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The Intimate Dance: Understanding the Relationship Between Saving and Interest Rates
Introduction:
Are you tired of seeing your hard-earned savings stagnate? Do fluctuating interest rates leave you feeling confused and unsure about your financial future? Understanding the intricate relationship between saving and interest rates is crucial for building wealth and achieving your financial goals. This comprehensive guide will unravel the complexities, equipping you with the knowledge to make informed decisions about your savings and maximize your returns. We'll explore how interest rates impact your savings, strategies to navigate changing rates, and how to optimize your savings strategy for long-term success.
Chapter 1: How Interest Rates Affect Your Savings
Interest rates are the price you earn for lending your money to a financial institution. When you deposit money into a savings account, certificate of deposit (CD), or money market account, the bank uses your funds to lend to others. In return, they pay you interest, essentially a fee for using your money. The higher the interest rate, the more you earn on your savings.
Direct Impact: The most obvious impact is the direct correlation between the interest rate and the amount of interest you earn. A higher interest rate translates to a larger return on your savings. Conversely, low interest rates mean your savings grow more slowly.
Inflation's Role: Inflation erodes the purchasing power of your money. If inflation outpaces your interest rate, your savings are effectively losing value. This is why it's crucial to find savings accounts with interest rates that exceed the current inflation rate.
Compound Interest: The magic of compound interest amplifies the impact of interest rates. Compound interest means that you earn interest not only on your principal but also on the accumulated interest. The longer your money remains invested, the more significant the effect of compounding becomes, especially at higher interest rates.
Chapter 2: Types of Savings Accounts and Their Interest Rates
Different savings accounts offer varying interest rates. Understanding these nuances is essential for maximizing your returns.
Traditional Savings Accounts: These are the most common type, offering relatively low but accessible interest rates. They typically allow for easy withdrawals and deposits.
High-Yield Savings Accounts: These accounts offer significantly higher interest rates than traditional accounts but may have slightly stricter terms or minimum balance requirements.
Certificates of Deposit (CDs): CDs offer higher interest rates than savings accounts but lock your money in for a specific period. Withdrawing early often results in penalties. The longer the term, the higher the potential interest rate.
Money Market Accounts (MMAs): MMAs combine features of savings and checking accounts. They often offer higher interest rates than basic savings accounts and may allow a limited number of checks or debit card transactions.
Chapter 3: Strategies for Maximizing Savings in Varying Interest Rate Environments
Navigating fluctuating interest rates requires a strategic approach.
Diversification: Don't put all your eggs in one basket. Diversify your savings across different accounts with varying interest rates and maturity periods to mitigate risk and optimize returns.
Laddered CDs: Instead of investing in one large CD, consider a laddered approach. This involves investing in CDs with different maturity dates, allowing you to reinvest at higher rates as your CDs mature.
Regular Contributions: Consistent contributions to your savings accounts, regardless of interest rates, are crucial for long-term growth. The power of consistent saving significantly outweighs short-term fluctuations in interest rates.
Monitor and Adjust: Regularly monitor interest rates and adjust your savings strategy accordingly. When rates are high, consider locking in higher returns with CDs. When rates are low, focus on building a strong savings base and explore other investment options.
Chapter 4: Interest Rates and Other Financial Decisions
Interest rates don't just affect your savings; they also influence other critical financial decisions.
Debt Management: High interest rates on debt (credit cards, loans) make it more expensive to borrow. Prioritizing debt repayment becomes more crucial during periods of high interest rates.
Mortgages: Mortgage rates directly impact your monthly payments and overall cost of homeownership. Understanding the relationship between interest rates and mortgage payments is critical for homebuyers.
Investment Decisions: Interest rates influence the attractiveness of different investment options. Higher interest rates can make bonds more appealing, while lower rates may favor stocks or other investments with higher growth potential.
Chapter 5: The Future of Interest Rates and Their Impact on Savings
Predicting future interest rates is impossible, but understanding economic trends can help you anticipate potential changes. Factors like inflation, economic growth, and central bank policies all play a significant role in shaping interest rate movements. Staying informed about these factors allows you to adapt your savings strategy proactively.
Article Outline:
Title: The Intimate Dance: Understanding the Relationship Between Saving and Interest Rates
Introduction: Hook the reader with a relatable scenario and introduce the topic.
