BBSE Research Projects (2018)

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Browsing BBSE Research Projects (2018) by Subject "Econonics"

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    Devolved monetary policy
    (Strathmore University, 2018) Ndung'u, Bryan Wandegwa
    Inflation is the sustained increase in the prices of goods and services. Inflation is a double-edged sword, such that too much or too little will affect the economy poorly. Various Governments employ their Central banks or Federal reserves to try and regulate inflation. The Central banks and Federal reserves have various tools in their fight to restrain inflation to a level they feel is optimal for their country. These are referred to as monetary policies, they include, but are not limited to: interest rates and open market operations. In this changing world, with all the advances in technology and such, monetary policy must be flexible and adjust quickly to several scenarios that could prove critical to a nation's economy. Tinbergen's (1952) Rule that the number of achievable policy goals cannot exceed the number of policy instruments dictates that a mechanical monetary policy rule can fail to achieve its stated objectives of full employment and target inflation. The 2007 financial crisis that brought about increased inflation globally and small instances such as the effect of the election period in Kenya had on the economy; these are some of the examples that call upon flexible monetary policy.
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    Income distribution and household debt: macro-economics of keeping up with the Joneses
    (Strathmore University, 2018-02) Lang'at, Lynn Chemtai
    The purpose of this study is to examine the factors that affect household debt. The variable of interest is income inequality and its effect on household debt. The paper uses the generalized method of moments (GMM) method to estimate the relationship between household debt and income distribution. Time series data is used for the period between, 1980 -2015. The study also examines other factors that affect household debt such as lending rates, growth in income rates, unemployment rates and gross domestic product per capita rates. The theoretical framework focuses on the permanent income hypothesis and consumption smoothing which explains consumer spending throughout his lifetime and we can infer consumer borrowing from this. The main hypothesis of the study is that income distribution affects household debt to a large extent because of the effect of keeping up with the Joneses on individuals. Most of the research done in this area focuses on developed countries and not much has been done on developing countries such as Kenya. The findings in this study can be used by policy makers to better understand the impact of household debt on the economy.