Life circle theory of saving Free Essays

The life Circle Theory of Saving teaches about the modalities, guidelines, and strategies in which   families, governments, institutions should save, plan and manage their financial assets to span and cut across their entire life time. In the case of a family or household, it posits on how they should manage their financial assets in a transferable manner to cut across different times in their life circle, taking into cognizance the need to save and provide for retirements, as well as their children’s education, buy insurance, among other needs. According to  Ã‚   Zvi, B, Jonathan, T. We will write a custom essay sample on Life circle theory of saving or any similar topic only for you Order Now Wiillen P. (2004), this also relates to a companies assessment as to what to choose as the default asset allocation for a compulsory retirement saving plan. This theory poses various questions to people and deals with such fundamental issues as to how much of their earned income they should save for the future; how to invest what they save; the type of risk they must provide insurance,   incase of any eventuality; are they to buy a house or rent one; is it better to get a fix rate mortgage or bargain for an adjustable one. As Zvi B. (May 2007) observed, the theory not only concerns families, but government policy makers and firms that provide life circle serves, and even educator who help counsel   the public to make informed choices. LIFE CIRCLE THEORY AND AGGREGATE SAVING IN AN ECONOMY This concept of life circle theory is useful in understanding the aggregate saving in an economy. According to Hayashi, F. (2007), aggregate saving is calculated as average saving for all age brackets in the population of a particular nation. This is expected to be the same or equal to the aggregate savings in the national account. In practical terms, saving is the difference between disposable income and consumption. It therefore goes that if households are able to increase their aggregate savings they will be in a better position to save and plan well for their life circle. Floden, M. (Date not available) defines aggregate saving in a general equilibrium model in an economy, as a situation, â€Å"Where infinitely lived households face volatile income paths, holds a risk-free asset, and face a liquidity constraints†. In any economy, when individual income, or organizational income varies, or differs, then the aggregate equilibrium capital will be larger than when it is constant. He posits further that when income is stochastic, the equilibrium capital stock is always larger than when it is constant. National savings largely depends on the rate of growth and development of national income. However, the purpose of life circle theory is not to provide clear cut answers, instead it is to give a framework for individuals, policy makers and financial planners to provide solutions to the questions posed- as indicated above. The huge variation in household income and in the aggregate savings in the economy will determine how planners (as well as families) will fine tune their advise to suit whatever purpose they want to serve. DEFINITION OF INCOME. The Wikipedia gave various definitions of income, but basically, income, defined in general terms, is the money that is received as a result of normal business activities of an individual; or money received from employment by way of employment by way of salary, wages, tips, as well as profits, dividends from financial investments, as interests, capital gains, or other sources as in social security or premiums. Income also is the money received from labor, services rendered, sale of property or goods or from investment made. There are diverse elaborate definitions of income, but we shall make do with the above definition for the purpose of this paper. PERMANENT INCOME AND LIFE CIRCLE MODELS. In