The Causes and Challenges of Low Interest Rates: Insights from Basic Principles and Recent Literature

2020 ◽  
Author(s):  
Youchang Wu
Keyword(s):  
Interest Rates ◽  
Recent Literature ◽  
Basic Principles ◽  
Low Interest Rates

Remaking Retirement

2020 ◽  
Keyword(s):  
Interest Rates ◽  
Older Workers ◽  
Older Persons ◽  
The United States ◽  
Older Population ◽  
The Past ◽  
Cost Of Education ◽  
The World ◽  
Low Interest Rates ◽  
Key Aspects

Around the world, people nearing and entering retirement are holding ever-greater levels of debt than in the past. This is not a benign situation, as many pre-retirees and retirees are stressed about their indebtedness. Moreover, this growth in debt among the older population may render retirees vulnerable to financial shocks, medical care bills, and changes in interest rates. Contributors to this volume explore key aspects of the rise in debt across older cohorts, drill down into the types of debt and reasons for debt incurred by the older population, and review policies to remedy some of the financial problems facing older persons, in the United States and elsewhere. The authors explore which groups are most affected by debt, and they also identify the factors causing this important increase in leverage at older ages. It is clear that the economic and market environments are influential when it comes to saving and debt. Access to easy borrowing, low interest rates, and the rising cost of education have had important impacts on how much people borrow, and how much debt they carry at older ages. In this environment, the capacity to manage debt is ever more important as older workers lack the opportunity to recover for mistakes.

scholarly journals Special Issue “Interplay between Financial and Actuarial Mathematics”

Risks ◽  
2021 ◽  
Vol 9 (8) ◽  
pp. 139
Author(s):  
Corina Constantinescu ◽  
Julia Eisenberg
Keyword(s):  
Machine Learning ◽  
Control Theory ◽  
Option Pricing ◽  
Interest Rates ◽  
Financial Mathematics ◽  
Special Issue ◽  
Actuarial Mathematics ◽  
Mortality Models ◽  
Low Interest Rates

The Special Issue aims to highlight the interaction between actuarial and financial mathematics, which, due to the recent low interest rates and implications of COVID-19, requires an interlace between actuarial and financial methods, along with control theory, machine learning, mortality models, option pricing, hedging, unit-linked contracts and drawdown analysis, among others [...]

Counter-cyclical public venture capital: Debt-funding as an anti-austerity innovation strategy

2017 ◽  
Vol 56 (3) ◽  
pp. 477-495 ◽  
Author(s):  
Alex Etzkowitz ◽  
Henry Etzkowitz
Keyword(s):  
Venture Capital ◽  
Interest Rates ◽  
Innovation Strategy ◽  
Productive Capacity ◽  
Knowledge Based ◽  
Low Interest Rates ◽  
The Usa ◽  
The Business Cycle ◽  
Smart Specialization ◽  
Private Venture

This article outlines a counter-cyclical innovation strategy to achieve prosperity, derived from an innovative project, the California Institute for Regenerative Medicine (CIRM). We identify an ‘innovation paradox’ in that the very point in the business cycle, when legislators are tempted to view austerity as a cure for economic downturns and to reduce innovation spend, is when an increase is most needed to create new industries and jobs and innovate out of recession or depression. It is both desirable and possible that policymakers resist the urge to capitulate to the innovation paradox. During periods that exhibit subdued inflation, elevated spare productive capacity, and low government borrowing rates, governments should increase their borrowings and use the proceeds to boost investment targeted towards innovation. We show how the State of California successfully utilized debt financing, traditionally reserved for physical infrastructure projects, to stimulate the development of intellectual infrastructure. Finally, we recommend a halt to European austerity policies and a ‘triple helix’ broadening of narrow ‘smart specialization’ policies that chase a private venture capital chimera. Europe should seize the present macroeconomic opportunity of low interest rates, borrow for innovation and be paid back manifold by ‘picking winners’, similarly to what the USA has been doing through DARPA (Defense Advanced Research Projects Agency) with GPS, as a response to Sputnik, the Internet and artificial intelligence, or the driverless car, formerly known as the ‘autonomous land vehicle’ in its military guise. Proactively targeted macroscopic investments in innovation are needed to solve the productivity/employment puzzle and foster the transition to a knowledge-based society.

scholarly journals When Low Interest Rates Cause Low Inflation

2015 ◽  
Vol 50 (6) ◽  
pp. 350-355 ◽  
Author(s):  
Markus Demary ◽  
Michael Hüther
Keyword(s):  
Interest Rates ◽  
Low Interest Rates

Australia budget keeps defence spending commitments

2021 ◽  
Keyword(s):  
South China Sea ◽  
Interest Rates ◽  
Fiscal Year ◽  
National Politics ◽  
Content Type ◽  
Defence Spending ◽  
Low Interest Rates ◽  
Defence Expenditure ◽  
Conducive Environment ◽  
Made In

Significance With an election due soon, the governing Liberal-National Coalition’s pledge to ring-fence the defence spending commitments made in 2016 was under some pressure. However, defence spending in fiscal year 2021/22 will grow by over 4% in real terms and stay above the symbolic level of 2% of GDP. Impacts Growing popular and bipartisan concern with Chinese aggression is a conducive environment for increased defence spending. Low interest rates and a stronger Australian dollar are also supporting sustained levels of defence expenditure. Washington may increase pressure on Australia to conduct freedom of navigation exercises in the South China Sea. Major business groups are concerned that increased criticism of China in national politics will produce yet more punitive backlash.

