economics
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economics
At the very center of Minsky’s conception of what makes a financial structure robust or fragile is the relationship between the time pattern of cash commitments and the time pattern of expected cash flows. A firm with cash flows greater than cash commitments for every future period is said to be engaged in “hedge” finance, because the unit can meet
... See moreBoston University • Minsky’s Financial Instability Hypothesis and Modern Economics
At the heart of Minsky's ideas about strong and weak financial systems is how money coming in and money going out is timed. A company that makes more money than it needs to pay its bills in the future is considered to be managing its money safely, or “hedge” finance, because it can pay its bills without needing outside help.
“Speculative” financial systems expect to bring in more money than just what they owe in interest on loans, but they also know they will need to borrow more money to pay back the original loan when it’s due. This makes them risky because if borrowing becomes too expensive or they can't borrow at all, they could get into trouble.
“Ponzi” financial systems are even riskier because they expect to bring in less money than what they owe in interest. This means they rely on selling their investments for a profit and hope that the overall financial situation is good to cover their debts.
Re-fi dominates capital raising for new investment projects by around 3:1 and, hence, imposes a shorter business cycle than the traditional 9-10 year cycle associated with the replacement of capital goods. As a result, they suggest that the business cycle is more a cycle in the changing duration of the capital structure than fluctuations in the
... See moreSubstack • The Crest of a Wave
But there are two very different ways by which tariffs can lower consumption as a share of GDP. One way is by increasing GDP as a whole. This happens when a tariff’s implicit subsidy to production results in more jobs and higher wages, which in turn leads to an overall increase in total consumption. The higher savings—or the gap between the
... See moreMichael Pettis • How Tariffs Can Help America
DISTRIBUTION OF TOTAL RECEIPTS ACROSS DIFFERENT COMPONENTS (IN %) 2022-23 BE 2021-22 RE 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 0% 41 51 57 58 56 53 54 52 53 48 48 45 20% 40% 11 9 18 2 60% 14 12 13 10 1 2 41 80% 100% Tax Revenue Non Tax Revenue Recovery of Loans Other Receipts Borrowings and
... See moreaccountabilityindia.in • The-Evolution-of-Indias-Welfare-System-From-2008-2023
According to a March 2024 action plan, the Ministry of Commerce, together with other Chinese government agencies, has offered subsidies to consumers who trade in old automobiles, home appliances, and fixtures for new models. On paper, the plan loosely resembles the “cash for clunkers” program that Washington introduced during the 2008 recession to
... See moreZongyuan Zoe Liu • China’s Real Economic Crisis
In China, as in many other countries, the distortions created by financial repression are far greater than any distortion created by the currency.
Michael Pettis • The Great Rebalancing
The Competitive Side of the Economist-Minded Data Scientist
What really gives economist-minded data scientists an edge is their ability to connect models to value creation. While many professionals can code or fine-tune hyperparameters, far fewer can trace a line from a data insight to an economic outcome — like cost reduction, revenue growth, or
... See moreDima Diachkov • Why Every Data Scientist Should Think Like an Economist
The United States’ tax receipts are more correlated to asset prices than most other countries, with tax receipts lagging the performance of the stock market. This can be seen in both absolute terms and year-over-year terms:
Lyn Alden • September 2024 Newsletter: Why Nothing Stops This Fiscal Train
Given that I am a macro investor I look at cues to explain aggregate profits of all firms of the market. Individual firm’s profit is a produce of how well it runs its operations and how it is able to out-compete others in creating good products at low cost with good sales and distribution strategies. Assessing all these parameters is the job of my
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