The paper examines the macroeconomic determinants of investment decision in Nigeria using IS-LMBP-RP
approach. The data series employed were gathered from various sources such as National Bureau of
Statistics, Central Bank of Nigeria statistical bulletin and World Bank data base. The study employs the
theoretical propositions of IS-LM-BP-RP which was developed by Gray and Melone (2008). Considering the
backward bending of BP curve, the empirical results in the study confirm the validity of the backward bending of
BP curve in the Nigerian economy. The result equally indicates that if Mundell-Fleming model is used to
formulate policies in Nigeria, the risk factors will be significant enough to affect the validity of the policy. Based
on the policy responses to backward bending of BP curve analyzed in this paper, we recommend that moderate
expansionary monetary policy should be adopted and this will reduce the high risk premium brought about by
the high increase in the level of interest rate and thus increase the level of output.
Inward FDI flows to developing economies in 2014 reached their highest level at $681 billion with a 2 per cent rise. Developing economies thus extended their lead in global inflows. China became the world’s largest recipient of FDI. Among the top 10 FDI recipients in the world, 5 are developing economies. What are the advantages and disadvantages of foreign direct investment for developing countries?
Effect of budget deficits on economic growthNigus Temare
The main objective of this study was to investigate the effect of budget deficit on economic growth in Ethiopia. For this purpose, the study used time series secondary data, and the data was extracted from the World Bank development indicators, Ministry of Finance, and National Planning and Development Commission of Ethiopia. The data covered a period running from 1994 to 2020.The study employed the Autoregressive Distributed Lag (ARDL) co-integration technique to determine the long and short-run relationship between budget deficit and economic growth. The findings resulted from modeling and analysis of the study showed that there exists a negative relationship between budget deficit and economic growth in Ethiopia and these results are consistent with the neoclassical economist schools of thought. Besides, the inflation rate is affecting the economic growth negatively and significantly whereas, government expenditure and trade openness affect the economy positively and statistically significant in the long run. On the other hand, the analysis in the short-run revealed that the budget deficit is positive but statistically insignificant. This indicates that budget deficit changes have no immediate effect on economic growth. The study suggested some policies which are important for the government of Ethiopia to avoid certain levels of the budget deficit to achieve the desired level of growth.
Inward FDI flows to developing economies in 2014 reached their highest level at $681 billion with a 2 per cent rise. Developing economies thus extended their lead in global inflows. China became the world’s largest recipient of FDI. Among the top 10 FDI recipients in the world, 5 are developing economies. What are the advantages and disadvantages of foreign direct investment for developing countries?
Effect of budget deficits on economic growthNigus Temare
The main objective of this study was to investigate the effect of budget deficit on economic growth in Ethiopia. For this purpose, the study used time series secondary data, and the data was extracted from the World Bank development indicators, Ministry of Finance, and National Planning and Development Commission of Ethiopia. The data covered a period running from 1994 to 2020.The study employed the Autoregressive Distributed Lag (ARDL) co-integration technique to determine the long and short-run relationship between budget deficit and economic growth. The findings resulted from modeling and analysis of the study showed that there exists a negative relationship between budget deficit and economic growth in Ethiopia and these results are consistent with the neoclassical economist schools of thought. Besides, the inflation rate is affecting the economic growth negatively and significantly whereas, government expenditure and trade openness affect the economy positively and statistically significant in the long run. On the other hand, the analysis in the short-run revealed that the budget deficit is positive but statistically insignificant. This indicates that budget deficit changes have no immediate effect on economic growth. The study suggested some policies which are important for the government of Ethiopia to avoid certain levels of the budget deficit to achieve the desired level of growth.
The theory of multiplier and acceleration principle chapter 3Nayan Vaghela
The theory of multiplier and acceleration principle chapter 3, functioning of investment multiplier, the process of income generation through multiplier, acceleration principle, limitations of multiplier and acceleration.
In Keynesian Economics equilibrium is reached at a point where Ad equals AS. On the Other hand for equilibrium Consumption must equal Investment given the fact that S = I. The rete of interest which is the major determinant of Investment is determined in Money Market. It is therefore essential that at equilibrium all these markets should be in equilibrium. IS LM explains simultaneous equilibrium in all the markets.