Chapter 1: How Interest Rates Affect Your Savings: Discuss the direct and indirect impact of interest rates on savings, including inflation and compound interest.
Chapter 2: Types of Savings Accounts and Their Interest Rates: Compare and contrast different savings account types and their associated interest rates.
Chapter 3: Strategies for Maximizing Savings in Varying Interest Rate Environments: Provide actionable strategies for optimizing savings in fluctuating interest rate markets.
Chapter 4: Interest Rates and Other Financial Decisions: Explain how interest rates influence other major financial choices.
Chapter 5: The Future of Interest Rates and Their Impact on Savings: Offer insights into potential future interest rate trends and their implications.
Conclusion: Summarize key takeaways and encourage readers to take action.
(The detailed content for each chapter is provided above in the main article.)
9 Unique FAQs:
1. What is the best savings account for high interest rates? The "best" account depends on your individual needs and risk tolerance. High-yield savings accounts generally offer the highest rates but may have minimum balance requirements.
2. How do interest rates affect inflation? High interest rates can combat inflation by slowing down economic activity and reducing consumer spending.
3. What is the difference between simple and compound interest? Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.
4. How can I protect my savings from inflation? Invest in assets that historically outpace inflation, such as stocks or real estate, or find savings accounts with interest rates that exceed the inflation rate.
5. What are the risks associated with high-yield savings accounts? While they offer higher returns, they may have stricter terms or minimum balance requirements. Also, interest rates can fluctuate.
6. Should I invest in CDs during periods of low interest rates? Likely not. Consider other options like high-yield savings accounts or explore alternative investments.
7. How often are interest rates adjusted? Interest rates can change frequently depending on economic conditions and central bank policies.
8. What is the role of the Federal Reserve in setting interest rates? The Federal Reserve (the Fed) plays a crucial role in influencing interest rates through monetary policy actions.
9. How can I estimate the future value of my savings? Use online savings calculators that factor in interest rates and compounding to project future growth.
9 Related Articles:
1. Understanding Compound Interest: The Eighth Wonder of the World: Explores the power of compound interest and its long-term impact on wealth building.
2. High-Yield Savings Accounts: Finding the Best Rates: A detailed comparison of various high-yield savings accounts from different banks.
3. How to Choose the Right Certificate of Deposit (CD): A guide to selecting CDs based on individual needs and risk tolerance.
4. Inflation and Your Savings: Protecting Your Purchasing Power: Strategies for mitigating the impact of inflation on your savings.
5. Interest Rate Risk: Understanding and Managing the Volatility: Explores the risks associated with fluctuating interest rates and strategies for mitigating them.
6. The Relationship Between Interest Rates and the Stock Market: Discusses how changes in interest rates impact stock market performance.
7. Building a Diversified Savings Portfolio: Explores the benefits of diversifying your savings across various accounts and asset classes.
8. How Interest Rates Affect Your Mortgage Payments: A detailed explanation of how interest rates impact the cost of homeownership.
9. Mastering Your Personal Finances: A Beginner's Guide to Saving and Investing: A comprehensive guide to personal finance basics, including saving and investing strategies.
