Effects of Free Goods on Market Sustainability

2013 ◽  
Vol 2 (4) ◽  
pp. 68-101
Author(s):  
Steven Cavaleri ◽  
Sheldon Friedman
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
The United States ◽  
Capital Requirements ◽  
High Tech ◽  
Economic Policies ◽  
Housing Crisis ◽  
Economic Theories ◽  
Special Cases ◽  
Down Payments

Various types of ‘bubbles', e.g. stock market, housing, dot.com, high-tech, historically, are commonly-observed phenomena in complex systems. Yet, their emergence often surprises people who remain unaware of history or their systemic roots. Bubbles are often considered to be simply the product of unwise speculative investments or social mania. Alternatively, conventional economic theories often consider factors, such as interest rates, to be the trigger. However, economic theories rarely account for the systemic structure of markets or for non-linear dynamics. The authors propose that special cases may emerge in some markets to trigger instability. Specifically, when minimal interest rates and capital requirements (down payments) are become extremely low a perceptual shift occurs among consumers such that they become viewed as approximate free goods. This paper proposes that unwise economic policies may activate a free goods scenario initiating a cascading series of destabilizing events leading to market collapse. The authors propose hypothesize that such incendiary policies caused both the 1929 stock market crash and the 2008 subprime housing crisis in the United States. To more deeply examine this claim, these policies were tested using a system dynamics model based on data from both the 1929 and 2008 crises. The model simulated and tested the effects of alternative rate policies on market dynamics. Some of the rates and down payments used in both crises set off tsunami-like shock waves through markets leading to their sudden collapse in these simulations. Based on the findings of this study, found that economic policies lessened market stability. The authors propose several revisions to these policies to foster greater market sustainability.

Effects of Free Goods on Market Sustainability

2015 ◽  
pp. 1143-1177
Author(s):  
Steven Cavaleri ◽  
Sheldon Friedman
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
The United States ◽  
Capital Requirements ◽  
High Tech ◽  
Economic Policies ◽  
Housing Crisis ◽  
Economic Theories ◽  
Perceptual Shift ◽  
Down Payments

Various types of ‘bubbles', e.g. stock market, housing, dot.com, high-tech, historically, are commonly-observed phenomena in complex systems. Yet, their emergence often surprises people who remain unaware of history or their systemic roots. Bubbles are often considered to be simply the product of unwise speculative investments or social mania. Alternatively, conventional economic theories often consider factors, such as interest rates, to be the trigger. However, economic theories rarely account for the systemic structure of markets or for non-linear dynamics. The authors propose that special cases may emerge in some markets to trigger instability. Specifically, when minimal interest rates and capital requirements (down payments) are become extremely low a perceptual shift occurs among consumers such that they become viewed as approximate free goods. This paper proposes that unwise economic policies may activate a free goods scenario initiating a cascading series of destabilizing events leading to market collapse. The authors propose hypothesize that such incendiary policies caused both the 1929 stock market crash and the 2008 subprime housing crisis in the United States. To more deeply examine this claim, these policies were tested using a system dynamics model based on data from both the 1929 and 2008 crises. The model simulated and tested the effects of alternative rate policies on market dynamics. Some of the rates and down payments used in both crises set off tsunami-like shock waves through markets leading to their sudden collapse in these simulations. Based on the findings of this study, found that economic policies lessened market stability. The authors propose several revisions to these policies to foster greater market sustainability.

THE IMPACT OF THE US RECESSION ON IMMIGRANT REMITTANCES IN CENTRAL AMERICA

2012 ◽  
Vol 03 (03) ◽  
pp. 1250020 ◽  
Author(s):  
KARLA BORJA
Keyword(s):  
Interest Rates ◽  
Central America ◽  
Economic Recession ◽  
The United States ◽  
Central American ◽  
Housing Crisis ◽  
Substantial Impact ◽  
Us Economy ◽  
The Us ◽  
The Impact

The United States (US) economic recession has considerably affected employment among its immigrant Hispanic community, and as a consequence, remittances to Central America have plunged more than in any other region in the world. This paper provides evidence that the US housing crisis and the subsequent economic recession have affected the Central American region's Gross Domestic Product (GDP) beyond the traditional means of exports, exchange rates, and interest rates, namely, through remittances as well. Using a Vector Autoregression (VAR) model, we examine the case of El Salvador and find that major disturbances to the US economy have an immediate and substantial impact on remittances to this Central American nation.

