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Evidence on Short-term Bond ETFs vs High-interest Savings Accounts

In the Summer 2015 edition of MoneySense magazine, the article Value Hunter (Cash cows for your portfolio; by Norm Rothery PhD (Physics; York University)), recommends replacing High-interest Savings ...
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1answer
21 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 ...
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27 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.
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3answers
82 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 ...
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2answers
32 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 ...
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23 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 ...
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1answer
38 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 ...
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26 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 ...
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1answer
44 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 ...
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0answers
15 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 ...
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2answers
169 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 ...
2
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1answer
62 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 ...
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27 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?
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3answers
44 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 ...
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1answer
28 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
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1answer
41 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 ...
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1answer
38 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 ...
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1answer
23 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 ROI in the real economy. How can that be?
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25 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 ...
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73 views

Real option effect of uncertainty - irreversiblity vs fixed cost

There is a growing literature (e.g. Bloom, 2009) studying negative macroeconomic impacts of heightened uncertainty. One channel through which uncertainty can discourage economic activity, and ...
2
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1answer
74 views

What is the effect of redirecting government tax intake to a consumer retirement saving incentive?

In New Zealand we have a retirement saving scheme called Kiwisaver. The scheme is opt in. If a consumer opts in, they must save at least 3% of their income, which they can't access until retirement. ...