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Chapter 1 Understanding the Historical Role of Private Investment

Chapter 1 Understanding the Historical Role of Private Investment. What do output cycles look like in Thailand over the past 4-5 decades 2) Given those output cycles, how many important has private investment been as a source of output growth

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Chapter 1 Understanding the Historical Role of Private Investment

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  1. Chapter 1 Understanding the Historical Role of Private Investment • What do output cycles look like in Thailand over the past 4-5 decades • 2) Given those output cycles, how many important has private investment been • as a source of output growth • Provide that private investment contributes significantly to output growth, • what do we know about previous private investment cycle • To make the present recovery a quality one, what key lessons have been • learned from experience

  2. 1) Output cycles known to be persistent features of market-oriented economies and the analysis of business cycles offers a useful starting point for the understanding of historical economic behavior

  3. 2) Private investment : Cycles and Contributions to Output Growth • Since 1966 output and private investment cycles have moved together except • when output hit a trough in 1975 • In percentage deviation from trend, private investment fluctuates by about four • times as much as output • Cycles have become longer and more volatile, and recessions have gotten • increasing deeper • - The expansion phase of 1987-1996 was strikingly long

  4. What factors is a contributor to output growth? • Private consumption • Private investment ( asymmetric between expansion and recessions ) • Government spending

  5. Salient Features of Past Private Investment Cycles • Cycles 1 ( 1956-1961 ) • Cycles 2 ( 1962-1976 ) • Cycles 3 ( 1977-1986 ) • Cycles 4 ( 1987-1998 )

  6. Investment Cycles, Economic Recovery, and Monetary Policy

  7. Chapter 2Investment Determinants Theoretical Underpinning and Quick look at the figure

  8. Key for Investment • The rate of return on investment • Cost of investment • Investor’s confidence

  9. A. Theoretical foundation of Investment Decision = Cost of Capital = Share of capital in a simple Cobb-Douglas production

  10. q-Theory of Tobin l is gross investment K is net capital stock q is the Tobin’s q value is a strictly positive parameter

  11. B.

  12. Chapter 3 Policies and Private Investment

  13. Influence of Monetary Policies • The promotion of sustainable private investment growth. • Monetary policy support economy to the right direction.

  14. Sustainable Output Growth Throught Sustainable Private investment • Appropriate Monetary Policy Framework. • Enhancement of Returns on Investment. • Structural Reforms to Remove Impediment to Private Investment Growth.

  15. Appropriate Monetary Frame work • Use flexible exchange rate. • Benefit from using flexible rate.

  16. Enhancement of Returns on Investment. • The key to promote new investment. • What can we benefit from improvement?

  17. Structural Reforms to Remove Impediments to Private Investment Growth. • Attract foreign investment. • Bribing and corruption. • Information.

  18. Conclusion

  19. The EndThank YouForYour Attention.

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