Factors Affecting Investment Decisions in the Stock ExchangeAyman Sadiq
Stock markets always play a crucial role in the growth and stability of a country's economy. The development of the stock market encourages capital accumulation, efficient use of resources and promotion of economic growth. The rise of stock market can increase opportunities for investment and expansion for industries, thus creating more jobs and increasing the purchasing capacity of the people. On the other hand, stock market crashes throughout history have caused economic slowdowns, recessions, unemployment, curbed consumer spending etc. In basic terms, when people choose to invest their savings into the stock market instead of keeping the money at home, the funds become an active part of the economy as they become available to industries for use in productive purposes. In Bangladesh, the total market capitalization or worth of all the companies listed on Dhaka Stock Exchange alone stands at an impressive $50 billion.
However, in Bangladesh experienced massive downturns in the stock exchange in 2010. The predominantly bullish market (characterized by large and powerful investors) turned bearish (characterized by loss of investor confidence and a consistent decline in the value of stocks). Millions of small investors lost millions in equity and it is popular belief that the whole incident was a scam and resulted from government negligence.
As such, the aim of this paper was to search for the factors that affect the buying behavior of investors and to see whether investor choices were grounded in fact or fiction. As such, the research was conducted on a sample of 80 investors covering different demographic avenues ranging from age, years of education, monthly income, marital status and some other characteristics. The research team identified 6 broad factors of investment choices further broken down into small variables of measurement.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Tax Incentives and Foreign Direct Investment in Nigeriaiosrjce
Given the significance of Foreign Direct Investment (FDI) to economic growth and the use of tax
incentives as a strategy among government of various countries to attract FDI, this study examines the influence
of tax incentives in the decision of an investor to locate FDI in Nigeria. Data were drawn from annual statistical
bulletin of the Central Bank of Nigeria and the World Bank World Development Indicators Database. The work
employs a model of multiple regressions using static Error Correction Modelling (ECM) to determine the time
series properties of tax incentives captured by annual tax revenue as a percentage of Gross Domestic Product
(GDP)and FDI. The result showed that FDI response to tax incentives is negatively significant, that is, increase
in tax incentives does not bring about a corresponding increase in FDI. Based on the findings, the paper
recommends, amongst others, that dependence on tax incentives should be reduced and more attention be put on
other incentives strategies such as stable economic reforms and stable political climate.
Effect of Government Policies on Price Stability in Nigeriaijtsrd
This study examined the effect of monetary and fiscal policies on price stability in Nigeria using a data rich framework spanning from 1986 2020. The main problem with the macro economic policies that prompted this study was the fact that despite the series of the CBN Monetary Policy Committee decisions and government tax and expenditure implementation there is apparently no useful effect on inflation price . The study employed Auto regression Distributed Lag ARDL Bound Test for Co integration of data analysis depending upon the time series properties of the data that confer mixed order of integration in addition to the conduct of the unit root test and Error Correction Model ECM estimation. The ADF test revealed that LNCPI, EXR, GSDMD, GEXP, GTX and M2 were stationary at 1 1 while RIR, MPR and BOP at 1 0 . Pesaran, Shin and Smith 2001 established that the ARDL bounds technique allows a mixture of 1 1 and 1 0 variables as regressors. Hence, we proceed to perform the ARDL bounds test for integration. The results of the ARDL bounds revealed that the null hypotheses were all rejected implying that a long run effect exists among monetary and fiscal policies variables and CPI in a multivariate framework. ECM coefficient of 0.2942 conforms with expectation. Durbin Watson statistic 0f 1 9925 revealed that the model seems not to have any case of autocorrelation. The result of our analysis shows that fiscal policy rather than monetary policy exerts a more potent effect on price stability in Nigeria. The study recommends that both monetary and fiscal policies should be complementary in order to be effective in taming inflation in Nigeria. Onehi, Damian Haruna | Ibenta, Steve Nkem | Adigwe, Patrick, K. | Emejulu, Ikenna Justin "Effect of Government Policies on Price Stability in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-1 , February 2023, URL: https://www.ijtsrd.com/papers/ijtsrd52766.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/52766/effect-of-government-policies-on-price-stability-in-nigeria/onehi-damian-haruna
Using a series of econometric techniques, the study analysed interaction between monetary policy and private sector credit in Ghana. This study made use of monthly dataset spanning January 1999 to December 2019 of credit to the private sector (PSC) and broad money supply (M2). The results reveal that there exists cointegration, a long run stationary relation between monetary policy and private sector credit. This implies, increases in credit should prompt long-term increases in monetary policy. It is not surprising that growth in the private sector might have a stronger effect on monetary policy. The Error Correction Test is statistically significant and that all the variables demonstrate similar adjustment speeds. This implies that in the short run, both money supply and credit are somewhat equally responsive to their last period’s equilibrium error. There is unidirectional causation from private sector credit to monetary policy. It can be said that, there is an interaction between money supply and private sector credit. Thus, credit to private sector holds great potential in promoting economic growth. It can be recommended to the government to increase the credit flow to the private sector because of its strategic importance in creating and generating growth of the economy.
