Evaluating Alternative Explanations

2019 ◽  
pp. 208-229
Author(s):  
Jonas B. Bunte
Keyword(s):  
Developing Countries ◽  
Interest Rate ◽  
Supply And Demand ◽  
Relative Importance ◽  
Demand Side ◽  
Humanitarian Emergencies ◽  
Debt Crises ◽  
The Interest Rate

This chapter evaluates alternative explanations for differences in borrowing portfolios across developing countries. The analysis suggests that borrowing portfolios result from the interaction of supply- and demand-side factors, through their relative importance differs across creditors. Loans from private creditors are more heavily shaped by creditors’ preferences, while recipient preferences strongly affect borrowing from public creditors. The analysis finds no evidence that recognizing Taiwan negatively affects the loan volume obtained from China. Recipient governments do not appear to decide among creditors based on the interest rate of loans offered. Borrowing portfolios do not depend on the use to which the loan is put as differences in borrowing portfolios across coalitions remain irrespective of infrastructure needs, humanitarian emergencies, and debt crises. This suggests that recipients do not use particular creditors for specific projects. Lastly, domestic political considerations appear more important in determining governments’ borrowing decisions than their ideological alignment with creditor governments.

Capital Budgeting and business cycles

2021 ◽  
pp. 315-335
Author(s):  
Edward W. Fuller
Keyword(s):  
Interest Rate ◽  
Demand Curve ◽  
Supply And Demand ◽  
Investment Project ◽  
The Other ◽  
Investment Projects ◽  
Scarce Resources ◽  
Other Hand ◽  
The Future ◽  
The Interest Rate

Every investment project is aimed at achieving some future goal. This goal can only be attained by employing scarce resources, like time. Every investment project entails foregoing other investment projects. It is impossible to undertake all investment projects simultaneously because resources are scarce. This means each investment project is subject to cost. The investment project may be unsuccessful in achieving the future goal and the entrepreneur may suffer a loss. On the other hand, investment projects are only undertaken because they are perceived as more valuable than their costs. Every investment project undertaken implies the possibility of earning a profit. Investment projects take time. An investment project can be represented by a time line. Time A represents the beginning of the production process. Time B is the end of the production pro-cess. Line AB is called the period of production. Present goods are scarce resources that can be consumed im-mediately. On the other hand, future goods cannot be consumed immediately. Future goods are only expected to be consumer goods at some point in the future. An investment project entails making an investment at time A and receiving a present good at time B. All else equal, present goods are more valuable than future goods.1 Any good at time A is more valuable than the same good at time B. This is called time preference. Money is the present good par excellence. Therefore, future goods can be called future cash flows. All else equal, present money is more valuable than future money. This is called the time value of money. The interest rate is the price of present goods in terms of future goods. The interest rate is the price which equates the amount of present goods provided by savers with the amount of present goods demanded by investors. Like all prices, the interest rate is determined by supply and demand. Savers are suppliers of present goods. The supply curve (S) is the quantity of present goods supplied at each interest rate. Factor owners (investors) are the demanders, or buyers, of present goods. The demand curve (D) is the quantity of present goods demanded at each interest rate. The intersection of the supply and demand curve determines the interest rate. The interest rate is determined by the supply and demand for present goods:2

scholarly journals SOLAR 1.1: DEVELOPMENT OF SOFTWARE FOR SELECTING COMMERCIALLY AVAILABLE PHOTOVOLTAIC PANELS, INCLUDING THE ECONOMIC ANALYSIS

2009 ◽  
Vol 8 (2) ◽  
pp. 21
Author(s):  
P. Laranci ◽  
J. L. Silveira ◽  
W. Q. Lamas
Keyword(s):  
Developing Countries ◽  
Interest Rate ◽  
Economic Analysis ◽  
Electric Energy ◽  
Photovoltaic System ◽  
Photovoltaic Panels ◽  
Subsidy Rate ◽  
Electricity Cost ◽  
Electricity Grids ◽  
The Interest Rate

