MIS 4500 Lecture Notes - Berlin Wall, Country Risk, Econometrics

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

Document Summary

Peace dividend from fall of berlin wall. Oil shocks: sudden rises affects consumers" income and reduces spending; inflation rises, maybe offset by contractionary effect of higher oil prices restricting employment and opening up output gap. Financial crises: bank lending and investor confidence. Macroeconomic linkages: foreign demand for exports; cross-border direct business investment; but not perfectly integrated. Interest rate / exchange rate linkages: formal or informal exchange rate links; unilateral pegs; Emerging markets: essential differences b/w emerging and major economies: Need higher rates of investment than developed countries in physical capital and infrastructure and in human capital. Periodic crises from managing foreign debt required for investment. Often relatively small and concentrated in areas such as commodities or narrow range of manufactured goods; may rely heavily on oil imports: country risk analysis techniques: Emerging bonds: risk of country being unable to service debt. Stock: growth prospects and vulnerability to surprises.