Macroeconomic Variables and Financial Sector Output in Nigeriaijtsrd
The study investigated the effect of selected macroeconomic variables on the financial sector of Nigeria from 1986 to 2018. The study employed monetary target variables, namely money supply, interest rate, inflation rate, exchange rate and credit to private sector as proxies for macroeconomic variables while the outputs from financial sector on as dependent variable. The data obtained from the Central Bank of Nigeria Statistical Bulletin, were tested subjected to Augmented Dickey Fuller ADF test of stationarity, descriptive statistics, and Autoregressive Distributive Lag ARDL . The results revealed that macroeconomic variables has 99 significant short run effect but no significant long run effects on financial sector output in Nigeria. Specific findings revealed that money Supply M2 and Exchange Rate EXR have significant positive relationships with growth of the financial sector at current and third lags, respectively but inflation rate has a significant negative effect on financial sector output in the current period, while Interest rate INT and Credit to Private Sector had no significant effect on financial sector output within the short run periods in Nigeria. It thus recommended that the government employ inflation stabilisation policies and encourage export, and close borders to import on financial services into Nigeria. Dr. Loretta Anayoozuah | Prof. Steve N. Ibenta | Dr. Ikenna Egungwu "Macroeconomic Variables and Financial Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-1 , December 2020, URL: https://www.ijtsrd.com/papers/ijtsrd37966.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/37966/macroeconomic-variables-and-financial-sector-output-in-nigeria/dr-loretta-anayoozuah
This study brings to an academia table the discussion on whether investment incentives are a
motivator or a gift and also explores the moderating effects of Investors‟ Perceptions on Stock market
Performance. By use of key word characters the search initially identified 93 published and unpublished research
papers and after a tentative scrutiny, 66 papers were selected in a random sampling manner in order to give the
birth to this discussion paper. Exploratory research design was used. The key objective of this article was to
investigate on the question as to whether incentives are a gift or a motivator. The study findings reveal than
investor perceptions affects stock market performance more than incentives do. The paper concludes that the
availability, adequacy, and timeliness of relevant information about marketable securities are important for both
pricing efficiency and market confidence. Investment incentives work well in an ideal world to promote
investment while investors‟ perceptions are relevant in the real world. Hence, stock market incentives were
concluded as being a gift and not a motivator for investors to make investment decisions at the stock market.
