Back to School Offer

Get 20% of Your First Order amount back in Reward Credits!

Get 20% of Your First Orderback in Rewards

All papers examples
Get a Free E-Book! ($50 Value)
HIRE A WRITER!
Paper Types
Disciplines
Get a Free E-Book! ($50 Value)

Fiscal and Monetary Policy Simulation and Recommendation, Essay Example

Pages: 2

Words: 651

Essay

The Federal Reserve System (Fed) sets future goals for the monetary policy of the country. The latest update of the long term goals of the Monetary Policy Strategy were published on the 29th of January, 2013. The main principles are maximum employment and the inflation reduction. (FOMC 2013). The recommendations include increasing the clarity of monetary decisions to help businesses and households plan ahead. The report of the latest meeting in May 2013 (FOMC1 2013,) has assumed that the main contributors towards inflation were food and energy prices, and the yearly increase of price in energy supply was predicted to stay the same it was in the previous few years.

According to Rosa (2013), there are three main surprises in the Federal Monetary Policy affecting the future of the energy market. These are:

a, “A Target shock is defined as the difference between the announced target federal funds rate and market participants’ expectations”

b, “A Path shock captures revisions to the future path of monetary policy”

c, “An asset purchase shock measures the surprise component of asset purchase announcements”

(Rosa, 2013, pp. 5.)

Based on the new Federal Reserve Policy, the flexibility of the size of the monthly bond-buying program is a new approach that needs to be considered. Based on the predictions and the state of the economy, the long-term asset purchases would be planned in order to stimulate the economy.

Adjustments of Strategic Decision-making in the Energy Sector

As the government is focusing in increasing employment rate and balancing the economy, planning on the increase of energy prices at a 2 percent inflation rate, the main strategic adjustment an energy company needs to make is to keep the profitability of production and supply within the 2 percent increase margin. A price increase for corporate and residential companies of over 2 percent would mean that the government’s monetary goals are not met. Therefore, the company needs to focus on profitability and reducing the cost of production, supply, operation. Further, Rosa (2013, pp. 8.) confirms that the variation of trading volume based on the monetary policy increases the market’s volatility.

As the company is present on a global market and this includes the European Economic Area, the purchase of securities is necessary. The instability of different countries in the EEC and the difference in inflation rates calls for a similar investment strategy as the Federal Reserve Policy describes. Investing in low risk securities and reducing costs should be the main focus of the 2013 economic strategy plan of the company. As the 2013 FOMC paper concludes (FOMC1 2013, pp. 3.) “Yields of longer-term Treasury securities and foreign benchmark sovereign bonds

declined appreciably… Equity prices rose modestly, on net, supported in part by solid quarterly earnings reports.” The only investment strategy that carries low risk and reasonable return would be investing in equities and securities.

Some members of the committee concluded that the energy prices would decline in the course of 2013, therefore, in order to gain a competitive advantage, the company needs to focus on stability, customer service and increasing its market share worldwide. The instability of currencies, especially the fluctuation of Euro to Dollars and Japanese Yen due to the economic unreliability of some of the member countries calls for a careful and secure financial and investment plan. Taxation of global companies is likely to be revised in various countries, due to the increased focus on green policies, therefore, a strategy needs to be developed to prepare the company for the changes.

References

FOCM Report. Statement on Longer-Run Goals and Monetary Policy Strategy As amended effective on January 29, 2013. Web. http://www.federalreserve.gov/monetarypolicy/files/FOMC_LongerRunGoals.pdf

FOCM Report 1 (2013) Minutes of the Federal Open Market Committee April 30–May 1, 2013. Web. http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20130501.pdf

Gavin, W., Keen, B., Kydland, F. (2013) Monetary Policy, the Tax Code, and the Real Effects of Energy Shocks. Web. <http://research.stlouisfed.org/wp/2013/2013-019.pdf >

Rosa, C. (2013) The High-Frequency Response of Energy Prices to Monetary Policy: Understanding the Empirical Evidence. Federal Reserve Bank of New York Staff Reports.

Time is precious

Time is precious

don’t waste it!

Get instant essay
writing help!
Get instant essay writing help!
Plagiarism-free guarantee

Plagiarism-free
guarantee

Privacy guarantee

Privacy
guarantee

Secure checkout

Secure
checkout

Money back guarantee

Money back
guarantee

Related Essay Samples & Examples

Multinational vs Multicultural, Essay Example

The main difference between a multinational and a multicultural organization is that a multinational operates in several countries while a multicultural has individuals from diverse [...]

Pages: 1

Words: 378

Essay

Prevent terrorist strikes on American soil, Essay Example

Goal, Objectives, and Strategies The Department’s goal is to protect the homeland by thwarting terrorist threats and implementing emergency plans. These are the Department’s top [...]

Pages: 1

Words: 412

Essay

Science and Technology and Nation-Building, Essay Example

Science plays a pivotal role in technology. The combination of science and technology (S&T) results in the development of new knowledge used to improve human [...]

Pages: 3

Words: 768

Essay

Plato’s Portrayal of Socrates and the Historical Socrates, Essay Example

Socrates, the Athenian philosopher, changed how philosophers thought about the world. However, modern audiences believe that Socrates did not write any of his ideas down [...]

Pages: 5

Words: 1285

Essay

Ambiguity, Essay Example

The New Task I am Proposing My proposal is a promotion at work. I am a Business Development Associate at Universal New York, NY. My [...]

Pages: 1

Words: 278

Essay

Narratives That Shape Our World, Essay Example

The context and the values in the text Othello by William Shakespeare have shaped me in perspective through the main character Othello. I perceive life [...]

Pages: 6

Words: 1574

Essay

Multinational vs Multicultural, Essay Example

The main difference between a multinational and a multicultural organization is that a multinational operates in several countries while a multicultural has individuals from diverse [...]

Pages: 1

Words: 378

Essay

Prevent terrorist strikes on American soil, Essay Example

Goal, Objectives, and Strategies The Department’s goal is to protect the homeland by thwarting terrorist threats and implementing emergency plans. These are the Department’s top [...]

Pages: 1

Words: 412

Essay

Science and Technology and Nation-Building, Essay Example

Science plays a pivotal role in technology. The combination of science and technology (S&T) results in the development of new knowledge used to improve human [...]

Pages: 3

Words: 768

Essay

Plato’s Portrayal of Socrates and the Historical Socrates, Essay Example

Socrates, the Athenian philosopher, changed how philosophers thought about the world. However, modern audiences believe that Socrates did not write any of his ideas down [...]

Pages: 5

Words: 1285

Essay

Ambiguity, Essay Example

The New Task I am Proposing My proposal is a promotion at work. I am a Business Development Associate at Universal New York, NY. My [...]

Pages: 1

Words: 278

Essay

Narratives That Shape Our World, Essay Example

The context and the values in the text Othello by William Shakespeare have shaped me in perspective through the main character Othello. I perceive life [...]

Pages: 6

Words: 1574

Essay

Get a Free E-Book ($50 in value)

Get a Free E-Book

How To Write The Best Essay Ever!

How To Write The Best Essay Ever!