Schedule of Business Economics ISLB Fall semester 2009

Final Schedule ( Business Economics ISLB. Fall semester 2009).

13 January 2010-Dead Line: Homework (essays, readings and problems sets ) will be accepted till next Wednesday13th. Hand in your homework at the International Department of ISLB (don’t forget to include your name and as well my name in the envelop).

In this post you will find the report of DnBNord Bankas “Lithuanian Economic Outlook 2009”.The students that want to improve their marks should prepare an essay. The following question can be the guide-line of your essays. Anyway you are allowed to include in your essays topics that you consider interesting or important.

a) Analysis of the key macroeconomic indicators for Lithuania
b) Analysis of the inflation in Lithuania and in the other Baltic States
c) Foreign trade & Balance of Payments. What has happened with the exports and imports in Lithuania? What are the most important products and services that Lithuania is exporting? Who are the most important commercial partners of Lithuania?
d) What did happen with the investment in Lithuania?
e) Compare the economic situation in Lithuania with the other Baltic countries. What is the forecast of DnB Bankas for this new year 2010?
f) Conclusions

Use your own words. I expect no less than 5 pages (Times New Roman 12 points).The students Ugur Ozen, Kowalski K., and Essen D. have to do the essay. It is compulsory for them!!!! For the rest of students it is optional. This essay substitutes the third set of problems that it was announced in my last communication.

18 January (Monday) : I will send you the list with the students that have to take the final exam again.

26 January (Tuesday): Final exam. The students included in the list will have to take the Final Exam again. The students that want to improve their mark are also welcome.

28 January (Thursday): Final evaluation (marks)

I wish you the best for this new year 2010

MP

DnB Nord Bank report. Lithuania and Baltic countries

International School of Business and Economics. Schedule updated

ISLB SCHEDULE & INFORMATION DECEMBER 2009

First set of problems

Hand in the following exercises:

Students of SMK Micro:
Exercises: 1,2,3,4,5,6,10
Dead Line: 15 DEC 2009 (Tuesday)

Students of SMK Macro:
Exercises: 2,7,8,9,10,11
Dead Line: 17 DEC 2009 (Thursday)

Students of ISLB (ex-VTVK):
Exercises: 1,2,3,4,5,7,8,10.
Dead Line: 17 DEC 2009 (Thursday)

Economics 1rst Set of Problems

Second set of problems

Second set of problems

Hand in the following exercises:

Students of SMK Micro:
Exercises: 1,2,3,4,5,6,7,15,16,17 (choose only 6)
Dead Line: The day of the final exam 2009 (15 December 2009)

Students SMK Macro:
Exercises:. 8,9,10,11,12,13,14,15,16,18,19,20 (choose only 8)
Dead Line: The day of the final exam (17 December 2009)

Students of ISLB:
Exercises: 1,2,3,4,5,6,7,13,14,15,16,17 (choose only 8).
Dead Line: The day of the final exam (17 December 2009)

Economics 2nd Set of Problems

The Jobs Imperative

IF you’re looking for a job right now, your prospects are terrible. There are six times as many Americans seeking work as there are job openings, and the average duration of unemployment — the time the average job-seeker has spent looking for work — is more than six months, the highest level since the 1930s.

You might think, then, that doing something about the employment situation would be a top policy priority. But now that total financial collapse has been averted, all the urgency seems to have vanished from policy discussion, replaced by a strange passivity. There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers.This is wrong and unacceptable.

Yes, the recession is probably over in a technical sense, but that doesn’t mean that full employment is just around the corner. Historically, financial crises have typically been followed not just by severe recessions but by anemic recoveries; it’s usually years before unemployment declines to anything like normal levels. And all indications are that the aftermath of the latest financial crisis is following the usual script. The Federal Reserve, for example, expects unemployment, currently 10.2 percent, to stay above 8 percent — a number that would have been considered disastrous not long ago — until sometime in 2012.