Similar to Macroeconomic Determinants of Investment Decision in Nigeria: IS-LM-BP-RP Approach (20)
An Examination of Effectuation Dimension as Financing Practice of Small and M...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Does Goods and Services Tax (GST) Leads to Indian Economic Development?iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Childhood Factors that influence success in later lifeiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Emotional Intelligence and Work Performance Relationship: A Study on Sales Pe...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Customer’s Acceptance of Internet Banking in Dubaiiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study of Employee Satisfaction relating to Job Security & Working Hours amo...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Consumer Perspectives on Brand Preference: A Choice Based Model Approachiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Student`S Approach towards Social Network Sitesiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Broadcast Management in Nigeria: The systems approach as an imperativeiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study on Retailer’s Perception on Soya Products with Special Reference to T...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study Factors Influence on Organisation Citizenship Behaviour in Corporate ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Consumers’ Behaviour on Sony Xperia: A Case Study on Bangladeshiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Design of a Balanced Scorecard on Nonprofit Organizations (Study on Yayasan P...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Public Sector Reforms and Outsourcing Services in Nigeria: An Empirical Evalu...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Media Innovations and its Impact on Brand awareness & Considerationiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Customer experience in supermarkets and hypermarkets – A comparative studyiosrjce
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Implementation of Quality Management principles at Zimbabwe Open University (...iosrjce
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Organizational Conflicts Management In Selected Organizaions In Lagos State, ...iosrjce
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Macroeconomic Determinants of Investment Decision in Nigeria: IS-LM-BP-RP Approach
1. IOSR Journal of Economics and Finance (IOSR-JEF)
e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 6, Issue 4. Ver. II (Jul. - Aug. 2015), PP 68-74
www.iosrjournals.org
DOI: 10.9790/5933-06426874 www.iosrjournals.org 68 | Page
Macroeconomic Determinants of Investment Decision in Nigeria:
IS-LM-BP-RP Approach
Ogunsakin Sanya (Ph.D) Saliu Mojeed Olanrewaju
Department Of Economics, Faculty Of The Social Sciences, Ekiti State University,
Ado-Ekiti, P.M.B. 5363, Ado-Ekiti, Ekiti State, Nigeria.
Abstract: The paper examines the macroeconomic determinants of investment decision in Nigeria using IS-LM-
BP-RP approach. The data series employed were gathered from various sources such as National Bureau of
Statistics, Central Bank of Nigeria statistical bulletin and World Bank data base. The study employs the
theoretical propositions of IS-LM-BP-RP which was developed by Gray and Melone (2008). Considering the
backward bending of BP curve, the empirical results in the study confirm the validity of the backward bending of
BP curve in the Nigerian economy. The result equally indicates that if Mundell-Fleming model is used to
formulate policies in Nigeria, the risk factors will be significant enough to affect the validity of the policy. Based
on the policy responses to backward bending of BP curve analyzed in this paper, we recommend that moderate
expansionary monetary policy should be adopted and this will reduce the high risk premium brought about by
the high increase in the level of interest rate and thus increase the level of output.
Keywods: Mundell-Fleming model, risk premium, monetary policy, fiscal policy, BP curve
I. Introduction
In Keynesian terminology, investment refers to real investment which adds to capital equipment. It
leads to an increase in the level of income and production by increasing the production and purchase of capital
goods. Investment, thus, includes new plants and equipment, construction of public works, net foreign
investment, inventories, stock and shares of new companies. Investment is the most important macroeconomic
variable that can impact the economic growth. Investment spending makes direct contribution to economic
activity, because it is the most volatile component of GDP (Ahmed, 2012).
Strong and robust investment decisions depend on a good policy design that determines whether
investments pay off in greater competitiveness for firms and in sustained growth for the economy. Among the
policy areas that deals effectively with investment decision analysis is the IS-LM-BP framework which is
popularly referred to as the Mundell-Fleming (M-F) model. This model has enjoyed wide popularity since the
early 1960s and still plays a prominent role in shaping policy decisions till today most especially, in the area of
investment decision making.
Over the years, this model has proven very useful in drawing conclusions about the impact of policy
actions on output, interest rates and the balance of payments adjustment process under alternative exchange rate
regimes. Also, since it distinguishes between current and capital transactions in the balance of payments, it deals
with the effects of policy shifts on a country’s current account balance. Basically, Mundell-Fleming model is an
extension of classic IS-LM analysis to an open economy, assuming international capital mobility, imperfect
substitutability between domestic and foreign goods, a fixed aggregate price level and variable real output,
(Daniels and Vanhoose, 2002).
However, because of the fact that the world economies are integrated financially, the world economic
downturn which started in United State of America and United Kingdom in 2007 had a significant impact on the
Nigerian economy. The channel of impact includes the indirect effect of volatile and falling commodity prices
particularly crude oil, low inflow of capital, low remittance from abroad, decline in foreign aids, low foreign
direct investment and portfolio investment. This in turn has brought about weaker export revenue, pressures on
current account and balance of payment with negative effect on investment, growth rates and employment (IMF,
2008)
A lot of policy designs have been put forward by the Nigerian government and economic analysts to
fight against the menace brought about by the advent of economic depression in Nigeria. But these policies have
been proved unfruitful as policy-related costs are responsible for a high percentage of firms’ operational
downfall which arises from outmoded and ill-conceived policies on the part of the Nigerian government.