| relationship between saving and interest rate: National Saving and Economic Performance B. Douglas Bernheim, John B. Shoven, National Bureau of Economic Research, 1991-05 ... Papers presented at a conference held at the Stouffer Wailea Hotel, Maui, Hawaii, January 6-7, 1989. ... part of the Research on Taxation program of the National Bureau of Economic Research. -- p. ix. |
| relationship between saving and interest rate: Wealth, Disposable Income and Consumption R. Tiff Macklem, Bank of Canada, 1994 This report develops a measure of aggregate private sector wealth in Canada that includes financial, physical, and human wealth, and examines the ability of this wealth measure to explain aggregate consumption. The relationship between consumption and wealth is explored both to gauge the usefulness of the wealth measures developed and to improve upon empirical consumption models for Canada. The study augments the standard EC consumption model with a comprehensive measure of wealth, thus partly bridging the gap between life cycle-permanent income consumption equations and the more empirically motivated EC consumption models based on disposable income. |
| relationship between saving and interest rate: Macroeconomics: Theory and Policy Agarwal Vanita, 2010 Macroeconomics: Theory and Policy provides students with comprehensive coverage of all the essential concepts of macroeconomics. A balanced approach between theoretical and mathematical aspects of the subject has been adopted to ensure ease and clarity in learning. The book brings classroom teaching directly to the student with the friendly language that it uses. The purpose behind this book is not only to make the study of macroeconomics simple for the students but to enable them to apply it to everyday situations and the prevailing economic state of affairs. The wide coverage of topics has been designed for use in courses on macroeconomics at the undergraduate level of Indian universities. |
| relationship between saving and interest rate: Linkage Between Interest Rate Policy And Macro Economic Variables Fidous Ahmad Malik, 2022-06-15 This is an Academic book |
| relationship between saving and interest rate: Macroeconomics Robert J. Rossana, 2011-02-25 Research in macroeconomics in the last thirty years has featured, almost exclusively on two characteristics: an emphasis on the microfoundations of macroeconomics and secondly, intertemporal economics, that is, the behavior of economic actors over time. Curiously, textbooks in intermediate macroeconomics have been very slow to adopt these traits. The aim of this book is to bring intermediate instruction in macroeconomics fully into line with the direction taken by the research community. Key hallmarks of the text include: a full introduction to the microfoundations of consumption and investment a complete model of the labor market with profit maximization for firms to determine labor demand and a utility maximization model to determine labor supply an analysis of the Baumol-Tobin model to determine money demand accompanied by a discussion of traditional money supply Possessing a full range of additional learning features including a companion website, test bank and instructor’s manual, the book takes an international view of macroeconomics with case studies and examples from the United States and beyond. |
| relationship between saving and interest rate: The Economics of Saving James H. Gapinski, 2013-03-09 This book began when a letter reached my desk in November 1989. Written by Warren Samuels, professor of economics at Michigan State University and editor for Kluwer Academic Publishers, the letter reviewed the philosophy behind Kluwer's series on recent economic thought and accordingly expressed interest in the controversies that surround con temporary topics in the discipline. It graciously went on to invite me to organize, consonant with that philosophy, a volume of chapters on saving. Soon thereafter I learned that the chapters were to be original compositions. I also learned that I would have substantial flexibility in structuring the volume and in recruiting contributors, who logically would be authorities in the field. Succinctly, Samuels was inviting me to work with leading scholars in exploring the current controversies in saving, one of my favorite subjects. That invitation was simply too tempting to refuse. Preparation of the book's outline went smoothly. It was obvious that the statistics of saving should be covered along with the theories of saving. It was equally obvious that special issues must be addressed: Ricardian Equivalence, supply-side doctrine, and economic development among others. These themes should be handled so as to bring out the ideological tensions in the profession, and that criterion helped to shape the list of potential contributors. That is, both sides of a conflict should be represented, and both should be given the same treatment. |
