StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

The Real Long-Term Rate for the US, the UK, and Japan - Assignment Example

Cite this document
Summary
The paper “The Real Long-Term Rate for the US, the UK, and Japan” is a brief example of the assignment on macro & microeconomics.  We observe very large and rapid declines in the policy rate (the very short-term rate) in late 2008 and early 2009. Considering the US, the UK, and Japan, did long-term rates fall as much around that time or less or more?…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.6% of users find it useful

Extract of sample "The Real Long-Term Rate for the US, the UK, and Japan"

The paper “The Real Long-Term Rate for the US, the UK, and Japan” is a brief example of the assignment on macro & microeconomics.  We observe very large and rapid declines in the policy rate (the very short-term rate) in late 2008 and early 2009. Considering the US, the UK, and Japan, did long-term rates fall as much around that time or less or more?

As compared to the rapid declines in the policy rate in late 2008 and 2009, the long-term rate falls as much around that time in many advanced countries.  The USA policy rate has remained below 0% from 2008 to 2012. The UK remained low up to 2011 where it rose and fell afterward in 2012. Japan's policy rates fell lower in the long-term as compared to the short term rates (2008-2009). Moreover, forward curves show that markets will be pricing in low policy rates in the major advanced economies such as the US, UK, and Japan. According to the federal open market committee, given the macroeconomic outlook, the federal funds rate will remain at low levels at least until late 2014.

Using the most recent survey-based estimates of inflation expectations, estimate the real long-term rate for the US, the UK, and Japan for June 2012
Developments in the long-term inflation expectations play a very important role in the central banks’ monitoring and assessment activity since well-anchored expectations are central to the functioning of the monetary transmission mechanism. Currently, the long term inflation does not signal rising risks of price stability within Japan, the USA, and the UK. The survey indicates that the long-term inflation expectations will remain stable and within the central banks’ inflation goals. The survey indicates that the stability of the long-term inflation expectation depends on the high credibility of central banks of these countries which means that these banks have some leeway to offer further monetary stimulus. However, the credibility of the central banks’ of these three countries should not be taken for granted because if the economy remains weak and underlying solvency and structural problems remain unresolved the central banks’ may come under growing pressure to do more. As a result, a vicious circle can develop with a widening gap between what the central banks can actually deliver and what they are expected to deliver and this would make the eventual exit from monetary accommodation harder and may eventually threaten the inflationary expectations of this countries.

Estimate the real long-term rates

1. Brazil
Brazil is one of the emerging economies in the world and it's growing at a very fast rate. The country’s inflation rate was 5.2% in July 2012 and it has an inflation rate of 419.3%. The graph below show’s Brazil’s inflation rates since 2010

On the other hand, Brazil’s interest rate was reported to 8% which is the lowest since 1990, historically, from 1999 to 2012 the country’s interest rates averaged 16.6%.  The central bank of Brazil’s monetary committee makes decisions relating to interest rates. The following graph represents Brazil’s interest rates since 2010-1212

India
Just like Brazil, India is one of the emerging economies in the world. The country reported an inflation rate of 6.87% in 2012. Moreover, India’s inflation rate averaged 8% since 1969. The graph below represents India’s long-term inflation rates since 2010-2012  

On the other hand, India’s interest rate was reported to 8% just like Brazil. Historically, from 200 to 2012 the country’s interest rates averaged 6.49%.  Reserve Bank of India's Central Board of Directors makes decisions relating to interest rates. The following graph represents India’s long-term interest rates since 2010-1212

China
China is the second-biggest economy in the world; it is classified as an emerging economy. The country recorded an inflation rate of 1.8% in July. Historically, from 1994 until 2012, the country’s inflation rate averaged 4.3%. The low inflation rates have reduced the price of commodities as well as increase the country’s GDP. The graph below represents China’s long-term inflation rates since 2010-2012

The benchmark interest rate in China was last reported at 6 percent, historically, from 1996 until 2012, China Interest Rate averaged 6.4600 Percent reaching an all-time high of 10.9800 percent in May of 1996 and a record low of 5.3100 percent in August of 2010m In China, interest rates decisions are taken by The Peoples' Bank of China Monetary Policy Committee, the PBC administers two different benchmark interest rates: one-year lending and the one-year deposit rate