Omotola (2008) identifies weak, poor and inconsistent government policies as a major factor constraining
investment and trade decision in Nigeria. No wonder the position of Nigeria among some West African countries
with respect to some investment performance indicators remain poor in the Global Competitiveness Report 2007-
2008. Nigeria ranked 88 in 2007 and 101 in 2009 in the global competitiveness ranking while Botswana ranked
2. Macroeconomic Determinants of Investment Decision in Nigeria: IS-LM-BP-RP Approach
DOI: 10.9790/5933-06426874 www.iosrjournals.org 69 | Page
48 and 81 and Mauritius 52 and 55 in the same period. Ghana ranked 45 against Nigeria’s 76 under the Business
Competitiveness Index in 2007 (Africa Competitiveness Report, 2008).
Series of research works have made use of Mundell-Fleming model by the Nigerian and Overseas
researchers for the analysis of investment decision making. However, in Nigeria, only an overview of the
importance of Mundell-Fleming framework in the decision making analysis has been given but no suggestion has
been made on how to incorporate risk into the model. A striking flaw of Mundell-Fleming model is the omission
of risk factors. This omission is a serious one, because risk impacts the decision to spend, save and invest
(Flyvbjerg, 2012). Consequently, an increase in the risk premium could destroy many investment already
planned and reduce the number of new feasible projects if not monitored. Therefore, the objective of this
research work is to correct the above anomalies by incorporating risk factors into the Mundell-Fleming model
and to test its applicability in the Nigerian economy. These will thus, form new macroeconomic policy and
decision making mechanism suitable for investment decision making in Nigeria. The rest of the paper is
organized as follows, in the next section, we provide a brief review of the relevant literature. In section 3, we set
out a theoretical model to link risk factors into the macroeconomic model. A discussion of data and relevant
variables construction is provided in section 4. Following this is the section 5, where a brief conclusion and
policy recommendation is provided.
II. Literatures Review
Great attempts have been made by different researchers to provide evidences on the linkages between
investment and risk. The work of Lettau and Ludvigson (2002) focuses on investment decision and their
relationship with the risk premium. They use Q theory and a consumption-wealth ratio as proxy for the future
risk premium and then analyze the link between this proxy and future long-term investment.
Fuerst (2004) measures the dynamic multifactor risk premiums directly using the Fama and French asset
pricing model and test whether these premiums have implications for future real economic activity including new
durable goods. The results of which drive corporate managers’ financial decision making. Wachter (2007) links
the changing equity risk premiums in the United States to shifting volatility in the real economy. They attribute
the lower equity risk premiums of the 1990 to a reduced volatility in real economic variables including
employment, consumption and GDP growth.
Ursua (2009) modeled the catastrophic risk as both a drop in economic output (an economic depression)
and partial default by the government on its borrowing. They use panel data on 24 countries over more than 100
years to examine the empirical effects of catastrophic risk. Investigating the asset pricing implications, they
conclude that the consequences for equity risk premiums will depend upon investor utility functions.
Hampton and Sutton (2012) suggested the need for enterprises to imbibe a culture of managing risk.
They state that risk management involves aligning financial risk management with the business strategy. Elinner
and Walker (2012) suggested further that managing risks, integration into the wider business and boosting
innovation and growth is where the future of overcoming uncertainties in financing and other business decision
lies. Wellisz (2012) opined that the entrepreneur’s risk and the lender’s risk increase with the size of the loan.
They stated further that with the investor’s limited capital, the size of loan is limited. Therefore basing
investment on the investor’s own capital may mean a decrease in potential risk to finance even as the size of the
business increases. The risk involved shows that the rate of growth of the business under different risk conditions
will create a difference in the capital structure of the firm.
III. Theoretical Model
The aim of this research work is to link risk factors into the macroeconomic model which is rested on
the theoretical propositions developed by Gray and Malone (2008) and revised by Yonggang, Jiaqi, Lingfeng and
Pei, (2013). The macroeconomic model is a new open macroeconomic IS-LM-BP model and the introduction of
the risk factors is based on the risk premium.
The new open macroeconomic IS-LM-BP model was developed by Mundell and Fleming (1962). In the
model, there are three equilibriums of commodity markets, money markets and the international balance of
payments.
