Inflation Targeting, Seigniorage, and Economic Schools of Thought
Main Features of Inflation Targeting
The main features of the monetary policy strategy of inflation targeting are:
- A quantitative inflation target (generally 2%).
- Using an internally-made conditional inflation forecast as an intermediate target variable.
- A high degree of transparency and accountability.
Understanding Seigniorage
Seigniorage is the profit made by a government from issuing currency. It can be useful for the government as a source of revenue for:
- Financing debt.
- Funding expenditures.
- Reducing
Understanding Money: Forms, Value, and History
Money is any item generally accepted by a society as a medium of exchange to pay for goods or services. For a good to be well qualified as money, it must fulfill the following functions:
- Medium of exchange: It should be interchangeable. This happens when it is readily traded for other goods and services.
- Unit of account: It must be an accounting unit. This occurs when the value of a good is used to express the value of other goods and services.
- Store of value: It must be a store of value. This occurs
Strategic Branding and Marketing Mix Elements
Strategic Role of Branding
Branding plays a crucial role in a company’s success. It helps to:
- Defend market share.
- Attack competitor brands.
- Act as a market entry barrier (strong brands with large market share make market entry difficult for competitors).
- Enter new markets.
- Satisfy different market segments.
Brand Portfolio (Model of Riezebos)
Example: Volkswagen Group
- Bastion brand: Volkswagen
- Fighter brands: Seat, Skoda
- Prestige brand: Infinity (for Nissan)
Brand Positioning
Brand positioning is the managerial
Read MoreEconomic Variables, Policies, and National Accounts
Economic Variables and Their Cycles
Variables can be classified according to their movement in relation to the economic cycle:
- Pro-cyclical variables: Tend to increase during economic expansions and decrease during contractions.
- Counter-cyclical variables: Tend to increase during downturns and decrease during expansions.
- Acyclical variables: Do not move in line with the economic cycle.
Understanding the Demand Curve
The demand curve can shift due to several factors *other* than price changes. These include:
Central Bank Transparency, Policy, and Framework
Transparency and Communication in Monetary Policy
The need for transparency and central bank communication stems from two principles: accountability and effectiveness. Most of the effects of monetary policy on the economy result from stakeholders’ perceptions of the most likely future course.
We can distinguish between different areas of monetary policy transparency:
- Transparency of Roles, Responsibilities, and Targets: Disclosing the formal objectives of monetary policy.
- Transparency in Policy Formulation
EMU and CAP: Currency, Crisis, and Agriculture
Benefits and Costs of a Currency Area
Some benefits of a currency area include diminished transaction costs, directly comparable prices across countries (increased competition), decreased uncertainty regarding exchange rates, and limited speculation and competitive devaluations. However, costs can include asymmetric shocks or symmetric shocks with asymmetric effects that increase macroeconomic instability. The EMU does not fulfill all criteria to be an optimum currency area because, when faced with
Read More