| relationship between saving and interest rate: The Economics of Saving James H. Gapinski, 1992-12-31 This book began when a letter reached my desk in November 1989. Written by Warren Samuels, professor of economics at Michigan State University and editor for Kluwer Academic Publishers, the letter reviewed the philosophy behind Kluwer's series on recent economic thought and accordingly expressed interest in the controversies that surround con temporary topics in the discipline. It graciously went on to invite me to organize, consonant with that philosophy, a volume of chapters on saving. Soon thereafter I learned that the chapters were to be original compositions. I also learned that I would have substantial flexibility in structuring the volume and in recruiting contributors, who logically would be authorities in the field. Succinctly, Samuels was inviting me to work with leading scholars in exploring the current controversies in saving, one of my favorite subjects. That invitation was simply too tempting to refuse. Preparation of the book's outline went smoothly. It was obvious that the statistics of saving should be covered along with the theories of saving. It was equally obvious that special issues must be addressed: Ricardian Equivalence, supply-side doctrine, and economic development among others. These themes should be handled so as to bring out the ideological tensions in the profession, and that criterion helped to shape the list of potential contributors. That is, both sides of a conflict should be represented, and both should be given the same treatment. |
| relationship between saving and interest rate: Negative Interest Rate Policy (NIRP) Andreas Jobst, Huidan Lin, 2016-08-10 More than two years ago the European Central Bank (ECB) adopted a negative interest rate policy (NIRP) to achieve its price stability objective. Negative interest rates have so far supported easier financial conditions and contributed to a modest expansion in credit, demonstrating that the zero lower bound is less binding than previously thought. However, interest rate cuts also weigh on bank profitability. Substantial rate cuts may at some point outweigh the benefits from higher asset values and stronger aggregate demand. Further monetary accommodation may need to rely more on credit easing and an expansion of the ECB’s balance sheet rather than substantial additional reductions in the policy rate. |
| relationship between saving and interest rate: The Economics of Saving and Growth Klaus Schmidt-Hebbel, Luis Servén, 1999-05-13 A look at major research and policy issues surrounding saving across the world, first published in 1999. |
| relationship between saving and interest rate: Living with Defined Contribution Pensions Olivia S. Mitchell, Sylvester J. Schieber, 1998-05-29 Table of Contents |
| relationship between saving and interest rate: Modern Economics An Analytical Study, 20th Edition Ahuja H.L., 2016 In its 20th edition, this trusted definitive text is a comprehensive treatise on modern economics. It discusses in detail microeconomics, macroeconomics, monetary theory and policy, international economics, public finance and fiscal policy and above all economics of growth and development. The book has been exhaustively revised to provide students an in-depth understanding of the fundamental concepts and is streamlined to focus on current topics and developments in the field. |
| relationship between saving and interest rate: Interest Rate Policies in Developing Countries International Monetary Fund, 1983-10-31 In recent years, the appropriate level and structure of interest tates have come to be seen as major issues in connection with stabilization programs undertaken by members. These issues arise from consideration both on the demand side, as interest rates affect the magnitude of aggregate demand, and on the supply side, as they influence the volume and quality of investment and, thus, the growth of output. |
| relationship between saving and interest rate: Monetary Theory - 16Th Edition M C Vaish, 2009-11-01 Monetary Theory Is A Comprehensive Textbook That Meets The Needs Of Students At The Honours And Post-Graduate Level. The Sixteenth Edition Has Been Thoroughly Revised And Updated. The Book Is Divided Into Five Parts Viz Money And Prices; Trade Cycle And S |
| relationship between saving and interest rate: The Limits of Choice Sahra Wagenknecht, 2013-10-02 Wann und warum sparen private Haushalte? Sahra Wagenknecht untersucht in ihrer Dissertation den Zusammenhang von Sparentscheidungen und Grundbedürfnissen in Deutschland und den USA von den 1950er-Jahren bis heute. Ihre zentrale Hypothese lautet, dass der Einkommensanteil der Ausgaben zur Befriedigung von Grundbedürfnissen die entscheidende Erklärungsvariable des individuellen Sparverhaltens darstellt. In Abgrenzung zur Lebenszyklus- bzw. Permanenten Einkommenshypothese (LCPIH) kann Wagenknecht zeigen, dass die individuelle Sparquote entscheidend vom langfristigen Einkommen abhängt. Die Arbeit weist für einen Zeitraum von über 50 Jahren nach, dass sich auch auf volkswirtschaftlicher Ebene die Veränderung der privaten Sparquote durch den necessity share erklären lässt. Das vorgelegte Modell liefert zudem eine Erklärung, weshalb die private Sparquote bei steigender Einkommensungleichheit in Volkswirtschaften mit dereguliertem Kreditmarkt sinkt, während sie bei restriktiven Kreditmärkten steigt. |
| relationship between saving and interest rate: Robertsonian Economics John R. Presley, 1979-06-17 |
| relationship between saving and interest rate: Handbook of Financial Decision Making Gilles Hilary, David McLean, 2023-08-14 This accessible Handbook provides an essential entry point for those with an interest in the increasingly complex subject of financial decision making. It sheds light on new paradigms in society and the ways that new tools from private actors have affected financial decision making. Covering a broad range of key topics in the area, leading researchers summarize the state-of-the-art in their respective areas of expertise, delineating their projections for the future. |