the view of Roberts, S. (date not available), this is a situation where people base their consumption on what they believe to be their regular income. So, they try to maintain a fairly constant and stable standard of living, even though their earnings may vary either on monthly or yearly basis. This happens in a way that their spending pattern are fairly constant irrespective of increases or decreases in their earned income. This hypothesis was developed by Milton   Friedman in 1957. If people perceive that a change in income is temporary, their spending may not change, but if they observe it is permanent, it may vary slightly on the average. DEMOCRAPHIC FUNDAMENTALS   AND FLOW OF SAVING The demographic fundamentals as it relates to flow of savings in life circle theory is based on the premise that young people borrow money, they middle aged class save their money, while the old people (elderly) run down or spend their savings.   Consequently, a nation with large population of middle age will have high savings, especially as people prepare to retire. Concerning the relationship between the demographic fundamentals and the bond marker, when the savings supply is high as a result of the high population of the middle age savings, the price of stocks and bonds falls. Also, when the supply is low, yield equally increases. INTEREST RATE EFFECT ON SAVING AND LIFE CIRCLE MODEL. Naturally, interest rate, which is the rate of the fee paid on borrowed asset, would always adjust to level up with investment and savings. Increase in interest rate affects how much income left for consumption. If the interest rate is increased it means less money for consumption and investment, whereas, it is increased there will be likelihood of slight increase or constant level of consumption and investment. It goes therefore to say that a rise in saving would bring about a fall in interest rate, thereby encouraging investment. Inn life circle theory, the lower the interest rate, the more likely consumption will increase, as well as investment. Both in individuals as well as institutions. According to an extensive review by Modigliani, FF Albert, A. (March 2005), in a world congress of the Economic Society in Barcelona in 1990. In trying to assert a comprehensive and standard evidence on saving and growth in a developing economy, he said that, â€Å"Both growth and demographic structures are powerful predictors of national saving, with little or no role for the level of national income†. WEALTH EFFECT ON LIFE CIRCLE MODEL The level of wealth in an economy bears a simple relation to the length of the retirement span, which is the middle age, the very class that saves money the most. It is also true to say that the consumption of a household is also dependent solely on the present value of their lifetime income. For example, if two investors separately have the same total wealth (monetary wealth) working life, and are equally expectant of some sources of income in their remaining working life, their consumption decisions will be similar or same, not minding their income profile. REEFERENCE 1. Albert, A. Modighiani, F, (March 2005). The Life Circle Hypothesis of Saving: Aggregate Implication and Tests. American Economic Review. 53 (1) 55-84. Angus Deaton. â€Å"Research Programme in Development Studies and Center for Health and Wellbeing. Princeton University. www.princeton.edu/ 2. Floden, M.www.ideas.repec.org/p/hhs/hastef/0591.html 3. Hayashi, F. (2007) Understanding Savings: Evidence from the United States and Japan. MA. MIT Press, 55 Haywad Press. Page 305. ISBN-10: 0-262-08255-1 4. Zvi, B. Jonathan T. Willen P. (2004). The Theory of Life- Circle Saving and Investment. Public Policy Discussion Paper. No. 07-3 5. Zvi B. (May 2007) 6. www.wikipedia.com 7.Robert S. Permanent-Income hypothesis,   published in www.wikipedia.org How to cite Life circle theory of saving, Essay examples

