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Natural capital is related to government bonds through the macroeconomy and credit risks. This paper estimates this relationship from the long-term, between-country view and the short-term, within-country view. The paper cautions against the former, as it is dominated by income differences. These are de facto ingrained, as they cannot be overcome by short-term policy efforts. The within-country view is unaffected by the ingrained income bias and leaves room for recent natural capital changes to affect bond yields. The paper finds that non-renewables (fossil fuels and mineral assets) raise bond yields, possibly due to the resource curse. Renewables (forests and agricultural wealth) lower borrowing costs because they are economically worthwhile investments. Protected areas are more likely to be luxury investments.

Agriculture --- Climate Change and Agriculture --- Climate Change Mitigation and Green House Gases --- Environment --- Finance and Development --- Finance and Financial Sector Development --- Greenhouse Gas Emissions --- Ingrained Income Bias --- Interactive Fixed Effect --- Latent Common Bond Factors --- Natural Capital --- Natural Resource Management --- Natural Resources Management --- Renewable Resources --- Sovereign Bond Yield

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April 2000 - How Korea's financial structure affects the volatility of Korea's real effective exchange rate, money market rate, government bond yields, and stock prices. Min and Park explore how Korea's financial structure affects the volatility of asset prices. Documented empirical evidence of the relationship between financial structure and financial crisis sheds light on the relationship between asset price volatility - extreme variations in prices - and financial structure. And the volatility of financial and nonfinancial asset prices provides an indirect link between an economy's financial structure and the likelihood of financial crisis. Using time-series data and a set of indicators measuring financial structure, Min and Park examine how Korea's financial structure affects the volatility of the real effective exchange rate, the money market rate, government bond yields, and stock prices. They find: There is a stable long-term relationship between financial structure and volatility in the real effective exchange rate, the money market rate, stock prices, and the yield on government housing bonds; Financial structure affects asset price variables asymmetrically. Some variables' volatility increases and others' diminish, suggesting that monetary policies should target different asset markets to achieve different goals. If the goal of the monetary authority is to stabilize the money market rate, for example, intervening in the banking sector is more efficient than intervening in other financial subsectors; The higher volatility of stock prices reflects the thin stock market in Korea; The stability of the yield on government housing bonds reflects the Korean government's policy of stabilizing the nation's housing supply by isolating the housing market from the impact of Korea's financial structure; Restrictions on foreigners' ownership of domestic stock in Korea during the period analyzed, and the fact that most capital flows through commercial banks, affect the exchange rate, which is determined (at least in the short run) by capital flows in the foreign exchange market. This paper - a product of the Macroeconomic Data Team, Development Data Group - is part of a larger effort in the group to understand the financial structure of developing countries based on empirical data. The authors may be contacted at hmin56@aol.com or jpark@worldbank.org.

Asset Prices --- Banking Sector --- Banks and Banking Reform --- Capital Flows --- Currencies and Exchange Rates --- Currency --- Currency Crises --- Debt Markets --- Emerging Markets --- Exchange --- Exchange Rate --- Finance --- Finance and Financial Sector Development --- Financial Crisis --- Financial Institutions --- Financial Literacy --- Financial Structure --- Financial System --- Government Bond --- Government Bond Yield --- Macroeconomics and Economic Growth --- Market --- Markets and Market Access --- Monetary Authority --- Monetary Policies --- Money Market --- Money Market Rate --- Private Sector Development --- Stock

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"Inflation, in which all prices and wages in an economy rise, is mysterious. If a war breaks out in the Middle East, and the price of oil goes up, the mechanism is no great mystery-supply and demand often work pretty visibly. But if you ask the grocer why the price of bread is higher, he or she will blame the wholesaler, who will blame the baker, who will blame the wheat supplier, and so on. Perhaps the ultimate cause is a government printing more money, but there is really no way to know this for certain but to sit down in an office with statistics, armed with some decent economic theory. But current economic theory doesn't really explain why we haven't seen inflation for so long, and more and more economists think that current theory doesn't hold together, or provide much guidance for how central banks should behave if inflation does break out. Many also worry that central banks have much less power over the economy than they think they do, and much less understanding of the mechanism behind what power they do have. The Fiscal Theory of the Price Level is a comprehensive new approach to monetary policy. Economist John Cochrane argues that money has value because the government accepts it for tax payments. This insight, he argues, leads to a deep re-reading of monetary policy and institutions. Inflation comes when a government is unable to repay its debts, rather than from mismanagement of the split of debt between money and bonds. In the book, he will analyze institutional design, historical episodes, and compare fiscal theory to the Keynesian and new-Keynesian theory based on interest rate targets, and to monetarism. The book offers an overview and introduction to the range of contemporary monetary economics and history of thought as well as the fiscal theory"--

Inflation (Finance) --- Monetary policy. --- Prices. --- BUSINESS & ECONOMICS / Economics / Macroeconomics. --- Accounting rate of return. --- Asset price inflation. --- Bond Yield. --- Central bank. --- Consumer debt. --- Consumer economy. --- Consumption (economics). --- Credit (finance). --- Credit risk. --- Credit spread (options). --- Currency crisis. --- Currency swap. --- Currency union. --- Currency. --- Debt limit. --- Debt-to-GDP ratio. --- Debt. --- Default (finance). --- Diversification (finance). --- Econometrics. --- Economic equilibrium. --- Economic planning. --- Economics. --- Exchange rate. --- Finance. --- Financial correlation. --- Financial economics. --- Fiscal adjustment. --- Fiscal gap. --- Fiscal multiplier. --- Fiscal policy. --- Fiscal space. --- Fiscal theory of the price level. --- Fixed exchange-rate system. --- Functional finance. --- GDP deflator. --- GDP-linked bond. --- Government budget balance. --- Government debt. --- Inflation swap. --- Inflation targeting. --- Inflation tax. --- Inflation. --- Interest Cost. --- Interest rate risk. --- Interest rate. --- Keynesian economics. --- Liability (financial accounting). --- Liquidity premium. --- Macroeconomic model. --- Macroeconomics. --- Marginal rate of substitution. --- Mark-to-market accounting. --- Market Risk Premium. --- Market clearing. --- Market liquidity. --- Market price. --- Microeconomic reform. --- Modern Monetary Theory. --- Monetarism. --- Monetary Theory. --- Monetary authority. --- Monetary reform. --- Monetary system. --- Money market. --- Money multiplier. --- Nominal interest rate. --- Price Change. --- Price controls. --- Price elasticity of demand. --- Price fixing. --- Price index. --- Price level. --- Public finance. --- Quantity theory of money. --- Real business-cycle theory. --- Real interest rate. --- Real versus nominal value (economics). --- Relative value (economics). --- Risk premium. --- Share price. --- Stochastic discount factor. --- Stock valuation. --- Supply (economics). --- Supply-side economics. --- Swap (finance). --- Tax and spend. --- Tax avoidance. --- Tax policy. --- Tax reform. --- Tax. --- Terminal value (finance). --- The General Theory of Employment, Interest and Money. --- The Wealth Effect. --- Tight Monetary Policy. --- Trade credit. --- Treasury Bill. --- Valuation (finance). --- Value (economics). --- Commercial products --- Commodity prices --- Justum pretium --- Price theory --- Consumption (Economics) --- Cost --- Costs, Industrial --- Money --- Cost and standard of living --- Supply and demand --- Value --- Wages --- Willingness to pay --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Finance --- Natural rate of unemployment --- Prices --- Monetary policy