Archive for June, 2009
Tradable and Non-Tradable Goods
There is a further point, which is that clear differentiation has to be made between tradable and non-tradable goods. PPP may not hold for non-tradable goods such as services. The dry world of economics is frequently best explained through example and anecdote. Thus, a haircut might be cheaper in New York than London (most things [...]
Reasons for “Misalignments”
Exchange rates which do not reflect the PPP value are said to be “misaligned” and it is assumed therefore that they have to revert towards PPP. Such misalignments are seen as being caused by temporary distortions, either to the price of the good or the exchange rate, which should quickly be eliminated by a rational, [...]
DEVELOPMENTS IN THE FINANCE SECTOR
Risk is an everyday hazard that faces banks, funds and insurers. It can usually be mitigated, but it is rarely eliminated completely. There are some cases where a positive “hazard” is a very good thing to have – each business faces a risk or probability of making profits. Millions of people buy lottery tickets each [...]