Life circle theory of saving Free Essays

The life Circle Theory of Saving teaches about the modalities, guidelines, and strategies in which   families, governments, institutions should save, plan and manage their financial assets to span and cut across their entire life time. In the case of a family or household, it posits on how they should manage their financial assets in a transferable manner to cut across different times in their life circle, taking into cognizance the need to save and provide for retirements, as well as their children’s education, buy insurance, among other needs. According to  Ã‚   Zvi, B, Jonathan, T. We will write a custom essay sample on Life circle theory of saving or any similar topic only for you Order Now Wiillen P. (2004), this also relates to a companies assessment as to what to choose as the default asset allocation for a compulsory retirement saving plan. This theory poses various questions to people and deals with such fundamental issues as to how much of their earned income they should save for the future; how to invest what they save; the type of risk they must provide insurance,   incase of any eventuality; are they to buy a house or rent one; is it better to get a fix rate mortgage or bargain for an adjustable one. As Zvi B. (May 2007) observed, the theory not only concerns families, but government policy makers and firms that provide life circle serves, and even educator who help counsel   the public to make informed choices. LIFE CIRCLE THEORY AND AGGREGATE SAVING IN AN ECONOMY This concept of life circle theory is useful in understanding the aggregate saving in an economy. According to Hayashi, F. (2007), aggregate saving is calculated as average saving for all age brackets in the population of a particular nation. This is expected to be the same or equal to the aggregate savings in the national account. In practical terms, saving is the difference between disposable income and consumption. It therefore goes that if households are able to increase their aggregate savings they will be in a better position to save and plan well for their life circle. Floden, M. (Date not available) defines aggregate saving in a general equilibrium model in an economy, as a situation, â€Å"Where infinitely lived households face volatile income paths, holds a risk-free asset, and face a liquidity constraints†. In any economy, when individual income, or organizational income varies, or differs, then the aggregate equilibrium capital will be larger than when it is constant. He posits further that when income is stochastic, the equilibrium capital stock is always larger than when it is constant. National savings largely depends on the rate of growth and development of national income. However, the purpose of life circle theory is not to provide clear cut answers, instead it is to give a framework for individuals, policy makers and financial planners to provide solutions to the questions posed- as indicated above. The huge variation in household income and in the aggregate savings in the economy will determine how planners (as well as families) will fine tune their advise to suit whatever purpose they want to serve. DEFINITION OF INCOME. The Wikipedia gave various definitions of income, but basically, income, defined in general terms, is the money that is received as a result of normal business activities of an individual; or money received from employment by way of employment by way of salary, wages, tips, as well as profits, dividends from financial investments, as interests, capital gains, or other sources as in social security or premiums. Income also is the money received from labor, services rendered, sale of property or goods or from investment made. There are diverse elaborate definitions of income, but we shall make do with the above definition for the purpose of this paper. PERMANENT INCOME AND LIFE CIRCLE MODELS. In the view of Roberts, S. (date not available), this is a situation where people base their consumption on what they believe to be their regular income. So, they try to maintain a fairly constant and stable standard of living, even though their earnings may vary either on monthly or yearly basis. This happens in a way that their spending pattern are fairly constant irrespective of increases or decreases in their earned income. This hypothesis was developed by Milton   Friedman in 1957. If people perceive that a change in income is temporary, their spending may not change, but if they observe it is permanent, it may vary slightly on the average. DEMOCRAPHIC FUNDAMENTALS   AND FLOW OF SAVING The demographic fundamentals as it relates to flow of savings in life circle theory is based on the premise that young people borrow money, they middle aged class save their money, while the old people (elderly) run down or spend their savings.   Consequently, a nation with large population of middle age will have high savings, especially as people prepare to retire. Concerning the relationship between the demographic fundamentals and the bond marker, when the savings supply is high as a result of the high population of the middle age savings, the price of stocks and bonds falls. Also, when the supply is low, yield equally increases. INTEREST RATE EFFECT ON SAVING AND LIFE CIRCLE MODEL. Naturally, interest rate, which is the rate of the fee paid on borrowed asset, would always adjust to level up with investment and savings. Increase in interest rate affects how much income left for consumption. If the interest rate is increased it means less money for consumption and investment, whereas, it is increased there will be likelihood of slight increase or constant level of consumption and investment. It goes therefore to say that a rise in saving would bring about a fall in interest rate, thereby encouraging investment. Inn life circle theory, the lower the interest rate, the more likely consumption will increase, as well as investment. Both in individuals as well as institutions. According to an extensive review by Modigliani, FF Albert, A. (March 2005), in a world congress of the Economic Society in Barcelona in 1990. In trying to assert a comprehensive and standard evidence on saving and growth in a developing economy, he said that, â€Å"Both growth and demographic structures are powerful predictors of national saving, with little or no role for the level of national income†. WEALTH EFFECT ON LIFE CIRCLE MODEL The level of wealth in an economy bears a simple relation to the length of the retirement span, which is the middle age, the very class that saves money the most. It is also true to say that the consumption of a household is also dependent solely on the present value of their lifetime income. For example, if two investors separately have the same total wealth (monetary wealth) working life, and are equally expectant of some sources of income in their remaining working life, their consumption decisions will be similar or same, not minding their income profile. REEFERENCE 1. Albert, A. Modighiani, F, (March 2005). The Life Circle Hypothesis of Saving: Aggregate Implication and Tests. American Economic Review. 53 (1) 55-84. Angus Deaton. â€Å"Research Programme in Development Studies and Center for Health and Wellbeing. Princeton University. www.princeton.edu/ 2. Floden, M.www.ideas.repec.org/p/hhs/hastef/0591.html 3. Hayashi, F. (2007) Understanding Savings: Evidence from the United States and Japan. MA. MIT Press, 55 Haywad Press. Page 305. ISBN-10: 0-262-08255-1 4. Zvi, B. Jonathan T. Willen P. (2004). The Theory of Life- Circle Saving and Investment. Public Policy Discussion Paper. No. 07-3 5. Zvi B. (May 2007) 6. www.wikipedia.com 7.Robert S. Permanent-Income hypothesis,   published in www.wikipedia.org How to cite Life circle theory of saving, Essay examples