Photovoltaic energy represents an opportunity to produce electricity in a clean manner. It can be applied in all world places, in particular in the developing countries, where there are places where electricity grids are unreliable or non-existent and is inconvenient to make investments in a grids expansion. In remote locations photovoltaic power supplies often the most economic and cleaner option to produce electric energy. In addition, many developing countries have high radiation levels year round because of their latitude. The software SOLAR 1.1 was developed with purpose of helping the choice of photovoltaic panels available commercially including electric needs calculation for the installation. This new version of program also help to conduce the economic analysis for grid connected or stand alone photovoltaic systems for the choice of convenient values of interest rate and payback period. In this version of the software is possible to select the language among English, Italian and Portuguese. The software choices the panels in its archive that contains more of 250 types of photovoltaic modules made by 35 producers. The selection provides as output three modules, the cheapest for each cell type: monocrystalline, multicrystalline and amorphous. The software archive can be updated adding new item or editing the inserted items. The economic analysis can be operated by SOLAR 1.1 in each of the chosen panels. This analysis gives as output all the values of the costs in the photovoltaic system and the diagrams with the electricity cost and the expected annual saving trend with variation of the amortisation period and for different values of the interest rate and the governmental subsidy rate.

scholarly journals The Impact of Interest Rate Marketization on Commercial Banks

2021 ◽  
Vol 9 (4) ◽  
pp. 176
Author(s):  
Yulin He
Keyword(s):  
Interest Rate ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Supply And Demand ◽  
System Reform ◽  
Analysis Process ◽  
Interest Rate Marketization ◽  
Rate Transmission ◽  
The Interest Rate ◽  
The Impact

<p>Interest rate marketization means that the interest rate level of financial institutions operating and financing in the money market is determined by market supply and demand. It includes interest rate determination, interest rate transmission, interest rate structure and marketization of interest rate management. At present, there are still many deficiencies and defects in the traditional interest rate management system. The reform of interest rate marketization is the focus of China’s financial system reform. Therefore, we should not only be brave in innovation, but also carefully study and analyze. In the analysis process, this paper focuses on the impact of interest rate marketization on commercial banks, and puts forward some countermeasures.</p>

Valuation of interest rate ceiling and floor based on the uncertain fractional differential equation in Caputo sense

2020 ◽  
pp. 1-10
Author(s):  
Ting Jin ◽  
Hui Ding ◽  
Bo Li ◽  
Hongxuan Xia ◽  
Chenxi Xue
Keyword(s):  
Interest Rate ◽  
Financial Market ◽  
Supply And Demand ◽  
Dynamic Change ◽  
Asset Price ◽  
Interest Rate Risk ◽  
Proposed Model ◽  
The Interest Rate ◽  
The Right ◽  
Predictor Corrector

As an economic lever in financial market, interest rate option is not only the function of facilitating the bank to adjust the market fund supply and demand relation indirectly, but also provides the guarantee for investors to choose whether to exercise the right at the maturity date, thereby locking in the interest rate risk. This paper mainly studies the price of the interest rate ceiling as well as floor under the uncertain environment. Firstly, from the perspective of expert reliability, rather than relying on a large amount of historical financial data, to consider interest rate trends, and further assume that the dynamic change of the interest rate conforms to the uncertain process. Secondly, since uncertain fractional-order differential equations (UFDEs) have non-locality features to reflect memory and hereditary characteristics for the asset price changes, thus is more suitable to model the real financial market. We construct the mean-reverting interest rate model based on the UFDE in Caputo type. Then, the pricing formula of the interest rate ceiling and floor are provided separately. Finally, corresponding numerical examples and algorithms are given by using the predictor-corrector method, which support the validity of the proposed model.

scholarly journals An Investigation into the Interest Elasticity of Demand for Money in Developing Countries: A Panel Data Approach

2017 ◽  
Vol 9 (3) ◽  
pp. 69 ◽  
Author(s):  
Felix S. Nyumuah
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Interest Rate ◽  
Equatorial Guinea ◽  
African Countries ◽  
Demand For Money ◽  
Elasticity Of Demand ◽  
Long Run ◽  
Short Run ◽  
The Interest Rate

The issue as to whether the interest rate influences the demand for money in developing countries is still controversial. The aim of this study is to attempt to resolve this controversy. The study uses panel data from eight African countries to look at the interest elasticity of demand for money in developing countries. The countries used in the study are Angola (ANG), Equatorial Guinea (EQG), Gambia (GMB), Guinea-Bissau (GBS), Kenya (KNY), Mali (MLI), Nigeria (NGR) and Uganda (UGD). Overall, the study finds the interest rate to be inelastic in the short run but elastic in the long run. This finding suggests that monetary policy is ineffective in developing countries in the long run.

scholarly journals The Impacts of Interest Rate and Exchange Rate Volatilities on the Demand for Money in Developing Economies

