Gross fixed capital formation.

And inflation is like default a capital levy on holders of public debt, as it reduces the real value of nominal liabilities at fixed interest rates.

Returns the Macauley duration of a fixed interest security in years.

Banks capital adequacy ratios were set globally, and, once set, remained fixed.

And low interest rates will encourage firms that do invest to spend on fixed capital like highly automated machines, thereby ensuring that, when recovery comes, it will be relatively jobless.

As a result, the interest rate for 12 month fixed deposits has reached 3.9 .

If exchange rates were fixed but capital could move freely, capital flight from the country would generate pressures to end loose monetary policies.

Table 2. FDI outflows as a percentage of gross fixed capital formation in selected economies, 2001 2003a

These measures are aimed at channelling external flows to fixed capital investment, export diversification and technological modernization.

In a low interest rate environment, however, equities tended to perform better than fixed income securities.

Keeping interest rates low discouraged capital inflows and encouraged asset price inflation.

But this vigorous attempt to reduce interest rates is distorting capital allocation.

Table 2. FDI outflows as a percentage of gross fixed capital formation in selected economies, 2001 2003a (concluded)

Fixed mortgages, with interest rates at 6 , were replaced with variable rate mortgages, whose interest payments were tied to the lower short term T bill rates.

The decline has occurred because, relative to population growth, fixed capital investment, knowledge and skills, and improvements in institutions have not compensated for the degradation of natural capital.

Similarly, a potential downside to quantitative easing is that low interest rates send capital to higher growth, high interest rate countries.

But higher interest rates also imply large capital losses for central banks asset holdings.

h Corresponding to net inflow of capital, less net payments of profits and interest.

payments a profits and interest c account d of capital e Global balance f

William agreed to pay George interest and the capital in compensation, but George remained unpaid.

Nonetheless, we continue to transfer capital to rich countries to pay interest on our foreign debt.

Low interest rates on deposits encourage savers, especially households, to invest in fixed assets, rather than keep their money in banks.

Ideally, bank creditors would not lose money, because their fixed interest claims would be converted into bank shares of similar value.

But even as short term interest rates began to rise, the day of reckoning was postponed, as new borrowers could obtain fixed rate mortgages at interest rates that were not increasing.

Fixed

Fixed

Fixed

Fixed

Fixed

Will the government liberalize interest rates or loosen capital controls? How will the fiscal system be revamped?

Doing so will require maintaining some capital account control, while raising interest rates to market clearing levels.

Private and official transfers continued to the subregion. The amount of short term private capital and some capital repatriation attracted by high rates of interest was significant.

A fixed polarity of power means fixed alliances.

In China, Brazil, Malaysia, and Mexico, foreign direct investment (FDI) accounts for 8 to 12 of gross fixed capital formation without generating debt.

The third is temporary interest reduction bonds, where interest rates start from a very low level and rise over several years, followed by payment of a variable interest rate calculated as a floating international base rate plus a fixed margin.

Monetary policy was undermined by the banking crisis, and any reduction of interest rates to boost economic activities would encourage further flight of capital and stop capital inflows.

By 2012, human capital s contribution to China s GDP growth fell almost to zero, with fixed capital accumulation accounting for roughly 60 of total growth.

But competitive pressures and the long gestation period of fixed capital outlays multiply optimism, leading to more investment being undertaken than is actually profitable.

If they try to clamp down by raising domestic interest rates, they will only attract greater capital inflows.

The problem? An invasion of short term capital flows fleeing the slow growth, low interest rate advanced countries.

Under the current system, the fixed differentials between interest rates on deposits and those on loans translate into monopolistic profits for commercial banks.

The use of longer maturity fixed rate instruments could help prevent pro cyclical effects caused by the Government's interest payments and funding requirements.

Over time, however, the interest rate premium is likely to be small, because higher capital requirements and contingent capital should significantly reduce the likelihood of ever reaching the triggers.

Fixed Date

Fixed Font