Maori and Minangkabau

Maori Maori culture is one of the most fascinating indigenous cultures remaining at present. In the first place, it is necessary to note that New Zealand is the only place in the world where population of indigenous people is about 15% of the overall population. However, the fact that made me choose this very culture is that Maori society can be regarded as â€Å"a key critique of evolutionary theory† (qtd. in Walter et al. 275).Advertising We will write a custom proposal sample on Maori and Minangkabau specifically for you for only $16.05 $11/page Learn More Maori society developed in a very specific way, which can be regarded as reverse development. Thus, one of the most fascinating facts concerning Maori society is that it â€Å"passed from . hunting, gathering and fishing† to agricultural production and then returned to hunting, fishing, gathering (Walter et al. 275). Moreover, Maori managed to preserve their culture, which is very impo rtant as now people understand that wisdom of their ancestors is important to find solutions to contemporary issues. Thus, knowledge of Maori people can help contemporary people solve some environmental issues as Maori’s experience in agriculture is immense. Maori society became known to Europeans in the middle of the seventeenth century and there is quite a lot of information on these indigenous people. However, apart from considering specific traditions and lifestyles of Maori people, it can be interesting to trace the way they developed. It is especially interesting to understand how they managed to preserve their culture as lots of cultures and societies have disappeared throughout centuries. This understanding can help researchers work out specific strategies to help other indigenous people preserve their traditions. Minangkabau The history of development of Minangkabau people is quite conventional. The history of this society dates back to 1500. First, Minangkabau were involved in hunting, fishing and gathering. Agriculture developed a bit later and became one of the most important sectors of economy. The most important thing about this Minangkabau society is that they managed to preserve the culture. Sumatra â€Å"was integrated in international trade† for a long time (Colombijn 6). Minangkabau could have assimilated long time ago. Rapid development of economy could have contributed to people’s assimilation as they had to accept new ways. However, Minangkabau society still exists. These people managed to adjust their lives to the changing environment, but they also remained faithful to their cultural backgrounds. Minangkabau people have managed to combine their ancestors’ wisdom and new ways of development which were brought by colonialists. It can be interesting to trace the development of this society up to these days. It is important to understand how different Minangkabau people of the twenty-first century are from Minang kabau people who lived in the seventeenth or nineteenth centuries. It can be also interesting to consider relationships between Minangkabau people and colonialists. Notably, every century offered a lot of challenges to Minangkabau people.Advertising Looking for proposal on ethnicity studies? Let's see if we can help you! Get your first paper with 15% OFF Learn More One of the major challenges has been economic development. Therefore, the most interesting periods to consider are 19th and 20th centuries when Minangkabau people had to find their place in the new world of invaders and in the world of rapid technological development. This knowledge can help define major trends in indigenous people’s development. Works Cited Colombijn, Freek. â€Å"A Moving History of Middle Sumatra, 1600-1870.† Modern Asian Studies 39.1 (2005): 1-38. Print. Walter, Richard, Ian Smith and Chris Jacomb. â€Å"Sedentism, Subsistence and Socio-Political Organization in Prehistori c New Zealand.† World Archeology 38.2 (2006): 274-290. Print. This proposal on Maori and Minangkabau was written and submitted by user Kathleen Watts to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

The Political Theories of Locke and Hobbes essays

The Political Theories of Locke and Hobbes essays Political Theories of Locke and Hobbes John Locke influenced Western political thought immensely. He lived during the age of political upheaval, the Glorious Revolution. During this time, the Tories and the Whigs, Englands first two political parties, joined together to rid their country of the tyrannical James II and welcomed as their new co-rulers his daughter, Mary, and her Dutch husband, William. Locke witnessed these events from the Netherlands, where he had fled in 1683 because he foresaw the accession of the absolutist and Catholic-leaning James II. These events greatly influenced his political theories. Throughout his writings, Locke argued that people had the gift of reason. Locke thought they had the natural ability to govern themselves and to look after the well being of society. He wrote, The state of nature has a law of nature to govern it, which treats everyone equally. Reason, which is that law, teaches all mankind...that being all equal and independent, no one ought to harm another in his life, health or possessions. Locke did not believe that God had chosen a group or family of people to rule countries. He rejected the Divine Right, which many kings and queens used to justify their right to rule. Instead, he argued that governments should only operate with the consent of the people they are governing. In this way, Locke supported democracy as a form of government. Locke wrote, We have learned from history we have reason to conclude that all peaceful beginnings of government have been laid in consent of the people. Governments were formed, according to Locke, to protect the right to life, the right to freedom, and the right to property. Their rights were absolute, belonging to all the people. Locke also believed that government power should be divided equally into three branches of government so that politicians will not face the ...