2018 ◽  
Vol 10 (3) ◽  
pp. 56
Author(s):  
Felix S. Nyumuah
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Demand ◽  
Time Series Data ◽  
Developing Economies ◽  
Series Data ◽  
African Countries ◽  
Demand Functions ◽  
The Interest Rate

Volatilities in the interest rate and the exchange rate cause instability in money demand functions. This study investigates the effect of interest and exchange rates volatilities on money demand in developing countries using time series data of four African countries namely, Equatorial Guinea, Gambia, Nigeria and Uganda. The model used is a conventional log linear money demand function, with money demand specified as a function of income, interest rate, inflation rate, exchange rate, interest rate volatility and exchange rate volatility. The results show that on the whole the interest rate and exchange rate volatilities do not have significant effects on money demand in developing countries. However, the money demand functions of these economies prove unstable. These findings imply that the monetary authorities should resort to inflation targeting monetary policy and employ the interest rate as the policy instrument.

scholarly journals A Review of Quantitative Studies in Agritourism: The Implications for Developing Countries

2020 ◽  
Vol 1 (1) ◽  
pp. 23-40 ◽  
Author(s):  
Kumar Bhatta ◽  
Yasuo Ohe
Keyword(s):  
Developing Countries ◽  
Adverse Effects ◽  
Supply And Demand ◽  
Developed Countries ◽  
Demand Side ◽  
Quantitative Studies

This study reviews the published quantitative literature in agritourism from the supply, demand, and both supply- and demand-side perspectives to determine the implications for agritourism in developing countries. A total of 85 quantitative papers were reviewed. Most studies in the literature concern developed countries, and the motivations and attributes of the actors in this field have been investigated thoroughly, whereas few researchers have focused on quality tourism and identity in agritourism. This study suggests that policymakers in developing countries should promote females, insist on maintaining the quality of the workforce, ensure the availability of credit or subsidies to farmers, and guide and monitor the planning and development of agritourism. Furthermore, connecting different stakeholders and minimising the adverse effects in society through innovation in agritourism may lead to sustainable agritourism.

Predicting the future price of a commodity using the OWMA operator: An approximation of the interest rate and inflation in the brown pastusa potato price

2020 ◽  
pp. 1-11
Author(s):  
Gina Fonseca-Cifuentes ◽  
Ernesto León-Castro ◽  
Fabio Blanco-Mesa
Keyword(s):  
Interest Rate ◽  
Supply And Demand ◽  
Linear Regression Analysis ◽  
Consumer Price Index ◽  
Coefficient Of Determination ◽  
Future Price ◽  
Owa Operators ◽  
The Future ◽  
The Interest Rate ◽  
Watson Statistic

This main aim of this paper is to propose a methodology for the prediction of the future price of the brown pastusa potato in Colombia, taking into consideration the variables of interest rate, as measured by fixed term deposits (FTDs), and inflation rate, as measured by the consumer price index (CPI). The methodology conducts linear regression analysis and assesses the results using the significance test, the Durbin-Watson statistic, analysis of the variance inflation factor (VIF) and the coefficient of determination. After that, the forecast of the independent variables has been conducted with the ordered weighted moving average (OWMA) operator and new proposed OWA operators using probabilities that are presented in the paper. Using these new methods and the proposed econometric model, it is possible to establish future prices. The results show a greater impact of the interest rate than inflation, as well as the need to include supply and demand variables that have not been included due to the absence of systematic information.

The Role of Different Channels in Transmitting Monetary Policy into Output and Price in Vietnam

2015 ◽  
pp. 20-40
Author(s):  
Vinh Nguyen Thi Thuy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Monetary Transmission ◽  
Impulse Response Functions ◽  
Short Run ◽  
The Exchange Rate ◽  
The Interest Rate ◽  
Interest Rate Channel

The paper investigates the mechanism of monetary transmission in Vietnam through different channels - namely the interest rate channel, the exchange rate channel, the asset channel and the credit channel for the period January 1995 - October 2009. This study applies VAR analysis to evaluate the monetary transmission mechanisms to output and price level. To compare the relative importance of different channels for transmitting monetary policy, the paper estimates the impulse response functions and variance decompositions of variables. The empirical results show that the changes in money supply have a significant impact on output rather than price in the short run. The impacts of money supply on price and output are stronger through the exchange rate and credit channels, but however, are weaker through the interest rate channel. The impacts of monetary policy on output and inflation may be erroneous through the equity price channel because of the lack of an established and well-functioning stock market.

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