And the damage from sustained high unemployment will last much longer. The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers. Meanwhile, students who graduate into a poor labor market start their careers at a huge disadvantage — and pay a price in lower earnings for their whole working lives. Failure to act on unemployment isn’t just cruel, it’s short-sighted. So it’s time for an emergency jobs program.

How is a jobs program different from a second stimulus? It’s a matter of priorities. The 2009 Obama stimulus bill was focused on restoring economic growth. It was, in effect, based on the belief that if you build G.D.P., the jobs will come. That strategy might have worked if the stimulus had been big enough — but it wasn’t. And as a matter of political reality, it’s hard to see how the administration could pass a second stimulus big enough to make up for the original shortfall.

So our best hope now is for a somewhat cheaper program that generates more jobs for the buck. Such a program should shy away from measures, like general tax cuts, that at best lead only indirectly to job creation, with many possible disconnects along the way. Instead, it should consist of measures that more or less directly save or add jobs.

One such measure would be another round of aid to beleaguered state and local governments, which have seen their tax receipts plunge and which, unlike the federal government, can’t borrow to cover a temporary shortfall. More aid would help avoid both a drastic worsening of public services (especially education) and the elimination of hundreds of thousands of jobs.

Meanwhile, the federal government could provide jobs by ... providing jobs. It’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment. There would be accusations that the government was creating make-work jobs, but the W.P.A. left many solid achievements in its wake. And the key point is that direct public employment can create a lot of jobs at relatively low cost. In a proposal to be released today, the Economic Policy Institute, a progressive think tank, argues that spending $40 billion a year for three years on public-service employment would create a million jobs, which sounds about right.

Finally, we can offer businesses direct incentives for employment. It’s probably too late for a job-conserving program, like the highly successful subsidy Germany offered to employers who maintained their work forces. But employers could be encouraged to add workers as the economy expands. The Economic Policy Institute proposes a tax credit for employers who increase their payrolls, which is certainly worth trying.

All of this would cost money, probably several hundred billion dollars, and raise the budget deficit in the short run. But this has to be weighed against the high cost of inaction in the face of a social and economic emergency.

Later this week, President Obama will hold a “jobs summit.” Most of the people I talk to are cynical about the event, and expect the administration to offer no more than symbolic gestures. But it doesn’t have to be that way. Yes, we can create more jobs — and yes, we should.

By PAUL KRUGMAN

Published: November 29, 2009

Ejercicios Beginners 2nd year, Ejercicio 2

Ejercicios 2 Advanced

Pension and Mutual Funds in Lithuania. Conference. International School of Law and Business.

Mr. Taurimas Valys, expert in Pension and Mutual Funds in Lithuania, with many years of experience in the sector, and Ph. D. Candidate in Vilnius Univerity, gave a seminar in my classroom. After the lecture a questionnaire was distributed among the students. I want to thank you for the attendance. It will be rewarded in the final evaluation.

M.P

Pension and Mutual Funds in Lithuania. Seminar 09 11 25

SMK Macroeconomics Final Exam Information & Schedule November December 2009

Cost the production, economies of scale and marginal analysis

Production Inputs and Cost Supply Analysis

SMK MICROECONOMICS SCHEDULE & FINAL EXAM

SMK_MICROECONOMICS SCHEDULE & FINAL EXAM

Economies of Scale

Economies of Scale

VTVKinformationschedulenovember2009blog

The American Betrayal of the World's Rural Poor

SINCE the late 1980's, there are any number of examples one could choose to symbolize the dramatic failure of the U.S. and its allies to deliver on their utopian promises for market-driven higher living standards in the developing world. Among them are the worse crisis since the Great Depression, increasing economic inequality, destruction of the environment, and rapid declines in several key measures of welfare. However, the stunning lack of progress made in the lives of the rural poor should go down in history as one of the great betrayals of the neoliberal era.