How to Distinguish Between a File and a Directory in Perl

How to Distinguish Between a File and a Directory in Perl Lets say youre building a Perl script to traverse a file system and record what it finds. As you open file handles, you need to know if youre dealing with an actual file or with a directory, which you treat differently. You want to glob a directory, so you can continue to recursively parse the filesystem. The quickest way to tell files from directories is to use Perls built-in ​File Test Operators.  Perl has operators you can use to test different aspects of a file. The -f operator is used to identify regular files rather than directories or other types of files. Using the -f File Test Operator #!/usr/bin/perl -w$filename /path/to/your/file.doc;$directoryname /path/to/your/directory;if (-f $filename) {print This is a file.;}if (-d $directoryname) {print This is a directory.; } First, you create two strings: one pointing at a file and one pointing at a directory. Next, test the $filename with the -f operator, which checks to see if something is a file. This will print This is a file. If you try the -f operator on the directory, it doesnt print. Then, do the opposite for the $directoryname and confirm that it is, in fact, a directory. Combine this with a directory glob  to sort out which elements are files and which are directories: #!/usr/bin/perl -wfiles *;foreach $file (files) {if (-f $file) {print This is a file: . $file;}if (-d $file) {print This is a directory: . $file;}}​ A complete list of Perl File Test Operators  is  available online.

Pop and rock music history Essay Example | Topics and Well Written Essays - 750 words

Pop and rock music history - Essay Example Indeed, Appleseed cast is one of the most creative musical bands in the world. According to the Herald News, the album is described as unique in that, each song on this album induces emotion. The bass work and drum nicely complement the loud and thick guitars to maintain the rhythm of the songs. These are accompanied by true and raw vocals by the experienced singers. Screams are also included to the rich set of instruments, though occasionally some singing is thrown in when suitable. The art work and production of the album is the best ever. As mentioned, the album is also made unique by the emotion created. This makes this album to stand out among the rest. It is inspirational, heartfelt and an emotional music album. In comparison to other bands, The Appleseed Cast has no non-versatile descriptive words, bland choruses and excessive use of the words agony and pain. In simple words, it is a poetry of the young emotions of harsh losses and true love. Appleseed Cast perfectly blend the songs between simple tunes, sad and an emotional flurry of drums and guitars. However, this sometimes happens within the same song. In the song Marigold & Patchwork the lead singer’s voice is rattling yet, perfectly quiet. At the same time the voice is becomes abrasive and can send chills down a person’s spine. On the other hand, the song untitled half, is comprised of almost perfect crescendo of bass, jackhammer drumming, duel guitars and sax. Interestingly, the song Ring Wars deserves time to really understand comprehend the music. It is like Nirvana meets Radio Head. In this song, the lead singer Chris shows in and out voice that mumbles lyrics and also screeches. Their melodies are nice even though not pop. It has soothing instants where singing stops for about 2 minutes into the song. The drum work is amazing as heard the in the last instrumental track. Another song in the album is Marigold & Patchwork. This is an all-time amazing song. It has an

Human Geography Oxford City Essay Example | Topics and Well Written Essays - 750 words

Human Geography Oxford City - Essay Example Tourist and other visitors do their shopping at Covered Market; it is one among the several historic centers in Oxford. The tower has been locating in a strategic place in relation to the landscape of the land and the same applies to St. Mary's the Virgin University Church. The architectures of the time were very considerate in designing view points which are currently being used as centers of interest yet they were built hundred of years back. Below is an aerial view of High Street.Oxford City is ever green; the local government has worked hard to conserve the environment by designing nature walks and parks within the ring road. Nature reserves are over 28 in number both within the City and outside. Some of the major parks are South Parks, University Parks, Rock edge reserves, Shotover Reserve. These show how the citizens of the City together with the City governance have worked hard to maintain the natural environment. Any one tempting to tamper with the natural environment faces h igh charges to be a lesson to others. Here is a photo of the green City. In reference to human geography, Oxford city is a city that has considered it in a great way. The design of the City, as well as the activity that takes place within the City, are all admirable, it can critically be used by scholars to define the meaning of human geography because there are a couple of practical example to the subject. This branch of social science is complicated and without examples, it would be difficult for students to comprehend all it details.