Keynesian Economics Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism. The first three describe how the economy works. 1. A Keynesian believes that aggregate demand is influenced by a host of economic decisions—both public and private—and sometimes behaves erratically. 2. Monetary policy can produce real effects on output and employment only if some prices are rigid—if nominal wages (wages in dollars, not in real purchasing power), for example, do not adjust instantly. But Keynesians believe that, because prices are somewhat rigid, fluctuations in any component of spending—consumption, investment, or government expenditures—cause output to fluctuate. 3. No policy prescriptions follow from these three beliefs alone. 4. 5. 6. About the Author Alan S. Further Reading Blinder, Alan S. Mankiw, N.
CFA Institute Publications: Financial Analysts Journal - 51(4):21 - Abstract Although earnings surprises have been studied extensively, they have not been examined in the context of contrarian strategies. Positive and negative earnings surprises affect “best” (high-P/E) and “worst” (low-P/E) stocks in an asymmetric manner that favors worst stocks. Long-term reversion to the mean, in which worst stocks display above-market returns while best stocks show below-market results, regardless of the sign of the surprise, continues for at least 19 quarters following the news. These results are consistent with mispricing (overreaction to events) prior to the surprise, and a corrective price movement after the surprise is consistent with extant research on underreaction. The mispricing-correction hypothesis explains the superior returns of contrarian strategies noted here and elsewhere in the literature. Topics Behavioral Finance Portfolio Management Equity Portfolio Management Strategies Author Information David N. Michael A. Cited by First Page Image
Keynesianismus John Maynard Keynes (1883–1946) Unter Keynesianismus [keɪnz-] wird in den Wirtschaftswissenschaften ein Theoriegebäude verstanden, in dem die gesamtwirtschaftliche Nachfrage die entscheidende Größe für Produktion und Beschäftigung ist. In diesem Sinne geht der Keynesianismus auf John Maynard Keynes’ Allgemeine Theorie der Beschäftigung, des Zinses und des Geldes von 1936 zurück. Die Interpretation von Keynes’ Allgemeiner Theorie durch John R. Hicks 1937 in Form des IS-LM-Modells war Grundlage der neoklassischen Synthese, als deren bekannteste Vertreter Paul Samuelson und Franco Modigliani gelten. Der amerikanische Neokeynesianismus lieferte die bis etwa 1970 dominierenden ökonomischen Modelle. Keynes’ engere Schüler in Cambridge lehnten diese Syntheseversuche stets ab, Joan Robinson nannte die neokeynesianische Schule nur verächtlich „bastard keynesianism“.[1] Die entgegengesetzte postkeynesianische Schule konnte jedoch nie starken Einfluss auf die mainstream-Ökonomie gewinnen. „J.M.
TIME: We Are All Keynesians Now (See Cover) The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. —The General Theory of Employment, Interest and Money Concluding his most important book with those words in 1935, John Maynard Keynes was confident that he had laid down a philosophy that would move and change men's affairs. Subscribe Now Get TIME the way you want it The print magazine in your mailbox The Tablet Edition on your iPad® Subscriber-only content on TIME.com, including magazine stories and access to the TIME Archive.
Efficient-market hypothesis In finance, the efficient-market hypothesis (EMH), or the joint hypothesis problem, asserts that financial markets are "informationally efficient". In consequence of this, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information available at the time the investment is made. Historical background[edit] The efficient-market hypothesis was developed by Professor Eugene Fama at the University of Chicago Booth School of Business as an academic concept of study through his published Ph.D. thesis in the early 1960s at the same school. The efficient-market hypothesis emerged as a prominent theory in the mid-1960s. It has been argued that the stock market is “micro efficient” but not “macro efficient”. Further to this evidence that the UK stock market is weak-form efficient, other studies of capital markets have pointed toward their being semi-strong-form efficient. Theoretical background[edit] Weak-form efficiency[edit]
Allgemeine Theorie der Beschäftigung, des Zinses und des Geldes John Maynard Keynes (1946) Die Allgemeine Theorie der Beschäftigung, des Zinses und des Geldes (häufig auch als Allgemeine Theorie oder General Theory (vom engl. Originaltitel The General Theory of Employment, Interest and Money) bezeichnet) wurde von dem britischen Ökonomen John Maynard Keynes verfasst. Es erschien im Februar 1936 und gilt als sein wirtschaftswissenschaftliches Hauptwerk. Das abstrakte und rein makroökonomische Werk richtet sich gegen klassische bzw. neoklassische Axiome („Postulate“), insbesondere gegen den sogenannten natürlichen Zinssatz und somit gegen das Saysche Theorem. Werk[Bearbeiten] Inhalt[Bearbeiten] Das Werk ist in sechs Bücher gegliedert und umfasst insgesamt 24 Kapitel: Erstes Buch: Einleitung 1. Rezeption[Bearbeiten] Die in der Allgemeinen Theorie enthaltenen revolutionären Gedanken wurden durch ein breites Spektrum von erklärten Anhängern wie Hicks bis zu offenen Gegnern wie Jacob Viner abgeschwächt, verfälscht und abgewertet. Kerngedanken[Bearbeiten]
Real wage - Wiki Real wages in the US from 1964 to 2004 have fluctuated. They have remained mostly stagnant over this period of time. U.S. productivity and average real earnings, 1947-2008 Despite difficulty in defining one value for the real wage, in some cases a real wage can be said to have unequivocally increased. The use of adjusted figures is used in undertaking some forms of economic analysis. An alternative is to look at how much time it took to earn enough money to buy various items in the past, which is one version of the definition of real wages as the amount of goods or services that can be bought. Real wages are a useful economic measure, as opposed to nominal wages, which simply show the monetary value of wages in that year. Example[edit] Consider an example economy with the following wages over three years. Year 1: $20,000Year 2: $20,400Year 3: $20,808 Real Wage = W/i (W= wage, i= inflation, can also be subjugated as interest). See also[edit] References[edit] External links[edit]
Momentum (finance) In finance, momentum is the empirically observed tendency for rising asset prices to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month.[1][2] The existence of momentum is a market anomaly, which finance theory struggles to explain. The difficulty is that an increase in asset prices, in and of itself, should not warrant further increase. Jump up ^ Jegadeesh, N; Titman S (1999).
