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Showing posts from June, 2014

Financial globalization and the capital market

The impact of the financial crisis on the Tunisian financial market The patterns of cross-border capital raised the effect on the developments of domestic markets and highlighted the differences between advanced and developing economies. One of the effects of this globalization is the introduction of the euro and the effect it had on the European and global capital markets by bringing into existence a currency area comparable in size to that of the United States. However, the globalization had also a downside resulted by the effects of the financial crises on foreign capital raisings during the 2007-09 global financial crisis. Financial globalization expanded the international capital markets to investors and firms all over the world. Foreign capital raisings by firms have increased substantially since the early 1990s in terms of equity as well as debt. The integration of financial markets has emphasized the rapid flow of capital across borders as well...
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SAVING , INVESTMENT AND THE FINANCIAL SYSTEM

Introduction Investment is financed by saving. There are various ways to finance capital investments: Borrow the money,   from a bank or from a friend or relative.Alternatively, convince someone to provide the money in exchange for a share of future profits. Use own savings. In all cases, investment is financed by someone else’s saving . The financial system consists of those institutions in the economy that helps to match one person’s saving with another person’s investment. FINANCIAL INSTITUTIONS The financial system moves the economy’s scarce resources from savers (people who spend less than they earn) to borrowers (people who spend more than they earn). Savers supply their money to the financial system with the expectation that they will get it back with interest at a later date. Borrowers demand money from the financial system with the knowledge that they will be required to pay it back with interest at a later date. The...
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PRODUCTION AND GROWTH

Introduction The average person in a rich country has an income more than ten times as high as the average person in a poor country. Large differences in income are reflected in large differences in the quality of life (better nutrition, better health care, and longer life expectancy). Even within a country, there are large changes in the standard of living over time. A growth rate of GDP per person by 2% (7%) per year implies that average income doubles every 35 (10) years. Growth:       1%   2%   3%   4%   5%   6%   7% Time:            70    35    23    18    14    12   10 Growth rates vary substantially from country to country. In some East Asian countries (Singapore, S K, China), average income has risen about 7% per year. Average income doubles every 10 year...
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MEASURING THE COST OF LIVING

Introduction Few years after the independence of Tunisia, the income per capita was around 50 TD. Today, it is well over 5000 TD. To compare the two figures, we need to find some way of turning dollar figures into meaningful measures of purchasing power . That is exactly the job of a statistic called the consumer price index (CPI) . The CPI is used to monitor changes in the cost of living over time. When the CPI rises, the typical family has to spend more to maintain the same standard of living. Inflation describes a situation in which the economy’s overall price level is rising.   Economists measure the inflation rate by the consumer price index. THE CONSUMER PRICE INDEX The CPI is a measure of the overall cost of the goods and services bought by a typical consumer. The first step in computing the CPI is to determine which prices are most important to the typical consumer. If the typical consumer buys more of good A than good B,  then the...
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