The governments in these countries have been actively taking policy measures, such as quantitative easing and easy monetary policies to boost up the economies and increase level of economic performance. Table of Contents Table of Contents 3 Central Bank Tools Discussion 5 Recent Recession and its effects 8 Equity Markets Bubble in Banking Sector 9 Compare QEs in US, EU and Japan 10 Effects on the Labour Markets 11 Conclusion 12 Works cited 13 Name of the Student Name of the Professor Course Number Date The role of quantitative easing in distorting equity markets leading to a distortion in the labour market Recessionary background The financial crisis that had hit the America and the European Union in the 2008 has come to an end in the 2009, according to economists. However, the effects of crisis have been lingering around for the last four years. The financial crisis had ruptured the financial system and has consequently affected the entire global economy. As the financial drought has neared its end in the year 2009, think tanks consisting of economist and politicians from around the world have been investigating the root cause of global crisis. The actual reason has yet remained a debatable discussion. However, near consensus has been reached on one factor that has led to the financial breakdown; high default rate on the subprime mortgages. In the Europe, high liquidity had led to high level of risky transactions in the real estate market. Loans were provided at low rates of interest and without accepting fair amounts of security. Some of the large financial institutions that were affected the most in this scenario were, Lehman Brothers, Bear Sterns and Northern Rock (Weisberg, “What Caused the Economic Crisis?”). This financial down turn had caused economic activities to slowdown in the Europe and the United States. This has been the primary reason behind the global recession in the first decade of the twenty first century. The effect of the financial crisis has been an elongated one. The extent upto which the effect of recession in the European Union is being experienced is a longer period of time than the actual period of time for which the financial break down had occurred in these countries (Arcega, “European Recession Now Longer than 2008 Financial Crisis”). The countries in Europe are still striving to recover from the after effects of the crisis. Out of the seventeen nations that follow the common currency, Euro, nine countries are in the state of recession in 2013. While in general recession lasts for four quarters in a financial year, this recession is lasting for more than six quarters. Central Bank Tools Discussion In general, the central banks raise lending activity indirectly by cutting the rate of interest. Lower interest rate encourages investors to make higher levels of investment. People are also induced to spend more. But when rates of interest come close to zero, the central bank cannot further lower the interest rate (“What Is Quantitative Easing?”). It has the last option of directly injecting higher amount of money in the economy. The central bank can do this by purchasing assets (usually in the form of government bonds). This raises the level of money supply in the economy. The financial crisis
THE ROLE OF QUANTITATIVE EASING IN DISTORTING EQUITY MARKETS LEADING TO A DISTORTION IN THE LABOUR MARKET Executive summary The US economy has faced severe financial breakdown during 2007 and since then it is suffering from the after effects of recession. The Euro zone is also victim to housing market crash during the same period and is still struggling to recover its economic condition…
Over the last two years, the company has experienced a considerable decline in its turnover. From the internal discussions which the managing director and the store managers have had, two possible causes have been identified which are: either online DVD rental competitors are attracting Film 4 You customers or what the company offers fall below the expectations of the consumers.
For Winkler (1), globalization is “the transnational movement of factors of production, goods, and services”. Globalization is therefore characterized by; increased cross-border trade, foreign direct investments, migration, capital flows as well as flow of knowledge.
As Bonner, Wiggin, and Incontrera (2009) point out, through quantitative easing, a central bank generally purchases different types of financial assets to pump a fixed volume of money into the economy with intent to promote economic activities and thereby to boost growth rate (p.
In most cases, the central bank tends to employ this form of policy in a situation where the interest rates do not show any probability of making the expected results. Use of quantitative easing is associated with various risks including having a fixed amount of various goods intended for sales.
Quantitative easing has many negative effects on consumers, especially those approaching retirement and those who have savings. This paper focuses on how it influences change in food prices. In 2011, the president of Euro Pacific Capital Peter Schiff states that the instability in the commodities market is influenced by the nations that print much money and demean their currencies.
This paper also found out that there is an increase in the number of retail positions in any area that Wal-Mart chooses to open a new store. From my research, I discovered that when Wal-Mart opens a new store, this leads to increased retail employment. This translates in one Wal-Mart’s worker replacing roughly 1.4 workers in other retail stores.
During the recruitment process, a series of important observation was made. Observation on Selection of the Labors: During the selection, many migrant workers had been considered for various posts in the organization whose qualifications, talent and prior knowledge would not be acknowledged outside the United States of India.
Economic and finance ministers from the G20 nations are conducted a meeting in Argentina to discuss the increasing volatility among food and commodity prices. Food prices are no longer depended on the traditional economic motion of supply and demand in a market.
What decides the lengths of livelihood and unemployment spells? By what means would we be able to all the while have unemployed workers and unfilled opening? What elements focus the total unemployment and opening rates? By what means can obviously
financial assets from commercial banks and other private institutions therefore increasing the prices of the same financial assets while decreasing their yield and increasing the monetary base at the same time. This is different from the typical policies of buying or selling
11 pages (2750 words)Research Paper
Get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Apply my DISCOUNT
Got a tricky question? Receive an answer from students like you!Try us!
Didn't find an essay?
Contact us via Live Chat, call us at +16312120006or send an email to email@example.com