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3
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1answer
229 views

Screw foreign investment, lets just print money

We often hear of countries securing foreign investment. Stores like this are trumped as major achievements. Foreign investment also has criticisms - profits generated in a country end up going abroad, ...
6
votes
1answer
30 views

Impact of election outcomes on individual's mood? Behavioral Finance

I am currently working on my thesis in behavioral finance. My topic is about short term stock returns after the elections. One paper ("Sport Sentiments and Stock Returns") proves that the losing ...
1
vote
1answer
60 views

Aggregation theorems hold if endowments are endogenous?

I have a specific question about considering a representative agent. According to Rubinstein 1974, in an inter-temporal economy with $N$ individuals each one with initial endowment $e_i$ and ...
1
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0answers
10 views

Calculating Annualized Average Return

I am currently working on a problem set in a book that asks me to compute the annualized average return for a portfolio, benchmark, and then the relative return from the annual returns reported. I ...
5
votes
1answer
70 views

What sort of impact would one expect on investment as a result of an approaching election?

I am looking to observe and possibly quantify private investment during election periods. I am interested in any studies, particularly empirical, which discuss the impacts elections can have on the ...
5
votes
1answer
129 views

Does dollar cost averaging actually have any advantage over one time investment?

Some banks promote savings plans by stating that investing a fixed amount of money in regular time intervals minimizes the average buying price or the downside risk (dollar cost averaging). Since the ...
0
votes
0answers
15 views

What is the proper definition of RCRR?

I want to know the definition of realized compound return rate, however i am not able to find sufficient informations about that topic. How to define RCRR, how to calculate it given that we know cash ...
0
votes
0answers
11 views

How to calculate if a government can allocate funds they claim they will

When governments claim they will invest X% of GDP or Y billions into education, defence, infrastructure, etc, is there anyway of verifying the feasibility of these claims? For example any Education ...
2
votes
2answers
316 views

Is the loan principal ever delivered in pieces over time?

Not sure if this is the right place for this question but it's more of a theoretical finance question than a personal finance question. So a loan has a principal amount that is given to the borrower ...
0
votes
1answer
28 views

How can foreign protectionism affect local FDI

I am citing an article here: In a speech at the G-20 in Istanbul, TİM’s Mehmet Büyükekşi said, “Protectionism is increasing in every market around the world and it is affecting not only Turkish ...
0
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0answers
16 views

Firms accumulating knowledge in offshore centre to shift production of components there in case of disruption at home location?

Have firms switched production from their home location to an offshore location due to some disruption at the home location, using the accumulated knowledge (learning by doing something else) at their ...
3
votes
3answers
46 views

Diagram with axes $r$ and $S,I$

In the figure below, I have a coordinate system where $r$ depends on $I$ or $S$, but I do not completely understand why I can have multiple functions inside this coordinate system. Why can I write $S(...
0
votes
1answer
149 views

Inverse/negative relationship between investments and interest rate

The investments (I) have a negative relationship with interest rate (r) $$ I = e-f \cdot r. $$ So $e$ can be interpreted as a minimum level of investments while $f$ can be interpreted as how much the ...
4
votes
1answer
45 views

Instrument suggestions for FDI

I am extremely stuck on trying to think of an instrument for the location of FDI within a country. The instrument must be correlated with foreign firms, but not correlated with domestically-owned ...
0
votes
0answers
67 views

Planned investment and the interest rate

Was studying for my macroeconomics test and came upon this multiple choice question: If planned investment is perfectly responsive to changes in the interest rate, the planned investment schedule: A)...
2
votes
3answers
82 views

Are savings necessary for economic growth?

So, I've had this confusion for a long time. We all know how spending is absolutely vital for economic growth. However, at the same time, are savings necessary too? My initial opinion was "no". In a ...
1
vote
1answer
31 views

Historical returns for popular American funds over 20-30 years?