Investment in South Africa

2021 ◽  
pp. 912-934
Author(s):  
Ciaran Driver ◽  
Laurence Harris
Keyword(s):  
South Africa ◽  
Interest Rates ◽  
Social Transformation ◽  
Empirical Literature ◽  
Private Business ◽  
Business Investment ◽  
Industrial Policies ◽  
Evidential Support ◽  
Fixed Capital Formation ◽  
Low Interest Rates

Abstract: Since the achievement of democracy, high levels of gross fixed capital formation have been required for the economic and social transformation of South Africa. Public-sector investment has risen, particularly since 2008, but private-business investment has not grown enough, while manufacturing’s share of the capital stock has declined substantially. Common explanations for low investment in manufacturing are examined in the light of empirical literature and are judged to have inadequate evidential support. Industrial policies derived from these views, such as maintaining low interest rates to promote investment, need to be based on stronger evidence. An argument is put forward for a system-based approach to research on the determinants of investment.

Investment in New Proved Oil Reserves: An Austrian Perspective

2017 ◽  
Vol 12 (s1) ◽  
Author(s):  
Bradley T. Ewing ◽  
Mark Thornton ◽  
Mark Yanochik
Keyword(s):  
Time Series ◽  
Interest Rates ◽  
Financial Time Series ◽  
Commodity Prices ◽  
Asset Markets ◽  
Oil Reserves ◽  
Econometric Methods ◽  
Low Interest Rates ◽  
Treasury Bond ◽  
Exploration And Production

AbstractExploration and production (E&P) companies must replace oil produced with new proved reserves in order to sustain their existence, generate future revenues and value. Extensions constitute the largest type of additions to new proved reserves. Adding reserves through extensions is capital intensive and both the real price of oil (represented by real refiner acquisition cost) and real interest (represented by real yield on 10 year Treasury bond) will influence the investment in new discoveries of proved reserves. However, recent periods of unusually high commodity prices and ultra-low interest rates, often linked to monetary policy, may have led to an over-investment in reserves through extensions. Accordingly, using U.S. data (1977–2014) we test for the existence of “explosive behavior” in the volume of extensions over time with financial time series econometric methods referred to as right-tail ADF tests which have traditionally been used for identifying speculative bubbles in asset markets. Empirical evidence identifies a period of explosive (“bubble-like”) behavior in the time series of extensions having occurred beginning 2010 through 2014. This research provides an Austrian explanation for the empirical results consistent with the notion of malinvestment.

scholarly journals Analisis Peran Negara Di Bidang Ekonomi Dalam Prespektif Sistem Kapitalisme, Sosialisme, Dan Ekonomi Islam

2016 ◽  
Vol 1 (1) ◽  
Author(s):  
Muhammad Kambali
Keyword(s):  
Interest Rates ◽  
Conceptual Framework ◽  
Economic System ◽  
Economic Crisis ◽  
The State ◽  
Planning System ◽  
Role Of The State ◽  
The World ◽  
Low Interest Rates

The economic crisis that convolved the world economy a few years ago is the result of a series of government policies in the economic field. Starting from the Subprime Mortgage in America, the crisis eventually spreads across all sectors of the economy. As analysts say that the explosion of the current economic crisis is caused by the trend of low interest rates that are applied by the Fed. The trend of low interest rates will give rise to expectation of market to future economic situation. It is characterized by the overflow of capital expansion in all sectors, especially in property sector. Today, along with the growing mobility of capital from one country to another as part of unavoidable economic liberalization, mobility of capital, on the one hand, has spawned some of the imbalances in the life of a State. The powerlessness can not be separated from economic ideology and system on state role in the economy. Capitalism with its laissez faire brings the concept of state minimal role in the economy. In the empirical facts, it is broken by the crisis situation in 1930 and today's financial crisis. Socialism tends to carry the central role of the State in the economy through the centralistic planning system. The fall of the Soviet Union in the 1980s brought the world to a choice whether reconstructing capitalism or socialism as Fukuyama and Gidden said. On the other hand, as the new system, the economic system of Islam brings the concept of the role of the State in the economy on the basis of universal values of Islam, such as justice in the economy which is reflected in the mechanism of the prohibition of riba (usury), just income distribution and redistribution of income through zakat and social security. This article is an exposure of the State's role in the economy which is studied through the perspective of today’s economic system. The systems are capitalism, socialism, and Islam. The article not only explores conceptual framework, but also also contains an empirical framework mapping and how the conceptual framework is operated. At the end, from the two mapping (conceptual and empirical), author draws a reflection of how the State should play a role in the economic field. Keywords: Capitalism, Socialism, Islam, Economic Role of State

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