| relationship between saving and interest rate: Macroeconomics Nicoli Nattrass, 2002 |
| relationship between saving and interest rate: Money as Organization, Gustavo Del Vecchio's Theory Gianfranco Tusset, 2015-10-06 Between 1909-17, Gustavo Del Vecchio developed a ‘theory of circulation’. In a series of articles he set out his thoughts on the utility and value of money, credit, discount rates, banking and international payments. Tusset re-evaluates Del Vecchio’s theory, concluding that money represents a technology which organizes both economy and society. |
| relationship between saving and interest rate: John Maynard Keynes Charles Robert McCann, 1998 |
| relationship between saving and interest rate: African Voices on Structural Adjustment Codesria, International Development Research Centre (Canada), 2003 African Voices on Structural Adjustment presents 14 in-depth studies on the history and future of structural adjustment in Africa. Each study appraises the performance of structural adjustment policies (SAPs) with respect to a particular sector or issue. Each evaluates the compatibility of SAPs with the requirements for long-term development in Africa. And, most importantly, each presents a truly African perspective. The contributors represent an outstanding collection of leading African economists and development experts. This volume is intended as a companion to Our Continent, Our Future. It will appeal to students, professors, academics, and researchers in development, economics, and African studies; professionals in donor organizations around the world; and economic policymakers in both the governmental and non-governmental sectors |
| relationship between saving and interest rate: Growth and Development in the Global Economy Harry Bloch, 2003-02-26 What are the forces behind the increasing globalization of economic life? How does globalization affect the functioning of national economies? What difficulties confront government policymakers in dealing with the global economy? These issues are addressed in this volume by leading specialists. The contributors present a range of unique and varied perspectives from which they consider aspects of the increasing integration of economic life, exploring implications for the functioning of domestic markets in a rapidly changing global economy. The result is a collection of insights that provide a framework for understanding globalization as an economic phenomenon. |
| relationship between saving and interest rate: Central Banking and Monetary Policy in the Asia-Pacific Akhand Akhtar Hossain, 2009-01-01 The strength of this book is that it summarises a vast amount of the modern literature in monetary economics. . . the book provides detailed and clear descriptions of monetary models. . . This comprehensive volume is a useful compendium of the monetary economics literature of the second half of the 20th century, which has to a certain extent been over taken by events. Paul Wachtel, Asian-Pacific Economic Literature This well-researched and finely crafted book is a valuable addition to the literature on monetary policy in developing countries. It explains the concepts and tools of monetary policy in a simple manner and discusses how monetary policy works in developing Asia in a historical context within the framework of an outward-oriented development strategy. I am not aware of any other book that covers the organisational and institutional aspects of major central banks in developing Asia. Prema-chandra Athukorala, Australian National University This book elaborates the key concepts, principles and models of inflation and monetary policy and explains how they remain relevant and useful to the design and conduct of monetary policy in developing Asia. In this rapidly growing region, price stability remains important and therefore monetary policy has gained increasing importance. Even while emphasising the importance of the classical approach, the book discusses alternative frameworks and points out areas where a consensus is emerging. The review of the literature is extensive and careful. Along with developing this theme, the book reviews the structure and governance of most central banks in the Asia-Pacific and discusses how they conduct monetary policy to achieve price stability under different monetary policy frameworks. The book fills a gap in the central banking and monetary policy literature and has no close competitors. It should be useful to both students and policymakers in developing Asia. Salim Rashid, University of Illinois, US The 1997 East Asia crisis exposed many economic policy weaknesses in the Asia-Pacific region. In his latest book, Dr Hossain provides students with a refreshing up-to-date reference text on the concepts and principles of money, banking and finance in developing countries which differ in many ways to monetary institutions and practices in developed countries, which conventional monetary textbooks focus on. I thoroughly recommend it. A.P. Thirlwall, University of Kent, UK This timely book reviews the modern literature on inflation and monetary policy, and highlights contemporary issues in the design and conduct of monetary policy for price stability in developing Asia. Akhand Akhtar Hossain surveys the evolution of central banking and provides an introduction to the structure, function and governance of central banks in selected countries in the Asia-Pacific. The author also examines the major theories, models and approaches to inflation and monetary policy, and evaluates monetary policy regimes in selected countries in the Asia-Pacific in a historical context. This eloquent and comprehensible book will prove to be invaluable to undergraduate students on monetary theory and policy as well as banking and financial courses. Researchers exploring monetary policy concepts, principles and case studies will warmly welcome this book, as will policy-makers who have an interest in macroeconomics, monetary and financial policies. |
