Article Summary Essay Example | Topics and Well Written Essays - 750 words

Article Summary - Essay Example The bank not just possesses the financial might but also has a brilliant team of experts who have defined bank’s policies from time to time. Nobel laureate like Joseph Stiglit and prominent economists like Lawrence Summers have added to the intellectual capital of the bank. In spite of the major role played by the bank in global development, it’s financial might and the intellectual assets; the bank has been criticized by the Right wing as well as the Left wing for it’s functioning and this criticism is aimed at not just restricting the activities of the bank but has practically challenged the very existence of the bank. Revenue model of the bank involves selling bonds to investors in rich countries and receiving grants for raising the capital. While lending and soft lending to developing and underdeveloped countries complete the revenue model. In 1996, the bank acknowledged that some of the parts of soft lending were unrecoverable. Left wing wanted these debts to be written off by converting them to grants. Twice, in 1996 and 1999 the bank has ceded to these demands and partly written off the loans. However, there is another demand for completely writing off loans of 33 Highly Indebted Poor Countries (HIPCS). It is notable that some countries like Philippines and China have achieved growth from these soft loans and are yet to repay those loans. Writing-off such loans would mean big loss to the bank and reduced resources for future lending. In the past, bad debts of the World Bank had been compensated by the aid from rich countries. Britain still favors the same model. However, the US wants all the debts to be converted into grants. Under the US pressure, the soft loan fund is being converted into grant fund since 2003 and it is forecasted that by 2035, this fund will be reduced to just 10% of its present size. With no new support coming from the rich countries, this

Statistics Research Paper based on a Regression Study Term

Statistics Research based on a Regression Study - Term Paper Example This paper seeks to investigate how household income levels influence prices. In particular, we are interested in investigating whether increases in average household earnings lead to higher costs of living. We use state wise data to explore the question. Given the nature of the data, the specific query that we seek to answer is: Does more affluent states tend to have relatively higher costs of living? The secondary questions are regarding the nature of dependence, i.e., is there a linear dependence or is there in fact a non-linear relationship among our variables of interest? In this section we discuss the basic economic theory that we intend to validate and then develop the hypothesis to test using the data. Economic theory establishes that other things remaining the same, higher income leads to higher demand. That is, if there is an increase in the income of the consumer, ceteris paribus, at each price the consumer will demand more of the good, provided it is not an inferior good (Varian, 2006). Now, given the market supply curve is fixed, such a rise in demand always results in higher prices for the good (Sullivan and Sheffrin, 2003). This is elaborated in the diagram below: In the diagram above, E1 is the initial equilibrium price. Now if there is an increase in income of the consumer, the quantity demanded at each price increases. As a result, the demand curve shifts from D1 to D2. Given the supply, curve remains unchanged, this results in the new equilibrium point E2. Clearly, the new equilibrium price P2 is higher than the initial price P1. Therefore, we find that higher incomes tend to boost up equilibrium prices. Extending this logic implies that localities where more affluent individuals reside should witness higher relative prices. This is because people with higher incomes will bid up prices of general merchandise and, thus, the cost of living could potentially be higher for such places. It is