MIS 4500 Lecture Notes - Output Gap, Yield Curve, Business Cycle

• School: University of Manitoba
• Department: Management Info. Systems
• Course: MIS 4500
• Professor: Pourang Irani

Document Summary

Business cycle analysis: short-term inventory cycle (2-4 yrs); longer-term business cycle (9-11 years: chief measurements of economic activity: Gdp: consumption, investment, change in inventories, gov"t spending and exports less imports. Output gap: difference b/w gdp trend (potential gdp) and actual; affects inflation recession: two successive quarterly gdp declines inventory cycle: caused by companies trying to keep inventories at desired levels as expected level of sales changes. Up phase: businesses confident and increase production. However, downward trend from improved technology ( just in time inventory management); but more visibility so sharper changes: business cycle: 1. initial recovery; 2. early upswing; 3. late upswing; 4. slowdown; 5. recession. Gov"t bond yields may still be falling (matching declining inflation) or bottoming; Stock market may rise sharply, w/ demand for cyclical and riskier assets. Short rates starting to rise as stimulus withdrawn; Stocks still trending up longer bond yields stable or rising. Stock markets rising still but nervously; volatile.