| relationship between saving and interest rate: The Role of National Saving in the World Economy International Monetary Fund, 1990-03-19 This paper reviews and analyzes broad developments and considers specific policy measures to foster saving. The chapter also describes trends in national saving rates of industrial countries in recent years and briefly discusses the prospects over the medium term. The paper also discusses the effects of policy measures on national saving and investment. Fiscal, monetary, and exchange rate policies are all shown to have major implications for saving in developing countries. Fiscal restraint is especially important, since it increases national saving by both raising public saving and reducing the country's dependence on foreign borrowing. Exchange rate devaluation and the unification of exchange markets also appear to be effective in stimulating national saving. Interest rates and financial reforms play a crucial role in effecting an efficient allocation of resources, including the mobilization of savings to finance domestic investment. |
| relationship between saving and interest rate: Interest Rate Regulation on Small Savings Accounts United States. Congress. House. Committee on Government Operations. Commerce, Consumer, and Monetary Affairs Subcommittee, 1979 |
| relationship between saving and interest rate: Macroeconomic Theory - 14Th Edn M C Vaish, 2010 A complete textbook for UG and PG students of economics, commerce and business management, it provides an integrated view of macroeconomics from a global perspective as well as from Indian with special emphasis on Indian monetary policy. Divided into 4 parts--Introductory, Macroeconomic accounting, 3. Macroeconomic theory, 4. Money, interest and prices, 5. Policy, Foreign exchange and banking, 6. Trade cycle theories and economic growth |
| relationship between saving and interest rate: Post-Keynesian Essays from Down Under Volume II: Essays on Policy and Applied Economics G. Harcourt, Peter Kriesler, Joseph Halevi, John Nevile, 2017-03-21 Joseph Halevi, G. C. Harcourt, Peter Kriesler and J. W. Nevile bring together a collection of their most influential papers on post-Keynesian thought. Their work stresses the importance of the underlying institutional framework, of the economy as a historical process and, therefore, of path determinacy. In addition, their essays suggest the ultimate goal of economics is as a tool to inform policy and make the world a better place, with better being defined by an overriding concern with social justice. Volume II assess application and policies. |
| relationship between saving and interest rate: The International Economy Peter B. Kenen, 2000-01-13 This text is a rigorous introduction to international economics for upper-level undergraduates and above. The first half examines the causes and effects of international trade, how tariffs and other trade policies affect the gains from trade, and the ways in which governments try collectively to regulate those policies. The second half deals with monetary matters - the behavior of exchange rates, how trade and capital flows affect the functioning of monetary and fiscal policies, the causes and management of currency crises, and the new European Monetary Union (EMU). This fourth edition assesses the outcome of the Uruguay Round of trade negotiations, the work of the new World Trade Organization (WTO), and the challenges posed by regional trade blocs. It surveys recent theoretical work on currency crisis, examines recent crises in emerging-market countries and the role of the International Monetary Fund (IMF), and appraises innovations in exchange-rate arrangements, including the EMU and the use of currency boards by emerging-market countries. A problem set follows each chapter. |
| relationship between saving and interest rate: The Princeton Encyclopedia of the World Economy. (Two volume set) Kenneth A. Reinert, Ramkishen Rajan, Amy Joycelyn Glass, Lewis S. Davis, 2010-08-02 An essential reference to all facets of the world economy Increasing economic globalization has made understanding the world economy more important than ever. From trade agreements to offshore outsourcing to foreign aid, this two-volume encyclopedia explains the key elements of the world economy and provides a first step to further research for students and scholars in public policy, international studies, business, and the broader social sciences, as well as for economic policy professionals. Written by an international team of contributors, this comprehensive reference includes more than 300 up-to-date entries covering a wide range of topics in international trade, finance, production, and economic development. These topics include concepts and principles, models and theory, institutions and agreements, policies and instruments, analysis and tools, and sectors and special issues. Each entry includes cross-references and a list of sources for further reading and research. Complete with an index and a table of contents that groups entries by topic, The Princeton Encyclopedia of the World Economy is an essential resource for anyone who