For decades international financial institutions, aid organizations and the United Nations advocated an aid based approach to fighting world hunger. The way to respond, the hungry were told to believe, was through a series of technological 'green revolutions', increased market access and external support. At the same time international financial institutions were shoving their ideology of deregulation and liberalization down the throats of national governments. The result? The number of hungry people has topped one billion for the first time since records were established in 1970. Instead of placing blame on a failed strategy, the aid community is blaming the global recession and food crisis for their inability to eradicate hunger.


In the run-up to the 2009 UN Food Summit, the international aid community announced the boldest betrayal of hundreds of millions of starving people around the world. The UN Food Summit also backed away from any recommitment to halve world hunger by 2015---a key component of the UN Millenium Development Goals. Now the experts are claiming that even that goal may be impossible to reach until mid-2040. Humanitarian groups have rightly protested that the Rome summit was a failure, and that the three-day event was damaged by the absence of many of the world's leaders. The only silver-lining of the summit is perhaps the long overdue rejection of neoliberal paradigms in the final agreement. National responsibility for food security is one of the core principles in the summit declaration, which demands that plans for food security must be “nationally articulated, designed, owned and led.”


"The responsibility for ensuring food security, agricultural and rural development is the responsibility of each government and its people...It’s not the responsibility of the FAO and certainly not the responsibility of a summit. A summit does not have land. A summit does not have farmers. A summit does not have a budget to invest. A summit is a framework for discussion and debate to arrive at consensus solutions in the face of common challenges at the global level.”


In the aftermath of the fall of the Berlin Wall, American leaders boasted that the global integration of investment, trade, and communication would lead to a diffusion of economic prosperity and human development around the world. In 2009, with all of the enormous global prosperity, free trade, and cutting-edge technology the fact that there are more hungry people now than a decade ago, should make us re-think our basic laissez-faire assumptions about economic development. The prominent libertarian economist Friedrich von Hayek once warned that the social democratic welfare state of the post 1930's New Deal era would lead down the 'Road to Serfdom'. But in fact it is Hayek and the development policy-makers who shared his ideas who have condemned the rural poor to virtual slavery.

By E. Thomson

Conference mutual and pensions funds in Lithuania

Taurimas Conference

Spanish for Beginners Ejercicios 1

Ejercicios Beginners 2nd year, Ejercicio 1

Ejercicios 1. Estudiantes avanzados.

Spanish Advanced Ejercicio 1

First set of problems

Hand in the following exercises:

Students of SMK Micro:
Exercises: 1,2,3,4,5,6,10
Dead Line: 8 DEC 2009 (Tuesday)

Students of SMK Macro:
Exercises: 2,7,8,9,10,11
Dead Line: 10 DEC 2009 (Thursday)

Students of ISLB (ex-VTVK):
Exercises: 1,2,3,4,5,7,8,10.
Dead Line: 10 DEC 2009 (Thursday)

Economics 1rst Set of Problemsbueno

Taking out the trash

I reproduce a post written by G. Mankiw at his blog. It's quite clear that Mankiw and Krugman are not friends any more. The post was published on November 02 2009.

http://gregmankiw.blogspot.com/2009/11/taking-out-trash.html

The Obama administration’s “jobs created or saved” is just a way of saying “other things equal” in non-economese. Of course it makes sense to ask how many more people are working than would have been the case without a given policy — and every administration makes assertions along those lines. During the 2001 recession and its aftermath, how many times did the Bush administration claim that the recession would have been worse without its tax cuts? And while many of us quarreled with that claim, I don’t think I ever argued that other-things-equal arguments are nonsense on their face.

I don't usually respond to illogical cheap shots from around the blogosphere (life is too short). But when the cheap shot comes from a Nobel prize winner in economics, I will make an exception.

Paul Krugman says I should be ashamed of myself for calling into question Obama administration estimates of how many jobs have been "created or saved." Here is what Paul says,
Yet Paul is rebutting claims I did not make, and he is giving Team Obama more credit on this question than it is due. Here is what I wrote on the topic last February:

The 4 million job number is a counterfactual policy simulation of what the stimulus will do based on a particular model of the economy. As such, I have no objection to someone citing it in a policy discussion. In fact, macroeconomists use models to generate figures like this all the time. I have even done it myself.