The Impact of Monetary and Fiscal Policies on the Stock Market in the United States (U.S); Evidence from Linear ARDL Framework

2020 ◽  
Vol 11 (1) ◽  
pp. 132-132
Author(s):  
Aref Emamian
Keyword(s):  
United States ◽  
Stock Market ◽  
The United States ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Fiscal Policies ◽  
Long Run ◽  
The Us ◽  
Short Run ◽  
The Impact

This study examines the impact of monetary and fiscal policies on the stock market in the United States (US), were used. By employing the method of Autoregressive Distributed Lags (ARDL) developed by Pesaran et al. (2001). Annual data from the Federal Reserve, World Bank, and International Monetary Fund, from 1986 to 2017 pertaining to the American economy, the results show that both policies play a significant role in the stock market. We find a significant positive effect of real Gross Domestic Product and the interest rate on the US stock market in the long run and significant negative relationship effect of Consumer Price Index (CPI) and broad money on the US stock market both in the short run and long run. On the other hand, this study only could support the significant positive impact of tax revenue and significant negative impact of real effective exchange rate on the US stock market in the short run while in the long run are insignificant. Keywords: ARDL, monetary policy, fiscal policy, stock market, United States

Interest Rate, Foreign Exchange Rate, and Stock Market Development in Nigeria

2018 ◽  
Vol 9 (3) ◽  
pp. 247-253 ◽  
Author(s):  
Edward Adedoyin Adebowale ◽  
Akindele Iyiola Akosile
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Stock Market ◽  
Foreign Exchange ◽  
The United States ◽  
Ordinary Least Squares ◽  
Foreign Exchange Rate ◽  
Market Development ◽  
National Bureau ◽  
Stock Market Development

This research investigated the effect of interest rate and foreign exchange rate on stock market development in Nigeria. This research was centered on two research problems. First, it was whether interest rate had a significant effect on stock market development in Nigeria. Second, it was whether foreign exchange rate had a significant impact on stock market development in Nigeria. The scope of the research covered the period from 1981 to 2017. Data for this period were chosen because it covered pre and post-liberalization periods of Nigerian financial system. This research made use of ex post facto research design. Secondary data were sourced from Nigerian Stock Exchange reports, Central Bank of Nigeria statistical bulletins, and National Bureau of Statistics publications. Data were collected on Stock Market Capitalization (SMC), Prime Lending Rate (PLR) and Real Exchange Rate (RER) (Nigerian Naira in relation to American Dollars of the United States). Data analysis was carried out with Ordinary Least Squares (OLS) and Cochrane-Orcutt Iterative techniques. The findings reveal that interest rate has a significant negative effect, and foreign exchange rate has a significant positive effect on Nigerian stock market development during the period covered. It is suggested that monetary authorities should strive to formulate policies that will make interest and foreign exchange rates stable, competitive, and at a level that will stimulate the investment of funds in the stock market.

Pricing Initial Audit Engagements: A Test of Competing Theories

1999 ◽  
Vol 74 (2) ◽  
pp. 201-216 ◽  
Author(s):  
Allen T. Craswell ◽  
Jere R. Francis
Keyword(s):  
United States ◽  
Product Quality ◽  
Audit Fees ◽  
The United States ◽  
Public Disclosure ◽  
Audit Pricing ◽  
Experience Goods ◽  
Economic Theories ◽  
Time Period

Two competing theories of initial engagement audit pricing are examined empirically. DeAngelo's (1981a) model predicts initial engagement discounts in all settings, while Dye's (1991) model specifically predicts discounting will not occur in settings where audit fees are publicly disclosed. Unlike the United States and most countries, audit fees are publicly disclosed in Australia. Our study examines initial engagement pricing in Australia during a time period when comparable U.S. studies report discounts of 25 percent (Ettredge and Greenberg 1990; Simon and Francis 1988). The Australian evidence finds initial engagement discounting only for upgrades from non-Big 8 to Big 8 auditors. Discounting for upgrades to Big 8 auditors is consistent with economic theories of discount pricing by sellers of higher-priced, higher-quality experience goods as an inducement to purchase when uncertainty about product quality is resolved through buying (experiencing) the goods. The evidence in our study is generally consistent with Dye's (1991) conclusion that public disclosure of audit fees precludes initial engagement discounting and the potential independence problems arising from such discounting.