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(The Real Long-Term Rate for the US, the UK, and Japan Assignment Example | Topics and Well Written Essays - 500 words, n.d.)
The Real Long-Term Rate for the US, the UK, and Japan Assignment Example | Topics and Well Written Essays - 500 words. https://studentshare.org/macro-microeconomics/2079508-economic-of-money-and-banking
(The Real Long-Term Rate for the US, the UK, and Japan Assignment Example | Topics and Well Written Essays - 500 Words)
The Real Long-Term Rate for the US, the UK, and Japan Assignment Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/macro-microeconomics/2079508-economic-of-money-and-banking.
“The Real Long-Term Rate for the US, the UK, and Japan Assignment Example | Topics and Well Written Essays - 500 Words”. https://studentshare.org/macro-microeconomics/2079508-economic-of-money-and-banking.
  • Cited: 0 times

CHECK THESE SAMPLES OF The Real Long-Term Rate for the US, the UK, and Japan

Multinational Business Finance

The spot rate for Mexican pesos is Ps9.... What would the exchange rate between the dollar and the pound be if the U.... This decides the exchange rate as 1 dollar = 0.... 0 the exchange rate will be 1 dollar = 0.... 0, what was the exchange rate between France francs and U.... 0The exchange rate according to the gold price and standards is equal to 1 dollar = 14.... … Total long-term capital1,000The A shares each have 10 votes, the B shares each have 1 vote....
37 Pages (9250 words) Math Problem

Growth and Development in the Global Economy

This research paper aims at comparing the economic growth rate of Australia to that of the U.... One of the mathematical techniques used to measure the long-run growth rate is the compound growth rate formula expressed as (DOWRICK 2004);... Growth is usually calculated in real terms e.... In determining the economic growth of a given country, real GDP per capita is often used as it indicates the average standard of living of individuals in that country while economic growth indicates the increase in the average standard of living (REBELO 1992)....
9 Pages (2250 words)

Comparing Japan and the USA to Supermarket Retail

This analysis will primarily focus on the supermarket retail industry in two countries, namely the USA and japan.... PESTLE framework analysis will be put into utility with the aim of comparing the viability of internationalization of a company based in the uk seeking to expand its operations into other countries in the Supermarket retailer industry.... … The paper 'Comparing japan and the USA to Supermarket Retail " is a good example of a marketing case study....
12 Pages (3000 words) Case Study

How the Financial Crisis Affected the Economy

In the uk, the pivotal moment was when Northern Rock was bailed out by the Bank of England after the biggest run for more than a century on a UK bank.... Of significant impact was the bankruptcy of banks and other financial institutions and the subsequent inability to provide credit to the real economy (Cortright, 2008).... The light regulation in the industry has been widely regarded as the cause for the crisis while other concerns have arisen as to whether or not the finance has been able to grow in close proportions compared to the real economy (Sassen, 2009)....
7 Pages (1750 words)

Why Japan's Prosperity Stalled

Schaede (2008) claims that today, if the people who lost their lives in the world wars resurrect, the world be surprised by development changes that have happened in Japan, the us, Russia, Italy, UK, France, and Germany since 1945.... After Japan had been defeated during World War II, the us and its Allies led the rehabilitation of Japan.... … The paper “Why japan's Prosperity Stalled ” is a breathtaking example of the literature review on macro & microeconomics....
10 Pages (2500 words) Literature review

Hong Kongs Macroeconomics

… The paper "Hong Kong's Macroeconomics" is a perfect example of a micro and macroeconomic case study.... nbsp;This study explores the performance of property investment in Hong Kong and does a comparison with the property business in Australia.... The aim of this comparison is to investigate whether or not, the investment in Hong Kong is better than that of Australia....
10 Pages (2500 words) Case Study

Analysis of the ALDI Expansion to Japan & UK

The paper shall chat out the plan of selecting the prospective nations which the company shall seek to expand into- these being the United Kingdom and japan.... … The paper "Analysis of the ALDI Expansion to japan & UK" is an amazing Business case study.... The paper "Analysis of the ALDI Expansion to japan & UK" is an amazing Business case study....
12 Pages (3000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us