3.1 Output equation: Commodity market equilibrium is reached when the total output is equal to the total
supply. The total supply includes consumption, investment, government spending and net exports. Therefore, the
IS curve is given by:
IS: yS
= yD
Where yD
= C y + I r + G + NX
3. Macroeconomic Determinants of Investment Decision in Nigeria: IS-LM-BP-RP Approach
DOI: 10.9790/5933-06426874 www.iosrjournals.org 70 | Page
Money market equation: The money market equilibrium is reached when money supply is equal to the money
demand. The money supply, (M), and price index, (P), are exogenously given variables and the currency demand
is a function of the interest rate and aggregate income. Therefore, the LM equation is given by:
LM: MS
= MD
Where MS
= M
P and MD
= L ( r , y )
M
P = L ( r , y )
Balance of payment equation: The BP function reflects the balance of international payments, including the
balance of current account and capital account, net exports and net inflow of foreign capital.
3.2 Is-Lm-Bp Model With Risk Factors
IS-LM-BP model is a static model that is often targeted towards the formulation of fiscal and monetary
policy for an open economy. Meanwhile, assets value of firms can be subjected to changes at a given point due to
some risk factors. Therefore, the integration of IS-LM-BP macroeconomic model with the risk factor can provide
some dynamic analysis for effective policy formulation.
Incorporating risk factors, the system will now become IS-LM-BP-RP model where RP is the Risk Premium and
it is specified as follows:
The sign below the variables indicate the sign of the marginal effect of an increase in the variable on the
function of which it is a part.
In the IS equation, the aggregate demand responds negatively to the risk-free rate (r) and positively to a
rise in real income (Y).
In the BP equation, the trade flows which is represented by net exports NX depend upon real income
(Y) and the exchange rate (e). Capital flows, which is denoted by KA, are positively related to the differential
between home and foreign risk-free rates, ( r – r*) as in the case of Mundell-Fleming model but are also
negatively related to the differential between domestic and foreign risk premium ( ρ - ρ*). This assumption is
quite justifiable because investors are often attracted to a favorable differential in interest rate, but they also hate
the risk of loss ( Gray and Malone, 2008).
ρ is used to indicate Risk Premium (RP) which is positively related to both risk-free rate and exchange
rate. Based on the above propositions, the rise in the risk-free rate will increase the risk premium, reduce the
aggregate demand and net capital inflows which will thus reduce the marginal product. As a result of the
structure indicated by the BP and the Risk Premium (RP) equations, the BP curve is backward bending as shown
below:
4. Macroeconomic Determinants of Investment Decision in Nigeria: IS-LM-BP-RP Approach
DOI: 10.9790/5933-06426874 www.iosrjournals.org 71 | Page
Figure 1:
3.3 Monetary And Fiscal Policy Responses To Backward Bending Bp Curve
3.3.1 Monetary Policy
Figure 2:
The effects of expansionary monetary policy
Source: Adapted from (Gray and Malone, 2008)
The LM curve shifts to the right with the increase in the money supply. This leads to a new stable
equilibrium in which output is higher and the risk-free rate is lower than before the BOP shock. However, the
above analysis is only valid for a moderate expansionary monetary policy, because a large monetary expansion
will provoke a higher risk-free rate and lower output on the long-run (Malone and Gray, 2008).
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3.3.2 Fiscal Policy
Figure 3:
The effects of expansionary and contractionary fiscal policy
Source: Adapted from (Gray and Malone, 2008)
The fiscal expansion shifts the IS curve to the right, thus leading to a new equilibrium in which both the
output and the risk-free rate are higher than before the BP shock. On the other hand, the fiscal contraction shifts
the IS curve to the left and this will lead to a new equilibrium in which both output and the risk-free rate are
lower than before the BP shock.
Going by the analysis made above, in the economy where BP backward bending is applied in which risk
premiums are high and capital flows and investment are backward, then moderate expansionary monetary policy
is the appropriate response. Contractionary fiscal policy may be used as a defense as well but at the expense of
lower output.
