Home Equity Loan: All Cons and Pros

Home equity loan (for example, real estate) is a fairly popular financial transaction. Often, such conditions are excepted by private entrepreneurs. Such a loan is an excellent way to acquire good starting capital.

To date, there are many banking institutions that provide services for home equity loan. Banks sign contracts, as they receive from this an impressive financial benefit. Most of them can approve application even online, but here you need to understand that the lender is a reliable company. So before engaging in a contract, you should find out more about the chosen company: read comments of other people, and reviews on special websites, such as paydayloansonline.reviews. And only after you made sure that the company can be trusted, start to collect all necessary documents.

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Speedy Loans in Time of Financial Crisis: Precrisis and Postcrisis Movements of Capital

financial crisisBeginning in mid-1997, five East Asian countries lapsed into severe financial crisis: Indonesia, Malaysia, the Philippines, South Korea and Thailand. The crises centered both on the value of these countries’ currencies and on the solvency of their banking systems (Barth etaL, 1998; Garcia, 1998; Schwartz, 1998).

Figure One tracks the relative value in U.S. dollars of each country’s currency from April 1, 1997 to April 30, 1999. In all five crisis countries, the period of sharp decline ended by February, 1998. The period of free fall was longest and deepest in Indonesia, which was the only country to experience a political crisis as well. In all countries, currency values have strengthened since early 1998. As with the fall, the recovery has been rockiest in Indonesia, where political uncertainties remain strong. As Mei (1999) documents, political instability makes financial stability hard to maintain. We may come to a conclusion the banking service was destroyed as it is. it was rather hard to carry out the economical operations besides citizens suffer. but if they have such a service in the Internet it may help them to take speedy loans now to solve their problems.

Malaysia stabilized its currency by imposing controls on capital movements. The other four countries negotiated a series of assistance agreements with international lending institutions and particular foreign countries. The sources and size of outside assistance are summarized in Table 1. For a country undergoing crisis, the availability of outside aid is largely conditioned on its promise to maintain convertibility, to reform domestic financial regulation, and to strengthen its insolvent banks.

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WAGE MODEL. AS AN ALTERNATIVE WAY – Speedy Loan Online​​ : Evidence on the Effects of a Shock to Fiscal Policy

fiscal policyIn this section we accomplish two tasks. First, we describe our strategy for estimating the effects of an exogenous shock to fiscal policy. Second, we present the results of implementing this strategy.

2.1. Identifying the Effects of A Fiscal Policy Shock

Ramey and Shapiro (1998) use a ‘narrative approach’ to isolate three arguably exogenous events that led to large military buildups and total government purchases: the beginning of the Korean War (1950:3), the beginning of major U.S. involvement in the Vietnam War (1965:1) and the beginning of the Carter-Reagan defense buildup (1980:1).

To estimate the exogenous movements in government purchases, Gt, and average marginal tax rates, rt, induced by the onset of a Ramey-Shapiro episode and the corresponding movements in other variables, we use the following procedure. Define the set of dummy variables Dt, where Dt = 1 if t = {1950:3, 1965:1, 1980:1} and zero otherwise. We include Dt as an explanatory variable in a vector autoregression (VAR). Suppose that the k x 1 vector stochastic process Zt has the representation:

Formule 1

and E is a positive definite k x k matrix. The Ai can be consistently estimated using least squares. The response of Zit+k, the ith element of Zt+k, to the onset of a Ramey-Shapiro episode at date t, is given by the coefficient on Lk in the expansion of [I — Ai{L)L]~l A2(L). Note that this procedure assumes that the Ramey-Shapiro episodes are of equal intensity.

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COUNTRIES SUBSIDIZE INVESTMENT: A Model to Explain the Investment Subsidy Puzzle

Consider now the second stage. In a competitive labour market, each firm chooses labour input to maximize net revenue Y+z^-wL if production is taken up. This simply yields the marginal productivity condition YL=w. The equilibrium wage rate obviously satisfies w$c. The wage rate may exceed c if L=N in the equilibrium, i.e. no voluntary unemployment exists. For the following analysis, it is useful to concentrate on the case of an interior solution, where the labour market clears with Lw6685-7
We finally turn to the first stage where the firms choose K. For the analysis of investment behaviour, suppose for the sake of the argument that all firms decide to take up production, that is |ic=0. We show below that this conjecture is indeed correct. Expected profits of a firm i are thus given by
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At the third stage, is finally revealed. Given ц;, each firm has to decide whether to take up production or to close down. If the firm produces, the entrepreneur earns Y(L;K)+z |irwL. If the firm is closed down, the workers become unemployed and the capital goods are sold. The liquidation of the firm yields (1+r0)K. We assume r>r0>-1, such that, while the liquidation value of the firm is strictly positive, the return from selling the firm’s assets is less than the market rate of interest. A firm i therefore chooses to produce if and only if

Given that firms may be liquidated, it is natural to ask whether labour contracts chosen before the revelation of can be renegotiated at this final stage. To keep the analysis simple, we rule
out this possibility here. In section 4.4., however, we will show that none of our results is affected if renegotiation is allowed for.