I have seen charts like this one showing the return for the past 100+ years cited as evidence why one should invest in stocks for their retirement. I don't disagree with that, but realistically, ...
1
vote
0answers
80 views

Game Theory Investment Problem

An investor tries to sell an idea to identical lenders. There are two types of ideas: good (G) or bad (B). It costs a lender $I$ to fund to the idea. If the idea is funded, the returns to the lender ...
2
votes
1answer
37 views

Savings = investment with private money creation?

I've been reading some introductory macroeconomics and I'm struggling to understand one of the basic accounting identities. In a closed economy with a fixed money supply it's clear that every dollar ...
3
votes
3answers
182 views

Correlation and Causality: Data comparison of educational spending and GDP growth

I am interested as to whether or not Educational spending does or does not affect GDP and GDP growth (and as an aside GDP per Capita). As an overview, I've ranked the countries in each aspect (with 1 ...
1
vote
0answers
31 views

Selling my software suite to another company (acquisition) [closed]

I am trying to calculate a price to sell my software suite to another company. Let say my revenue is \$500,000 a year with only about \$50,000 costs each year. The rate of growth of revenue has been ...
0
votes
2answers
145 views

How interest rates affect investment [duplicate]

We know that a rise in real interest rates will cool down the economy in terms of investments. An increase in interest rate will provide higher incentive for saving rather than consumption. So people ...
1
vote
0answers
37 views

Testing Tobin's q theory predictions

I'm reading this great intermediate level macroeconomic book by Carlin and Soskice, and on page 31, when discussing the empirical studies testing the Tobin's q theory to explain the behaviour of ...
2
votes
1answer
73 views

What does “the world's strongest currency” title mean for investors? [closed]

Kuwaiti Dinar shows up as the most expensive in the world. Does that mean I better invest in KWD (or the safe USD) instead of my home currency (IDR)? A little background: I am just an ordinary person ...
1
vote
0answers
34 views

Why does Burton Malkiel recommend investing in commodity companies instead of commodities?

Source: p 185 , ETFs for Canadians for Dummies (2013; by Russell Wild and Bryan Borzykowski). In a recent interview with the Journal of Indexes, famed investment guru Burton G. Malkiel, ...
2
votes
1answer
32 views

If a currency crashes, does that effect the value of rare or collector coins?

I own lots of collectable coins from the 70's (mostly mint dollars and quarters.) Some of my friends are telling me that the US economy is going to crash and the the dollar is going to lose its value....
1
vote
2answers
33 views

What is this economic theory? Cost of investment vs production accounting for time?

I know there has got to be a standard set of theories or formulas to chart this but I don't know how to search for it. Other than a great place like this. :) I'm a software developer and not an ...
2
votes
1answer
305 views

Relationship between Real Interest Rate and Employment

The country of Kingsland is considering the introduction of a compulsory retirement saving scheme. Under this scheme all workers are required to save ten per cent of their annual wages and ...
3
votes
4answers
3k views

What is the difference between present value and face value?

What is the difference between present value and face value? When I search this question on Google is says they're the same in some cases and different in others. It says they are the same when the ...
1
vote
1answer
56 views

Why a new startup should ask a big investment company to value them as low as possible? [duplicate]

In "Silicon Valley TV Series" (in first episode of the second season) a bunch of guys, designed a new algorithm, and asked big companies to invest in that project and value their product. At a ...
4
votes
1answer
321 views

Best resources to self-educate myself in economics

I want to learn Economics by myself and I'm looking to build a path with people who're in this field to how and in what order should I learn Economics, I did some research and I've found many ...
2
votes
1answer
115 views

What is the relationship between the demand for loanable funds and investment?

If the demand for loanable funds decreases, investment increases because the real interest rate decreases. Isn't that a contradiction, because loanable funds are used for investment, and a decrease in ...
-1
votes
1answer
53 views

Savings and investment relation to interest rate, loanable funds theory, paradox of thrift [closed]

HOw can it all be linked? I think I know but I am only a fresher so.
6
votes
3answers
142 views

Which capital accumulation is right? $K_t = (1-\delta)K_{t-1} +I_t$ or $K_t = (1-\delta)K_{t-1}+I_{t-1}$?

