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Leland proved that, even for small variations of future income, the precautionary demand for saving exists. It was only recently that economists confirmed the early findings of Leland. Lusardi (1998) confirmed that intuitions derived from economic models without a precautionary motive could be seriously misleading, even with small uncertainty. [12]
The Triffin dilemma (sometimes the Triffin paradox) is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was identified in the 1960s by Belgian-American economist Robert Triffin.
While one version of the impossible trinity is focused on the extreme case – with a perfectly fixed exchange rate and a perfectly open capital account, a country has absolutely no autonomous monetary policy – the real world has thrown up repeated examples where the capital controls are loosened, resulting in greater exchange rate rigidity ...
In 2023, the Federal Reserve spent $114.3 billion more than it brought in — its largest operating loss on record. Compared to 2022 when the central bank brought in a net income of $58.8 billion ...
Full-reserve banking is the hypothetical case where the reserve ratio is set to 100%, and funds deposited are not lent out by the bank as long as the depositor retains the legal right to withdraw the funds on demand. Under this approach, banks would be forced to match maturities of loans and deposits, thus greatly reducing the risk of bank runs.
In economic theory, specifically Keynesian economics, precautionary demand is one of the determinants of demand for money (and credit), the others being transactions demand and speculative demand. The precautionary demand for money is the act of holding real balances of money for use in a contingency. As receipts and payments cannot be ...
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Country foreign exchange reserves minus external debt. In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a quarter or a year) and the outflow of money to the rest of the world.