Phillips curve

Distribution of Income Economic journalist Chelsea Gwynne investigates Australia’s distribution of income and its impact on the overall standard of living. Income distribution sits at the top of the political agenda as Inequality between those with the most and those with the least wealth in Australia is on the rise. Despite consistent public support for reducing inequality in the distribution of income, the government is seeking to reduce income support. In fact, in recent months the Liberal government

stochastic process with corresponding drift terms. Note that for real-world simulation one needs a real-world evolution of the whole yield curve to incorporate realistic risk perception of market participants and not just a few principal yield curve components as it often happens in risk-neutral simulation. There is a large number of approaches to evolve real-world yield curves including non-, semi- or parametric ones based on historical data as the primary source of real-world model calibration. In general

Answers to Practice Questions 1. Downward sloping. This is because high coupon bonds provide a greater proportion of their cash flows in the early years. In essence, a high coupon bond is a ‘shorter’ bond than a low coupon bond of the same maturity. 2. The key here is to find a combination of these two bonds (i.e., a portfolio of bonds) that has a cash flow only at t = 6. Then, knowing the price of the portfolio and the cash flow at t = 6, we can calculate the 6-year spot rate. We begin

by holding a bond until maturity. The Yield Curve, also known as term structure of interest rate, is a commonly used financial tool that tracks the relation between the yields and the time to maturity of a bond. Estimating the yield on a non-currently traded bond and identifying mispriced bonds are the purposes of using the yield curve.It could, furthermore, be used to forecast future performance of the yield on a bond. (Harris, 2014) The yield curve could be

behaviour of U.K bond auctions by using an event study to test the statistical significance of auctions on the secondary market bond prices. In their event study, they use the price movement that is associated with a level change in the zero coupon yield curve as an appropriate benchmark. Whilst running the regressions on the cumulative average abnormal returns (they refer to them as CAR(-x, x) ) they focus on three scenarios found in earlier yield drift testing, which takes place during 6 days before the

households into five equal groups or quintiles and to compare it with the percentage of personal income. The Lorenz Curve is a way to display the quintile distribution. In a graph showing the Lorenz curve, there is one straight, up-sloping diagonal line that represents a perfectly equal distribution of income, and a second curve of the actual quintile data that becomes the Lorenz curve. The space in between the two lines represents the amount of income inequality there is. This information can then

On September 15th 2008, Lehman Brothers, one of the United States’ largest investment banks, declared bankruptcy. This event occurred during the Great Recession, a time period where economic activities in the United States had significantly declined in the early 21st century. The Great Recession occurred for numerous reasons; however the primary reasons are due to the housing bubble as well as the subprime mortgage backed securities. What made matters worse during the recession was the day September

The purpose of this essay is to investigate the extent in which poverty, inequality and economic growth are related. These three dimensions are regularly perceived as indices of the complex and multidimensional concept of ‘economic development’. This term is not black and white however: it is a concept that is more than just merely income analysis. Poverty can be broken down into two separate definitions: absolute and relative. Absolute poverty describes the position of an individual who is living

Microeconomics: Income Inequity in the United States No matter which country you would look into whether it’s from wealthier to those less wealthy countries through the eyes of economics, there are bound to be types of inequity within their borders. Inequity is a very crucial problem in the United States, you would think that our economy here in the states is booming, and the citizens are living life easy or without worry. Life is the United States isn’t as it seems, in fact, Inequity is in fact

Yahya Bello Extra Credit 2 Page 133 Econ 1020 Professor Leach 1. Consumers who buy fantastic brand cleaner instead of Pathmark premium All-purpose cleaner behavior would be considered as bounded rationality because they tend to make their choices that serve their objectives, but they have limited ability to acquire and process information. Consumers that buy fantastic brand cleaner can also be considered as bounded rationality because they believe in the rule of thumbs that says the higher