- 行业: Economy; Printing & publishing
- Number of terms: 15233
- Number of blossaries: 1
- Company Profile:
That part of the jobless total caused by people simply changing jobs and taking their time about it, because they are spending time on job search or are taking a break before starting with a new employer. There is likely to be some frictional unemployment even when there is technically full employment, because most people change jobs from time to time.
Industry:Economy
Going public. When shares in a company are sold to the public for the first time through an initial public offering. The number of shares sold by the original private investors is called the "float". Also, when a bond issue is sold in the financial markets.
Industry:Economy
The foundation stone of monetarism. The theory says that the quantity of money available in an economy determines the value of money. Increases in the money supply are the main cause of inflation. This is why Milton Friedman claimed that “inflation is always and everywhere a monetary phenomenon”. The theory is built on the Fisher equation, MV = PT, named after Irving Fisher (1867–1947). M is the stock of money, V is the velocity of circulation, P is the average price level and T is the number of transactions in the economy. The equation says, simply and obviously, that the quantity of money spent equals the quantity of money used. The quantity theory, in its purest form, assumes that V and T are both constant, at least in the short-run. Thus any change in M leads directly to a change in P. In other words, increase the money supply and you simply cause inflation. In the 1930s, Keynes challenged this theory, which was orthodoxy until then. Increases in the money supply seemed to lead to a fall in the velocity of circulation and to increases in real income, contradicting the classical dichotomy (see monetary neutrality). Later, monetarists such as Friedman conceded that V could change in response to variations in M, but did so only in stable, predictable ways that did not challenge the thrust of the theory. Even so, monetarist policies did not perform well when they were applied in many countries during the 1980s, as even Friedman has since conceded.
Industry:Economy
When a government announces that the exchange rate of its currency is fixed against another currency or currencies. (See also currency board. )
Industry:Economy
A means by which some countries try to defend their currency from speculative attack. A country that introduces a currency board commits itself to converting its domestic currency on demand at a fixed exchange rate. To make this commitment credible, the currency board holds reserves of foreign currency (or gold or some other liquid asset) equal at the fixed rate of exchange to at least 100% of the value of the domestic currency that is issued. Unlike a conventional central bank, which can print money at will, a currency board can issue domestic notes and coins only when there are enough foreign exchange reserves to back it. Under a strict currency board regime, interest rates adjust automatically. If investors want to switch out of domestic currency into, say, US dollars, then the supply of domestic currency will automatically shrink. This will cause domestic interest rates to rise, until eventually it becomes attractive for investors to hold local currency again. Like any fixed exchange rate system, a currency board offers the prospect of a stable exchange rate and its strict discipline also brings benefits that ordinary exchange rate pegs lack. Profligate governments, for instance, cannot use the central bank’s printing presses to fund large deficits. Hence currency boards are more credible than fixed exchange rates. The downside is that, like other fixed exchange rate systems, currency boards prevent governments from setting their own interest rates. If local inflation remains higher than that of the country to which the currency is pegged, the currencies of countries with currency boards can become overvalued and uncompetitive. Governments cannot use the exchange rate to help the economy adjust to an outside shock, such as a fall in export prices or sharp shifts in capital flows. Instead, domestic wages and prices must adjust, which may not happen for many years, if ever. A currency board can also put pressure on banks and other financial institutions if interest rates rise sharply as investors dump local currency. For emerging markets with fragile banking systems, this can be a dangerous drawback. Furthermore, a classic currency board, unlike a central bank, cannot act as a lender of last resort. A conventional central bank can stem a potential banking panic by lending money freely to banks that are feeling the pinch. A classic currency board cannot, although in practice some currency boards have more freedom than the classic description implies. The danger is that if they use this freedom, governments may cause currency speculators and others to doubt the government’s commitment to living within the strict disciplines imposed by the currency board. Argentina's decision to devalue the peso amid economic and political crisis in January 2002, a decade after it adopted a currency board, showed that adopting a currency board is neither a panacea nor a guarantee that an exchange rate backed by one will remain fixed come what may.
Industry:Economy
When the state does something it may discourage, or crowd out, private-sector attempts to do the same thing. At times, excessive government borrowing has been blamed for low private-sector borrowing and, consequently, low investment and (because the economic returns on public borrowing are typically lower than those on private debt, especially corporate debt) slower economic growth. This has become less of a concern in recent years as government indebtedness has declined and, because of globalization, firms have become more able to raise capital outside their home country. Crowding out may also come from state spending on things that might be provided more efficiently by the private sector, such as health care, or even through charity, redistribution.
Industry:Economy
Making loans. Often the amount of credit creation is subject to regulation. Lenders may have limits on the amount of loans they can make relative to the assets they have, so that they run little risk of bankruptcy (see Basel 1 and 2 and capital adequacy ratio). A central bank tries to keep the amount of credit creation below the level at which it would increase the money supply so much that inflation accelerates. This was never easy to get right even when most lending was by banks, but it has become much harder with the recent growth of non-bank lending, such as by credit-card com¬panies and retailers.
Industry:Economy
The amount a firm must pay the owners of capital for the privilege of using it. This includes interest payments on corporate debt, as well as the dividends generated for shareholders. In deciding whether to proceed with a project, firms should calculate whether the project is likely to generate sufficient revenue to cover all the costs incurred, including the cost of capital. Calculating the cost of equity capital can be tricky (see capital asset pricing model and beta).
Industry:Economy
The domino effect, such as when economic problems in one country spread to another. (See Asian crisis. )
Industry:Economy
