks and bank holding companies; cash and coin-handling for the District and beyond; economic education; and community developm ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Business Cycle
Business cycles are intervals of Economic expansion, expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examining trends in a broad economic indicator such as Real Gross Domestic Production. Business cycle fluctuations are usually characterized by general upswings and downturns in a span of macroeconomic variables. The individual episodes of expansion/recession occur with changing duration and intensity over time. Typically their periodicity has a wide range from around 2 to 10 years (the technical phrase "stochastic cycle" is often used in statistics to describe this kind of process.) As in [Harvey, Trimbur, and van Dijk, 2007, ''Journal of Econometrics''], such flexible knowledge about the frequency of business cycles can actually be included in their mathematical study, using a Bayesian statistical paradigm. There are numer ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Difference Operator
In mathematics, a recurrence relation is an equation according to which the nth term of a sequence of numbers is equal to some combination of the previous terms. Often, only k previous terms of the sequence appear in the equation, for a parameter k that is independent of n; this number k is called the ''order'' of the relation. If the values of the first k numbers in the sequence have been given, the rest of the sequence can be calculated by repeatedly applying the equation. In ''linear recurrences'', the th term is equated to a linear function of the k previous terms. A famous example is the recurrence for the Fibonacci numbers, F_n=F_+F_ where the order k is two and the linear function merely adds the two previous terms. This example is a linear recurrence with constant coefficients, because the coefficients of the linear function (1 and 1) are constants that do not depend on n. For these recurrences, one can express the general term of the sequence as a closed-form expression of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Integer
An integer is the number zero (), a positive natural number (, , , etc.) or a negative integer with a minus sign (−1, −2, −3, etc.). The negative numbers are the additive inverses of the corresponding positive numbers. In the language of mathematics, the set of integers is often denoted by the boldface or blackboard bold \mathbb. The set of natural numbers \mathbb is a subset of \mathbb, which in turn is a subset of the set of all rational numbers \mathbb, itself a subset of the real numbers \mathbb. Like the natural numbers, \mathbb is countably infinite. An integer may be regarded as a real number that can be written without a fractional component. For example, 21, 4, 0, and −2048 are integers, while 9.75, , and are not. The integers form the smallest group and the smallest ring containing the natural numbers. In algebraic number theory, the integers are sometimes qualified as rational integers to distinguish them from the more general algebraic integers ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
GDP Deflator
In economics, the GDP deflator (implicit price deflator) is a measure of the money price of all new, domestically produced, final goods and services in an economy in a year relative to the real value of them. It can be used as a measure of the value of money. GDP stands for gross domestic product, the total monetary value of all final goods and services produced within the territory of a country over a particular period of time (quarterly or annually). Like the consumer price index (CPI), the GDP deflator is a measure of price inflation/deflation with respect to a specific base year; the GDP deflator of the base year itself is equal to 100. Unlike the CPI, the GDP deflator is not based on a fixed basket of goods and services; the "basket" for the GDP deflator is allowed to change from year to year with people's consumption and investment patterns. Calculation Measurement in national accounts In most systems of national accounts the GDP deflator measures the ratio of nominal (o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monetary Base
In economics, the monetary base (also base money, money base, high-powered money, reserve money, outside money, central bank money or, in the UK, narrow money) in a country is the total amount of money created by the central bank. This includes: * the total currency circulating in the public, * plus the currency that is physically held in the vaults of commercial banks, * plus the commercial banks' reserves held in the central bank. The monetary base should not be confused with the money supply, which consists of the total currency circulating in the public plus certain types of non-bank deposits with commercial banks. Management Open market operations are monetary policy tools which directly expand or contract the monetary base. The monetary base is manipulated during the conduct of monetary policy by a finance ministry or the central bank. These institutions change the monetary base through open market operations: the buying and selling of government bonds. For exam ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Gross Domestic Product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often revised before being considered a reliable indicator. List of countries by GDP (nominal) per capita, GDP (nominal) per capita does not, however, reflect differences in the cost of living and the inflation, inflation rates of the countries; therefore, using a basis of List of countries by GDP (PPP) per capita, GDP per capita at purchasing power parity (PPP) may be more useful when comparing standard of living, living standards between nations, while nominal GDP is more useful comparing national economies on the international market. Total GDP can also be broken down into the contribution of each industry or sector of the economy. The ratio of GDP to the total population of the region is the GDP per capita, p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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