While the entrepreneurs in our economy take investment decisions and manage the firms, there is a second group of agents, the workers. The overall number of workers is N and each worker inelastically supplies one unit of labour such that L denotes the number of workers employed in each firm. Workers have no initial endowment with capital. A worker of a firm which is not liquidated earns the wage rate w while a worker who finds no job or is employed by a firm which is closed down has an income c, which may also be interpreted as the value of leisure. The workers are assumed to be risk neutral, i.e. they only care about their expected income. comments
In the following section, we first analyse the benchmark case where no trade union exists, i.e. the case of a competitive labour market. In section 4.3., we then assume that the workers form trade unions, such that labour contracts are subject to bargaining between unions and firms.

Equilibrium with Competitive Labour Markets

We determine the competitive equilibrium by solving the model recursively, beginning with the third stage. We first note that, for given values of K, w, and L, (2) determines the critical shock level |ic. All firms where the productivity shock turns out to be lower than the critical level |ic are liquidated because the operating profits (the l.h.s. of (2)) is lower than the liquidation value (the r.h.s. of (2)). As all firms in the economy are assumed to be distributed in the interval ц 0 [0;1], a corner solution where no firms are liquidated with |ic=0 may arise. Note that |ic is also the ex ante probability that a firm will be closed down at the third stage. Finally, as we have normalised the overall number of firms in the economy to unity, |ic may also be interpreted as the number of firms which will be liquidated at stage three; hence, the number of producing firms will be 1-^c.


Investment subsidies, in contrast, are paid immediately and therefore serve as a substitute for employment subsidies. This argument, however, has the weakness that it does not explain why the government should not pay out labour subsidies immediately as well, based on future employment as announced by the firms, and raise taxes later in case the firm does not fulfill its employment obligations.
In what follows, we develop a model which gives a different explanation. In this model, union-firm bargaining distorts both employment and investment decisions and leads to an inefficiently low number of active firms. To correct these distortions, the government may use investment and employment subsidies. Our key result is that investment subsidies strictly dominate employment subsidies in this framework.
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One reason for the higher level of investment subsidies may simply be that employment and investment subsidies have different underlying policy objectives. While employment subsidies clearly have the function to raise employment, investment may be subsidised for reasons not directly related to labor markets. Most importantly, investment subsidies are also an instrument to raise economic growth. The endogenous growth literature has identified various externalities arising from private investment in physical capital. These externalities may justify investment subsidies.6 Investment grants may also be a result of tax competition, where national governments offer fiscal incentives to attract internationally mobile capital.
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Table 2: Regional Incentives in Europe
Another study which sheds some light on the relative empirical importance of employment and investment subsidies is Yuill et al. (1994). This study is more limited by the fact that it only covers regional policies in a sample of EU countries and only the three or four most important programmes for each country. The study has the advantage, however, that the data is country.
Table 2 shows that, while in nearly all countries under consideration, investment promotion plays an important role, significant programmes directly subsidising labour are reported for three countries only. Table 3 shows the expenditure shares of investment and employment subsidies. Here, it turns out that, even in those countries which do have employment subsidies, expenditure on investment promotion is much more important, with the exception of Italy.
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Investment and Employment Subsidies: Empirical Evidence

In this section, we present some empirical evidence about the role of investment and employment subsidies in industrialized countries. Somewhat surprisingly, there are few empirical studies trying to assess quantitatively the relative importance of these two types of subsidies. In the following, we discuss the results of three different studies. Firstly, on the basis of data collected by the OECD (1996), we consider the structure of aggregate general public support to industry in the OECD countries. Secondly, we use a report on regional incentive programmes in Europe (Yuill (1994)) to illustrate the role of capital and employment subsidies in individual European countries. Thirdly, we briefly consider the case of East Germany. In all cases, regional or sectoral subsidies are analysed. Subsidisation of employment and investment is measured relative to the general tax and social security system in the various countries under consideration. Our approach thus identifies how policies for specific sectors or regions are designed.
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