needs to better understand the global economy. More than 300 alphabetically arranged articles on topics in international trade, finance, production, and economic development International team of contributors Annotated list of further reading with each article Topical list of entries Full index and cross-references Entry categories and sample topics: Concepts and principles: globalization, anti-globalization, fair trade, foreign direct investment, international migration, economic development, multinational enterprises Models and theory: Heckscher-Ohlin model, internalization theory, New Trade Theory, North-South trade, Triffin dilemma Institutions and agreements: European Union, International Monetary Fund, World Trade Organization, World Bank, Doha Round, international investment agreements Policies and instruments: dollar standard, international aid, sanctions, tariffs Analysis and tools: exchange rate forecasting, effective protection, monetary policy rules Sectors and special issues: child labor, corporate governance, the digital divide, health and globalization, illegal drugs trade, petroleum, steel |
| relationship between saving and interest rate: IMF Staff papers International Monetary Fund. Research Dept., 1988-01-01 A central proposition regarding effects of different mechanisms of fi-nancing public expenditures is that, under specific circumstances, it makes no difference to the level of aggregate demand if the government finances its outlays by debt or taxation. This so-called Ricardian equivalence states that, for a given expenditure path, substitution of debt for taxes does not affect private sector wealth and consumption. This paper provides a model illustrating the implications of Ricardian equivalence, surveys the litera-ture, considers effects of relaxing the basic assumptions, provides a frame-work to study implications of various extensions, and critically reviews recent empirical work on Ricardian equivalence. |
| relationship between saving and interest rate: Financial Economics Chris Jones, 2008-01-24 Whilst many undergraduate finance textbooks are largely descriptive in nature, the economic analysis in most graduate texts is too advanced for latter year undergraduates. This book bridges the gap between these two extremes, offering a textbook that studies economic activity in financial markets, focusing on how consumers determine future consumpt |
| relationship between saving and interest rate: Macroeconomics (With Study Guide Cd-rom) Jagdish Handa, 2010-09-24 This book presents the stylized facts on the important variables (output, inflation, money supply and interest rates, etc.) of the macro economy and uses them to differentiate how well particular economic theories perform or fail to do so. On the determination of aggregate demand, this book presents two approaches: the traditional IS-LM analysis under the assumption that the money supply is exogenous because the central bank uses its monetary policy to control it, and the emerging IS-IRT analysis under the assumption that the interest rate is the exogenous monetary policy variable set by the central bank to manipulate aggregate demand in the economy. The IS-IRT analysis is important for the macro analyses of many economies, yet is totally neglected in most textbooks on macroeconomics. The chapter on Paradigms in Economics introduces students to the heritage of ideas in macroeconomics, and the evolution of ideas and approaches over the last two centuries. It also provides the justification for the simultaneous relevance of both Classical ideas and Keynesian ones. The two growth theory chapters go beyond the Solow growth model to cover the broad evolution of growth from Malthus's theory to the present endogenous approaches, and the link between money supply, inflation and growth over very long periods. |
| relationship between saving and interest rate: Modern Economic Theory Sampat Mukherjee, 2002 This Edition Includes Several New Topics To Make The Coverage More Comprehensive And Contemporary. Various Concepts And Issues Involved In Economic Analysis Have Been Thoroughly Explained And Illustrated With The Help Of Examples Drawn From Our Daily Experience. The Inter-Relationships Between Different Concepts Have Been Suitably Highlighted. The Application Of Economic Tools For Problem Solving Has Been Emphasised. Review Questions And Exercises Have Been Included In Each Chapter To Help Students To Test Their Understanding And Prepare Confidently For Examinations.The Book Would Serve As Excellent Text For B.A., B.Com And Business Administration Students. Candidates Preparing For Various Professional And Competitive Examinations Would Also Find It Very Useful. |
| relationship between saving and interest rate: The Oxford Handbook of the Ethiopian Economy Fantu Cheru, Christopher Cramer, Arkebe Oqubay, 2019-01-10 From a war-torn and famine-plagued country at the beginning of the 1990s, Ethiopia is today emerging as one of the fastest-growing economies in Africa. Growth in Ethiopia has surpassed that of every other sub-Saharan country over the past decade and is forecast by the International Monetary Fund to exceed 8 percent over the next two years. The government has set its eyes on transforming the country into a middle-income country by 2025, and into a leading manufacturing hub in Africa. The Oxford Handbook of the Ethiopian Economy studies this country's unique model of development, where the state plays a central role, and where a successful industrialization drive has challenged the long-held erroneous assumption that industrial policy will never work in poor African countries. While much of the volume is focused on post-1991 economic development policy and strategy, the analysis is set against the background of the long history of Ethiopia, and more specifically on the Imperial period that ended in 1974, the socialist development experiment of the Derg regime between 1974 and 1991, and the policies and strategies of the current EPRDF government that assumed power in 1991. Including a range of contributions from both academic and professional standpoints, this volume is a key reference work on the economy of Ethiopia. |