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.

Reshaping the Economic Structure in Argentina: The Role of External Debt during the Macri Administration (2015–2019)

2021 ◽  
pp. 048661342097642
Author(s):  
Juan E. Santarcángelo ◽  
Juan Manuel Padín
Keyword(s):  
External Debt ◽  
Economic Structure ◽  
The United States ◽  
Jel Classification ◽  
Financial Capital ◽  
Economic Policies ◽  
Right Wing ◽  
Long Term Effects

Argentina’s right-wing shift in the 2015 presidential election concluded twelve years of center-left rule. The elected president, Mauricio Macri, claimed that the economy would experience normalization of existing imbalances and recover its strength in a “new political era.” However, the new administration quickly restored the dominance of neoliberal economic policies through a comprehensive set of initiatives, which centrally included the return to international financial debt and equity markets and submission to the International Monetary Fund’s (IMF) rules. This article analyzes Argentina’s external-debt-growth process and discusses its objectives and long-term effects. This paper posits that the indebtedness process carried out by the Macri administration—and its modality—not only increased the relevance of financial capital in the Argentine economy but also structurally conditioned any future nonorthodox alternative path of development. This outcome cannot be understood without taking into account the deliberate role of the United States, the IMF, and the top companies that operate in Argentina, as well as the complicity of many political sectors. JEL Classification: H63, F34, F63

scholarly journals Surveillance of U.S. Corporate Filings Provides a Proactive Approach to Inform Tobacco Regulatory Research Strategy

2021 ◽  
Vol 18 (6) ◽  
pp. 3067
Author(s):  
Samantha Emma Sarles ◽  
Edward C. Hensel ◽  
Risa J. Robinson
Keyword(s):  
Electronic Cigarettes ◽  
Science Research ◽  
The United States ◽  
Regulatory Science ◽  
Product Launch ◽  
High Tech ◽  
Proactive Approach ◽  
Research Questions ◽  
The U.S ◽  
Regulatory Actions

The popularity of electronic cigarettes in the United States and around the world has led to a startling rise in youth nicotine use. The Juul® e-cigarette was introduced in the U.S. market in 2015 and had captured approximately 13% of the U.S. market by 2017. Unlike many other contemporary electronic cigarette companies, the founders behind the Juul® e-cigarette approached their product launch like a traditional high-tech start-up company, not like a tobacco company. This article presents a case study of Juul’s corporate and product development history in the context of US regulatory actions. The objective of this article is to demonstrate the value of government-curated archives as leading indicators which can (a) provide insight into emergent technologies and (b) inform emergent regulatory science research questions. A variety of sources were used to gather data about the Juul® e-cigarette and the corporations that surround it. Sources included government agencies, published academic literature, non-profit organizations, corporate and retail websites, and the popular press. Data were disambiguated, authenticated, and categorized prior to being placed on a timeline of events. A timeline of four significant milestones, nineteen corporate filings and events, twelve US regulatory actions, sixty-four patent applications, eighty-seven trademark applications, twenty-three design patents and thirty-two utility patents related to Juul Labs and its associates is presented, spanning the years 2004 through 2020. This work demonstrates the probative value of findings from patent, trademark, and SEC filing literature in establishing a premise for emergent regulatory science research questions which may not yet be supported by traditional archival research literature. The methods presented here can be used to identify key aspects of emerging technologies before products actually enter the market; this shifting policy formulation and problem identification from a paradigm of being reactive in favor of becoming proactive. Such a proactive approach may permit anticipatory regulatory science research and ultimately shorten the elapsed time between market technology innovation and regulatory response.

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