Flashcards in Capital Market Others Deck (4)
What is the Taylor Rule?
It is used to assess the central banks and predict changes.
Determines the target interest rate using the neutral rate, expected GDP relative to long get, trend, and expected inflation relative to its targeted amount.
Rtarget = R neutral + [0.5(GDPexp - GDPtrend)+ 0.5(infl exp - infl target)]
What are five elements of a pro-growth government structural policy?
Sound fiscal policy
Minimal public sector intrusion
private sector competition
infrastructure and human capital development
sound tax policies
What are four factors usually associated with emerging market economies (vs developed)?
Require high rates of investment - reliance on foreign capital
Volatile political and social situations
IMF/World Bank provide external sources of investment in return for structural reforms
Small and undiversified economies