But as an answer to the question "how can the American people gauge whether or not your programs are working?... What metric should they use?", citing the 4 million job figure is a non sequitur, or more likely a diversion. A metric has to be measurable, and the actual number of jobs "created or saved" by the policy will never be measurable from any data source.

That is, I do not object to claims such as,

A: "Based on our models of the economy, we believe there would be X million fewer jobs today without the stimulus."But it is absurd to suggest that you can say,

B: "We have measured how many jobs the stimulus has saved or created, and the number is X."Economists are capable of making statements such as A, but it is beyond our ken to make statements such as B. Statement B is,of course, much stronger than statement A, as it purports to be based on data rather than on models. Unfortunately, we are hearing statements like B much too often from administration officials. A good example is here, where can you "learn" that 110,185.36 jobs have been created or saved in California alone."

Invitation to the Students' Conference

MankiwReal Business Cycles

An example of in class presentation

AN example of good in class presentation. Moreover I remind you that together the slides you have to prepare an essay following the instructions given in my lectures.

PRODUCTIVITY GROWTH IN EUROPE AND THE USmodi

The financial crisis according to South Park

Principles of economics by Greg Mankiw. Creative proposal by his students of Harvard

Supply and Demand

BE SEP09 Supply Demand

PKarticle





http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html

Economic Donkeys

EARLY in the First World War, British generals decided to attack German trenches with an initial light bombardment, followed by infantry walking in close order across No Man’s Land. The result was tens of thousands killed in a series of military disasters, but the generals reacted with only small adjustments to their approach and essentially persisted in repeating the same mistakes for years. “The English soldiers fight like lions,” one German general remarked. “True. But don’t we know that they are lions led by donkeys?” was the reply.

Today, a year after global financial collapse and the ensuing tragedy for millions, our economic leaders are lining us up to suffer again (and again) through the same horrible experiences.

The collapse of Lehman Brothers in September 2008 demonstrated just how far our economic system in general and bank management in particular have gone awry. Lehman borrowed at low interest rates in global credit markets, and invested over half a trillion dollars of other people’s money in assets which, today, are worth next-to-nothing: failed ski hills in Montana, now empty suburban housing in California, and crazy bets on derivatives (options to buy or sell securities, in various complex combinations).

Worries about these failed investments sparked a run on the bank. And, after a mad weekend of trying to save Lehman, the U.S. “authorities” – meaning Henry Paulson (Secretary of the Treasury), Ben Bernanke (chairman of the Federal Reserve Board), and Timothy Geithner (President of the New York Fed) – decided to let it go bankrupt. Creditors, realizing no major bank is safe if our leaders might now let them fail, pulled cash from major financial institutions and bought relatively safe US Treasuries and UK Gilts.

Today Lehman’s senior debt trades at a mere 10 cents on the dollar, suggesting its $600 billion in assets were a mirage. This outcome is even more startling when compared to senior debt at Kazakhstan’s defaulting large banks, where management is now accused of serious malfeasance, yet that debt trades at 20 cents on the dollar – twice the price of Lehman’s debt.

At the G20 meeting of finance ministers last week, political leaders united behind two key steps which they claim will “prevent another Lehman”: tighter controls on the pay of executives and more capital for banks. France and Germany blame the crisis on lax regulation in Anglo-Saxon markets and excessive pay packets that encourage irresponsible risk taking. The British and Americans counter that European banks have too much debt (i.e., in the jargon, are “overly leveraged”), and need to raise more capital. The final communiqué proposes to do both, and we will hear more of the same at the upcoming G20 heads of government summit in Pittsburgh. But, in reality, both sides want only minor adjustments that cannot solve the real problems posed by our financial system.