| relationship between saving and interest rate: China's Economy in Transition Mr.Anoop Singh, Mr.Malhar Nabar, Mr.Papa M N'Diaye, 2013-11-07 China's current account surplus has declined to around one-quarter the peak reached before the global financial crisis. While this is a major reduction in China's external imbalance, it has not been accompanied by a decisive shift toward consumption-based growth. Instead, the compression in its external surplus has been accomplished through increasing fixed investment so that it is now an even higher share of China's national economy. This increasing reliance on fixed investment as the main driver of China's growth raises questions about the durability of the compression in the external surplus and the sustainability of the current growth model that has had unprecedented success in lifting about 500 million people out of poverty over the last three decades. This volume examines various aspects of the rebalancing process underway in China, highlighting policy lessons for achieving stable, sustainable, and inclusive growth. |
| relationship between saving and interest rate: Advanced Economic Theory LPSPE HL Ahuja, 2019 This authoritative and comprehensive text is an advanced treatise on microeconomics. Featuring simplified mathematical treatment, the book covers a wide spectrum of theories and concepts aimed at effective understanding of advanced economic theory. This revised edition explores further the concept of economic efficiency and the concept of utility and its critique by Prof. Amartya Sen. It further includes an incisive analysis of Hicksian and Slutsky substitution effect. The revision also includes important distinctions and critical analysis of several functions expositing the latest developments in the field. |
| relationship between saving and interest rate: O.T.A. Papers , 1978 |
| relationship between saving and interest rate: Targets, Interest Rates, and Household Saving in Urban China Mr.Malhar Nabar, 2011-10-01 This paper studies a panel of China's provinces over the period 1996-2009 during which urban household saving rates increased from 19 percent of disposable income to 30 percent. It finds that the increase in urban saving rates is negatively associated with the decline in real interest rates over this period. This negative association suggests that Chinese households save with a target level of saving in mind. When the return to saving declines (increases), it becomes more difficult (easier) to meet a target and households increase (lower) their saving out of current disposable income to compensate. The results are robust across specifications and to the inclusion of additional variables. A main policy implication is that an increase in real deposit rates may help lower household saving and boost domestic consumption. |
| relationship between saving and interest rate: Understanding Consumption Angus Deaton, 1992 An overview of the saving and consumption patterns of households |
| relationship between saving and interest rate: Economic Modelling in the OECD Countries Homa Motamen-Scobie, 2012-12-06 among the 159 member countries of the United Nations Organization which are treated as country units, while smaller countries are grouped together in regions. The number of equations used is approximately 13 700, while the number of software steps for computation is approximately 100000. Computation, including tabulation, can nevertheless be performed very rapidly, and only about 20 minutes is required to make forecasts from the present up to the year 2000. The FUGI model is at present being used by the Projections and Perspectives Studies Branch, Department of International Economic and Social Affairs of the United Nations, for simulations of United Nations medium- and long-term international development strategies, while the Project LINK model is being used for short-term forecasts (Onishi, 1985). Stimulated by our latest joint research with the United Nations University on a 'global early warning system for displaced persions', we have felt the need for our FUGI model to go beyond its present capacities centred on an 'economic' model (in the rather traditional, restricted sense of the term) and to develop into a model that can in the future analyse 'global problematiques' or 'global complexes of symptoms' and complicated questions including various types of environmental problems and the sorts of displaced persons issues to which we are now directing our attention. We are thus expanding the scope of our fifth-generation FUGI model, presently under development, to deal with such issues. |
| relationship between saving and interest rate: Money, Interest and Capital Colin Rogers, 1989-05-11 The novel feature of this study is the application of Keynes' principle of effective demand to demonstrate the existence of a long-run unemployment equilibrium without the assumption of rigid wages. |
