bbvista pp economic and industry analysis

In the long run unemployment cannot remain below the

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Unformatted text preview: ⇒ boost savings i.r ⇑ ⇒ lower business investment ⇒ Lower GDP MS⇓ ⇒ inflation⇓ ⇒ Output⇓ (higher wages) ⇒ GDP⇓ ⇒ Unemployment In other words: Unemployment is driven by differences between short term expected inflation and actual inflation. In the long run unemployment cannot remain below the natural rate ( 4%) due to price pressure on wages. Natural unemployment = structural unemployment and frictional unemployment MS policy controls cyclical unemployment. Strong Currency Little inflation Weak Currency High inflation Industry Analysis Industry Analysis Industry analysis helps investors isolate investment opportunities that have favorable risk­return characteristics. Auto analyst, drug analyst, retail analyst etc. Investors look for: Investors look for: Differences in industry risk Industry performance over time How economic trends impact different industries? How do industries differ in risk­return patterns? Do all firms in an industry perform in a similar manner? Is the industry profitable? What is the firm’s position in the industry? Business cycle and Industry Business cycle and Industry Performance Economic trend are expressed in the form of cyclical changes and structural changes. What determines Industry What determines Industry profitability Short...
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