IV. Empirical Analysis
It is quite pertinent to research empirically the backward bending of BP curve which is similar to the
study conducted by Yonggang, Jiaqi, lingfeng and Pei (2013). This is done in this research work by using
Nigeria data from years 1981 to 2010, so as to test the validity of backward bending of BP curve in the Nigerian
economy.
Following from the theoretical propositions of IS-LM-BP-RP model which was developed by Gray and Melone
(2008) and considering the backward bending of BP curve, the model used in this work is explicitly specified as
follows:
GFCF = α1 + α2 Exr + α3 DRFR + α4 DRP + εt … … … … … … … … … … . . (1)
GFCF = α1 + α2 Exr + α3HRFR + α4 FRFR + εt … … … … … … … … … … … . (2)
The first equation signifies a situation where there is introduction of risk factors, while the second equation
indicates no risk factors.
Where:
GFCF = Gross Fixed Capital Formation
Exr = Exchange rate
DRFR = Difference of domestic and foreign risk-free interest rate
HRFR = Home risk-free interest rate
DRP = Difference of domestic and foreign risk premium
FRFR = Foreign risk-free interest rate
εt = Error term
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Gross Fixed Capital Formation is used to capture investment; Treasury Bill Rate is used as proxy for
risk-free interest rate. Risk Premium is calculated by deducting Treasury Bill Rate from Lending Rate and United
State is used as the foreign economy.
4.1 Sources Of Data
The data set for this paper consist of annual time series spanning 1981 through 2010. The variables
under consideration are: Gross Fixed Capital Formation, Domestic and Foreign Treasury Bill Rates, Domestic
and Foreign Lending Rate and Exchange Rate. Data on Gross Fixed Capital Formation and Exchange Rate were
sourced from National Bureau of Statistics data base while data on other variables were sourced from World
Bank data base.
V.Result And Discussion
TABLE 1:Values of estimated parameters with Risk Factors
VARIABLES COEFFICIENT STANDARD ERROR PROBABILITY
EXR -0.041129 0.0206429 0.057
DRFR -0.0817873 0.3737796 0.829
DRP -0.4268364 0.1518531 0.009
R-Squared = 0.4212, Adjusted R-squared = 0.3544
Source: Author’s computation
Table 2: Values Of Estimated Parameters Without Risk Factors
VARIABLES COEFFICIENT STANDARD ERROR PROBABILITY
EXR -0.0037397 0.0264562 0.889
HRFR -0.1529351 0.2102886 0.474
FRFR 1.326434 0.4914968 0.012
R- Squared = 0.4937, Adjusted R- squared = 0.4353
Source: Author’s computation
The OLS regression above show the results of the estimated parameters with and without the
introduction of risk factors into the BP equation. Table 1 has a lower regression level with R2
and adjusted R2
of
0.42 and 0.35 respectively compared to the table 2 which has a higher regression level with R2
and adjusted R2
of
0.49 and 0.44 respectively. The results in table 1 indicate a negative impact of high-risk premium on investment
level in Nigeria. The result in table 1 equally shows that the difference in domestic and foreign Risk Premium
has a significant negative impact on the investment level in Nigeria. The result therefore confirms the validity of
backward bending of BP curve in Nigeria which is as a result of high-risk premium.
VI. Conclusion And Policy Recommendation
This research work augmented the open economy Mundell-Fleming model to include risk factors which
is in line with the propositions of Gray and Melone (2008) and Yonggang, Jiaqi Lingfeng and Pei (2013). In
addition to the three equilibriums of product market, money market and the international balance of payments,
the equilibrium of the risk factors is also analyzed. This paper therefore concludes that the introduction of risk
premium forces the BP curve to bend backward.
The empirical results in this research work equally confirm the validity of the backward bending of BP
curve in the Nigeria economy. The results indicate that if Mundell-Fleming model is used to formulate policies in
Nigeria, the risk factors will be significant enough to affect the validity of the policy.
Based on the policy responses to backward bending of BP curve analyzed in the theoretical model and
the results from this empirical research work, this paper therefore recommends that moderate expansionary
monetary policy should be adopted, as this will reduce the high risk premium brought about by the high increase
in the level interest rate and thus increase the level of output.
7. Macroeconomic Determinants of Investment Decision in Nigeria: IS-LM-BP-RP Approach
DOI: 10.9790/5933-06426874 www.iosrjournals.org 74 | Page
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