Tim Geithner, now US Treasury Secretary, is pushing for higher capital requirements for banks, i.e., they need to have more shareholder funds to protect against future losses. But he surely knows that two weeks prior to its bankruptcy, Lehman’s management reported they were well-capitalized, with a tier one capital ratio of 11% — roughly twice what the United States currently considers is needed for a well-capitalized bank, and much higher than the American side is proposing in private conversations.

Christine Lagarde, France’s Finance Minister, and Angela Merkel, President of Germany, helped convince the G20 that bank compensation policies need to be amended to encourage long term incentives. They want compensation packages to be limited and bonuses to be locked up, so we can be sure employees’ incentives are consistent with the long term survival of their banks.

President Merkel and Minister Lagarde need to look no further than Lehman for a model of how to introduce a good policy to align incentives. The top management and many employees in the company were largely compensated in shares of the company which vested over many years, so when Lehman Brothers went down, it brought crashing down the lives and finances of its 20,000 employees. Dick Fuld, the highly compensated head of Lehman, lost many million dollars – and presumably a large part of his total wealth. Apart from criminal penalties (of the kind not seen for banking in a century), can we think of a better way of aligning incentives with the outcomes for a bank?

The real problem with our financial system is that our economic and political system work together to encourage excessive risk, and this risk in turn leads to cycles of prosperity and collapse. In 1998, a much smaller Lehman Brothers was placed in financial peril by the aftermath of the Asian financial crisis and failure of Long Term Capital Management, a major hedge fund. The Federal Reserve responded by lowering interest rates and other central banks followed suit. This reduced the cost of obtaining funds, effectively bailing out Lehman and other institutions in trouble.

As markets have grown to recognize how quick the Federal Reserve is to bail out institutions (and executives) in trouble, they naturally respond. In the 1990s, people talked about the “Greenspan Put” a term which derisively suggests that it is always safe to invest in risky assets, because the Federal Reserve is ready to bail out investors (a put is effectively a promise to buy an asset at a fixed price if you are unable to sell it to someone else at a higher price – this is a way to lock-in profits or limit losses on investments). However, in months following the collapse of Lehman, we learned that the “Bernanke Put” is even more valuable since Chairman Bernanke, alongside the Bank of England, the European Central Bank, and central banks in much of the rest of the world, is prepared to take drastic measures to prevent asset prices from falling when there are risks of global collapse.

This policy of responding to the aftermath of bubbles, rather than addressing them before they get going, through tighter regulation, has become the mantra of most central banks. It is usually combined with fiscal policy stimulus and other measures to support the economy. Each time banks fail, by bailing the system out again, we teach our finance sector a lesson: you can safely take too much risk because, when you lose, the taxpayer will pick up the bill. We also send a simple message to creditors: it is safe to lend to Goldman Sachs, or Barclays Bank, because taxpayers and our nations’ savers are standing by to cover your losses. Rational bank executives and creditors respond as any person would: creditors lend to banks at low interest rates, and our banks gamble heavily hoping to make large profits. Such a system is destined to fail, but the party can run for a long time.

While Ben Bernanke has done a wonderful job of preventing financial meltdown, his calls in 2002-2003 for very low interest rates, without fixing our financial system, contributed to the credit expansion that led us into the current mess. In the United Kingdom, the Conservatives plan to transfer regulatory powers to the Bank of England, despite the fact that, like the Federal Reserve, the Bank of England has been a key component of our ever growing cycles of credit expansion and bust.

The “collapse or rescue” decision forced by Lehman’s failure is a symptom of a much larger systemic problem. We need leaders, both in the financial world and in public service who recognize that our financial sector too often causes social harm. There is no doubt that it also provides valuable services that are vital to the well-being of our pensioners and savers, and help manage and mitigate risk for our corporations. Yet too often these activities cause losses, which, either directly or indirectly, become a burden on the rest of society.

The pre-crisis activities and portfolios of Barclays, Goldman Sachs, and other “survivors” of this crisis were only slightly different from Lehman Brothers or Bear Stearns, which failed. The “good” banks also securitized subprime assets, helped build the intricate web of IOUs between banks and insurance companies, and leveraged their balance sheets to enormous levels. The winners were not better, they were just smart enough to make sure someone else held the bad assets when the music stopped, and they were powerful enough to win generous bailout packages from their governments.