The General Theory of Employment, Interest and Money Summary[edit] The central argument of The General Theory is that the level of employment is determined, not by the price of labour as in neoclassical economics, but by the spending of money (aggregate demand). Keynes argues that it is wrong to assume that competitive markets will, in the long run, deliver full employment or that full employment is the natural, self-righting, equilibrium state of a monetary economy. On the contrary, under-employment and under-investment are likely to be the natural state unless active measures are taken. One implication of The General Theory is that an absence of competition is not the main issue and measures to reduce unemployment by benefits or wage cuts have no major effect. Keynes sought to do nothing less but upend the conventional economic wisdom. Preface[edit] Keynes wrote four prefaces, to the English, German, Japanese and French editions, each with a slightly different emphasis. Book I: Introduction[edit] Book II: Definitions and Ideas[edit]
Keynes, Wage and Price 'Stickiness,' and Deflation | Dollars & Sense The General Theory and the Current Crisis: A Primer on Keynes’ Economics Intro | Pt. I | Pt. II | Pt. III | Pt. IV By Alejandro Reuss This article is from the September/October 2009 issue of Dollars & Sense: Real World Economics available at This is a web-only article, available only at www.dollarsandsense.org. Most people are accustomed to worrying about inflation, which has been a durable fact of life in the United States for half a century. Lower prices may sound appealing, but deflation can make a bad recession worse. Such concerns about deflation run sharply counter to the “mainstream” or neoclassical view of recessions. One response to the neoclassical argument is that, in fact, prices are not perfectly flexible (they exhibit “stickiness”). Keynes expressed, in numerous passages in The General Theory, the view that wages were “sticky” in terms of money. Did you find this article useful?
Security (finance) A security is a tradable asset of any kind.[1] Securities are broadly categorized into: The company or other entity issuing the security is called the issuer. A country's regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions. Securities may be classified according to many categories or classification systems: Securities are the traditional way that commercial enterprises raise new capital. Investors in securities may be retail, i.e. members of the public investing other than by way of business. Corporate bonds represent the debt of commercial or industrial entities. Euro debt securities are securities issued internationally outside their domestic market in a denomination different from that of the issuer's domicile. Hybrid securities combine some of the characteristics of both debt and equity securities.
2008–09 Keynesian resurgence In 2008 and 2009, there was a worldwide resurgence of interest in Keynesian economics among prominent economists and policy makers. This included discussions and implementation of economic policies in accordance with the recommendations made by John Maynard Keynes in response to the Great Depression— most especially fiscal stimulus and expansionary monetary policy.[1][2][3][4] From the end of the Great Depression until the early 1970s, Keynesian economics provided the main inspiration for economic policy makers in Western industrialized countries. In 2008, a rapid shift of opinion took place among many prominent economists in favour of Keynesian stimulus, and, from October onward, policy makers began announcing major stimulus packages, in hopes of heading off the possibility of a global depression. Background[edit] Competing views on macroeconomic policy[edit] Keynesian economics followed on from the Keynesian Revolution. The Keynesian ascendancy: 1941–1979[edit] Global trade imbalances.
Hansjörg HERR Arbitrage Arbitrage-free[edit] Conditions for arbitrage[edit] Arbitrage is possible when one of three conditions is met: Arbitrage is not simply the act of buying a product in one market and selling it in another for a higher price at some later time. The transactions must occur simultaneously to avoid exposure to market risk, or the risk that prices may change on one market before both transactions are complete. In practical terms, this is generally possible only with securities and financial products that can be traded electronically, and even then, when each leg of the trade is executed the prices in the market may have moved. In the simplest example, any good sold in one market should sell for the same price in another. See rational pricing, particularly arbitrage mechanics, for further discussion. Mathematically it is defined as follows: where and denotes the portfolio value at time t. Examples[edit] Price convergence[edit] Arbitrage has the effect of causing prices in different markets to converge.