In a lot of models with capital, I find different variants of capital accumulation formula as follows: $K_t = (1-\delta)K_{t-1} +I_t$ or $K_t = (1-\delta)K_{t-1}+I_{t-1}$ Which one is more ...
3
votes
2answers
96 views

Does aggregate demand increase investments?

I just read that increase in aggregate demand increases investment for a given interest rate. How is it possible because when aggregate demand increases, this shifts the demand for money to the right ...
4
votes
0answers
46 views

How exactly do Participatory Notes induce volatility into the economy?

I was reading up on participatory notes. Wikipedia defines these as "instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian ...
1
vote
1answer
60 views

Will the goods market be in equilbrium along the AD curve?

This is a question which was asked in the entrance to Jawaharlal Nehru University's (New Delhi) entrance for their post-grad program specializing in International Economics in 2014. Which of the ...
0
votes
0answers
43 views

Project Financing Evaluation and accounting

While evaluating the whole entrerprise value of Falck Renewables using the discounted cash flow method I end up with a negative continuing value and economic profit due to the negative spread between ...
3
votes
1answer
51 views

Capital in a credit frictions model

I won't go into detail of this model because it's really just one point that i'm confused about. This question is based on a model by Matsuyama (2007). Agents are deciding whether to invest in a ...
3
votes
0answers
42 views

Optimisation of bonds

I'm doing an optimisation problem but don't understand what the terms mean. Suppose someone wants to invest $110,000. They have 4 choices as to what they invest their money into: municipal bond ...
5
votes
1answer
42 views

Is over-valuation of a start up genuinely detrimental to the start up's future?

I recently watched S02E01 of Silicon Valley. In it, having demonstrated a breakthrough algorithm, the guys are pursued by investors with increasing funding offers. However, the founder is warned ...
3
votes
2answers
603 views

Investment = Saving relation in an open economy

I am reading the book Macroeconomics by Olivier Blanchard. It states that an alternative way of looking at an goods market equilibrium is investment = saving. In an open economy it states the ...
4
votes
1answer
109 views

Is there a theory about investors' behaviour during bubbles?

As far as I can see there are two senses in which it's 'rational' for an investor to buy during a bubble. The investor has erroneously overvalued the value of the stock/commodity. The investor is ...
0
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0answers
34 views

Bubble and productive investments

Is there some consenus in the literature as to what features characterize a bubble investment as distinct from a productive investment?
4
votes
3answers
64 views

Scaling Adjustment Costs

Take a cont. diff, convex and increasing cost function $c(X)$. Say you start with a stock $K$, and want to (dis)invest $I$. Many adjustment cost functions (for example, the first example on page 2 ...
3
votes
1answer
45 views

Does the amount of inward investments affect inflation?

I understand that inflation has an impact on the foreign direct investment. But can the opposite be true? The amount of foreign direct investment has an impact on the inflation of the country that ...
5
votes
1answer
57 views

Does 'ethical investing' have any effect?

Some mutual funds make a point of only investing in ethical companies (eg avoiding arms companies, polluters, human rights violators, etc). Or other organisations pressure funds to stop investing in ...
3
votes
1answer
42 views

Derive marginal productivity conditions in DW Jorgenson paper

I'm reading Jorgenson, Dale W. (1963), "Capital Theory and Investment Behavior", American Economic Review. Vol 53, No. 2, pp. 247-259. http://www.jstor.org/stable/pdfplus/1823868.pdf I would like ...
2
votes
3answers
44 views

Lower ROI because of zero interest rate

I've heard an interview with Bill Gross in which he claims that one of the problems with lower interest rate is that it leads to a lower return on investment (ROI) in the real economy. How can that ...
4
votes
1answer
46 views

How does economics cope with production processes that have large lumpy investment requirements?

If seems that all equations (e.g. Price elasticity of supply ) assume that there is a marginal cost of production that is nicely related to the level of output. But clearly you can’t buy half a new ...