The danger we face is that, by bailing out these institutions and rewarding failed managers with new powerful positions, we have now created a much more dangerous financial system. The politically well-connected, knowing they will most likely do fine in the next crisis, is now highly incentivized to take even greater risk.

Once we admit this profound problem in our system, we can begin to think of the radical measures needed to solve it. There is no doubt these solutions will include much greater capital requirements, so that bank shareholders know that they face substantial losses if their ventures fail.

But, we also need to ensure that our regulators are not captured by the banks that they are meant to oversee. This means we need to put checks on financial donations to political parties, and we need to buttress our regulators with more intellectual firepower and financial resources, along with rules that ensure independence, in order to be sure they can act in the interests of the broader population.

We also need to close the revolving door, through which politicians and regulators leave office to earn their nest eggs in finance, and “financial experts” move directly from failing banks to designing bailout packages. The conflicts of interest are abundant and most dangerous.

Last week the UK’s chief financial regulator, Adair Turner, faced heavy criticism from the City, Chancellor Darling, Boris Johnson, and editorials in the Financial Times and Wall Street Journal. His main offense was daring to raise the issue of whether parts of our financial system have become socially dysfunctional, in an interview with Prospect Magazine. He called for greater capital requirements at banks, and he pondered how it would be possible for regulators to preserve the valuable parts of our financial system, while ensuring that regulation limited the harmful parts. These are eminently sensible questions which anyone with a public spirit should understand are critical policy issues today.

Sadly, these public rebukes to Lord Turner are a further indication that very few of our leaders are prepared to even discuss the real problem, let alone seek a sufficient solution. Smart people and well-organized governments can, as in the past, behave like donkeys.

By Peter Boone and Simon Johnson in the blog "The Baseline Scenario"

An edited and shorter version of this post appeared today in the Sunday Times (of London).

VTVK, Business Economics, Fall semester 2009, 1rst slides september 2009

VTVK BE SEP09tenpricinciples_para El Blog

VTVK, Business Economics, Fall semester 2009, 1rst reading

VTVK Fall 2009 Be 1readingVARIAN What Use Theory 8911

US Health Care in Comparison

COMMENTATORS much more capable than myself are weighing in on the important health care debate taking place in Washington D.C. However, given the historic magnitude of the Obama Administration's push for health care reform I have decided to diverge from my usual focus to humbly remind my readers exactly why the American system needs fixing. Let's put it in perspective.

According to the OECD Health Data 2009 the United States' performance is comparatively lacking on all fronts. The OECD is comprised of the world's wealthiest nations with the highest living standards. Unfortunately, for citizens of the United States, our system spends much more and covers less people.

Spending More

"Total health spending accounted for 16.0% of GDP in the United States in 2007, by far the highest share in the OECD. Following the United States were France, Switzerland and Germany, which allocated respectively 11.0%, 10.8% and 10.4% of their GDP to health. The OECD average was 8.9% in 2007."

Covering Less

"For this amount of expenditure in the United States, government provides insurance coverage only for the elderly and disabled (through Medicare, which primarily insures persons aged 65 and over and people with disabilities) and some of the poor (through Medicaid and the State Children’s Health Insurance Program, SCHIP), whereas in most other OECD countries this is enough for government to provide universal primary health insurance."

The United States has fewer doctors per-capita than any other OECD country. We also lag behind world leaders in increasing life expectancy and declining infant mortality rates. This is all despite being the world's wealthiest country. The reason? Unlike most other industrialized OECD nations, the US does not have a universal health care system. Even the current reforms being advocated by President Obama fall short of providing universal quality care for every American. Furthermore, the administration left the single-payer option off the table which would have been the most efficient cost cutting mechanism. As a country that prides its self on being the "best" in the world, health care should offer every American a powerful dose humility.

Austin Thompson, in A.Thomson Monitor