Definition: Aid involves economic assistance from one country to another. Usually, aid refers to assistance from the developed world to LDCs – less developed countries Aid can take various forms: Debt Relief – Forgiving debt can save LDCs annual interest payments and leave them more resources for internal investment Direct AID- giving food, money and …
An economic stimulus package is an attempt by the government to boost economic growth and lead the economy out of a recession or economic slowdown. The two main ways for stimulating the economy are expansionary monetary policy and expansionary fiscal policy. Though it tends to refer to fiscal policy. Fiscal policy This involves a change …
The German economy has been one of the world’s strongest economies in the post-war period. There are many aspects of the German economy which deserve praise and emulation – not least strong productivity growth, a booming export sector and prolonged low inflationary growth. In the post-war period Germany has played an important role in promoting …
Readers Question: “As for the argument that China can always use its foreign exchange (forex) reserves to provide further stimulus to prop up the economy, the people who purport this have little knowledge of basic economics. If China were to use substantial forex reserves in this way, it would become a large net-seller of U.S. …
Readers Question Why did bond yields in the USA rise at news of the Fed Tapering back in August? The Federal Reserve has been engaged in a policy of quantitative easing. This involves: Creating money electronically Using this created money to buy assets, such as government bonds. The aim of quantitative easing is to stimulate economic …
In the past few years, Central Banks have been buying bonds to Increase money supply Reduce bond yields The aim of quantitative easing is to avoid deflationary pressure and increase economic growth. Ending quantitative easing will mean The Central Bank stop buying any more bonds. The process will then be reversed and, in time, the …
Securitisation involves changing loans into tradeable bonds. Securitisation can increase the liquidity of banks and enable banks to engage in more lending than previously. Securitisation was a factor in the credit crunch because it enabled banks to lend more than usual. When there was a shortage of credit in the banking system, banks became over-exposed …
The great moderation refers to a period of economic stability characterised by low inflation, positive economic growth, and the belief that the boom and bust cycle had been overcome. In retrospect, economists look back on the great moderation in a different light because although inflation was low, there was great volatility in financial markets and …