Economic Essay
A 3-5 page essay, in which you apply microeconomic concepts to your own life, comprises
15% of your grade. (Do NOT submit a research paper for this assignment.) Your essay can be
focused on one topic/economic concept, or multiple topics and concepts. Essays will generally
be graded on a Credit/No Credit basis. (Sometimes partial credit is awarded.)
Use charts, graphs, and tables as needed to answer the questions below.
].%u0432%u0402%u045C It is to be 1.5-lines spaced, 11-point Times New Roman font and will include the following:
1) a plan for building 2 aerotropolises in the country of Ehiopia
2) why two aerotropolises should be built in this country
3) should these facilities also be charter cities? If so, why? If not, why not?
4) proposed geographical locations of these facilities %u0432%u0402%u201C city, region, province, etc.
5) descriptions of these facilities which will include the amenities, number and length of runways, connector roads/rail lines, etc.
6) what products/services will be exported/imported to/from these facilities
7) what these facilities will cost and how long it will take for them to be fully operational
8) what additional infrastructure will be needed to support these facilities
9) the impact on employment, economic growth, and aggregate GDP of these facilities once they%u0432%u0402%u2122re fully operati
The model below is for an APT (arbitrage pricing theory)-type multiple regression analysis and it investigates what influences the rate of return on a company’s shares.
ERCOMPANYt = ?+?1ERSFTSEt+ ?2TERMt + ?3EXCHANGEt+ ?4INFLATIONt + ?5DMONEYt+ ?6OILt +?t (1) The dependent variable (ERCOMPANY) is the company’s excess return based on its
share price {labelled as COMPANY in the Excel data spreadsheet}. Note that you are expected to construct this variable yourself, knowing that excess return means the additional return on top of risk-free rate proxy,
i.e., TBILLSHORT as explained below.
The explanatory variables are: I. ERSFTSE: excess rate of return based on the FTSE ALL SHARE index in
London Stock Exchange {labelled as FTSE in the Excel data spreadsheet}. II. TERM: The difference between annual returns on 20-year government bonds and 3-month treasury bills {labelled as TBILLLONG and TBILLSHORT,
respectively, in the Excel data spreadsheet}.
Throughout the semester, we have extensively learned about different types of money and how they are woven together by a system of dealers consisting of the central bank, banks, and security dealers to form a hierarchy of money. Our journey so far has focused on the functioning of the hierarch from the perspective of the system of dealers. The goal of this assignment is to take our journey one step further by delving into how different types of liquidity risks arise in the hierarchy, how they are interlinked, and how the central bank can manage them. In answering the following essay questions, try to use your own words to convey the main piece of information and the key line of reasoning. Quoting too heavily or failing to quote properly will result in little or no credit.
1. Definitions. Define and explain three main types of liquidity, namely, the central bank liquidity, funding liquidity, and market liquidity.
2. Liquidity linkages in normal times. Explain how the three types of li
