Medical Tourism: Study Case of Ijn

Medical Tourism Sustainability through the Export Market Orientation Behaviours: The Case Study of Institut Jantung Negara (IJN) Ili-Salsabila Abd-Razak1 and Asmat Nizam Abdul Talib Universiti Utara Malaysia, Kedah, MALAYSIA The inclusion of tourism sector as one of the 12 recognized national key economic areas (NKEA) for the 10th Malaysia Plan represent the sector’s prospect in not only driving the nation’s economy, but also transforming the country into a high-income economy by 2020. With approximately 10 years left, many concerned groups are keen to know how this will be achieved.This paper aims at exposing the prospects of medical tourism as an essential subsector of tourism which would offer a number of proven benefits, and hence contribute to accomplishing the government aspiration of transforming the nation’s economy via the said sector. In discussing the subject, the case study method is employed involving Institut Jantung Negara (IJN) as an emerging medi cal tourism provider in the country. Findings of the case study are presented herein. Key words: medical tourism, economy, Institut Jantung NegaraIntroduction The promising prospect of tourism as an economic stimulator has enabled it to be included in the list of 12 National Key Economic Areas (NKEA), which has been specifically drafted to transform the Malaysian economy into high-income economy by year 2020. While there are tremendous numbers of tourism categories, ranging from environment, cultural, sports, and entertainment, to name a few, this paper intend to highlight on the prospects of medical tourism as a significant tourism-related economic contributor in this country. Connell (2006) defined medical tourism as health-related tourism involving specific medical intervention. Among the most popular medical tourism products are orthopaedic and cardiac surgery, which are very popular among Asian medical tourism providers, as well as executive health evaluations, cosmetic surgery , joint replacement, and similar complex medical, surgical and dental procedures (Horowitz and Rosensweig, 2007).Therefore this is a distinguished industry than that of the wider health tourism industry which involves tourists travelling to search for spas, yoga and meditation, or any other forms of health tourism (Connell, 2006; Garcia Altes, 2005). 1 Email: ili. [email  protected] com 169 In a relatively detailed account of medical tourism development which began in 1800s, Schroth and Khawaja (2007) proposed that the current phenomenon is different due to the unique combination of global demand and supply within the international medical market.As observed in the region, this proposition is regarded as well-founded. The present development of medical tourism in the international market is very unique, manifested by the escalating statistics of players, patients and revenues generated around the globe of late. How Malaysia is positioned within this backdrop, and how it would affe ct the development of this fast emerging economy, are among the focus of discussion of this paper. The Statistical Development of Medical Tourism Medical tourism has been a very significant industry over the years.By judging from its health travel umbrella, the sector is expected to generate some handsome revenue of RM240 billion (roughly USD73 billion) in 2010, with ASEAN contributing RM9. 6 billion (roughly USD3 billion) (PEMANDU, 2010). Specifically focusing on medical tourism industry, the anticipated revenue to be generated in Asia is RM14. 2 billion by 2012 (roughly USD4. 3 billion), with Malaysia is expected to bring in RM2. 1 billion (roughly USD64 million) from that amount (Ang, 2009).As a comparison, India, another top Asian medical tourism destination, expects to gain USD2 billion by the same year (Connell, 2006; Horowitz and Rosensweig, 2007). These statistics surely are translated by a growing number of medical tourists around the globe. The movement of medical tourists is another significant indicator of this trend. At the global stage, approximately 350 000 medical tourists moved from developed nations to less developed countries for treatment in 2003, while a year later 1. 18 million patients travelled to India alone and another 1. million to Thailand for the same reason (Horowitz and Rosensweig, 2007). Glancing at the local development, the Association of Private Hospitals of Malaysia (APHM) has been projecting for a stable 30% growth of takings from foreign patients until 2010. This is apparent from the steady increase of foreign patients to Malaysia which recorded a total of 39 114 patients in 1998 and 374 063 patients ten years later (APHM; Liow, 2009). In terms of revenue, RM14. 1 million was documented in 1998 before jumped to RM299. million in 2008 (APHM; Liow, 2009), and is expected to contribute to another RM540 million in 2010 (Leonard, 2009). The revenue per patient has almost tripled from RM360 in 1998 to RM800 in 2008 (Choy, 2010). In the latest development, medical tourism is expected to generate RM4294. 4 million of Gross National Income, together with 5295 jobs in 2020 (PEMANDU, 2010). This occurrence has readily attracted a number of giant MNCs with diversified structure such as General Electric (GE) to invest further in the industry (Panjanadan, 2010). The Revolution of Medical TourismThe presented statistics did not appear by chance. The numbers occurred out of plausible factors. The development of medical tourism industry is indeed different (Horowitz and Rosensweig, 2007). As mentioned earlier, Schroth and Khawaja attributed the uniqueness of the industry’s current development to the forces of market’s demand and supply, which is in resonance with Horowitz and Rosensweig (2007) who ascribed it to the movement of patients from industrialized nations to less developed countries. Connell (2006) argued that medical tourism is a niche which 170 xperienced rapid growth and has become an indust ry. The said paper also enlisted several factors promoting the development of medical tourism, such as the low costs factor, the long waiting list, the relatively affordable international air travel and favourable exchange rate, plus the aging of the baby boomers generation. These factors are also often cited in a number of studies regarding medical tourism such as Hansen (2008), Herrich (2007), Horowitz and Rosensweig (2007), Garcia Altes (2005), Marlowe and Sullivan (2007), and Schroth and Khawaja (2007), to name a few.Apart from these popular factors, other notable factors motivating the development of the industry spotted in the literature extent are the use of internet and mobility of technology, the unavailability of certain procedures in the local market, and the reduced trade barriers encouraging the mobility of workforce. Hansen (2008) argued that the revolution in medical tourism today is consumer-driven. This is in line with Horowitz and Rosensweig (2007) who argued that the industry is market driven with complex involvement of multitude medical, economic, social and political factors.While the progress of the industry seems to be very promising, the general overview of Malaysia’s involvement at the international level is not very charming. Even though medical tourism experienced an astounding per annum growth of 22% from 2004 to 2009, the global share is still considered as small with RM350 million in 2010 (PEMANDU, 2010). Furthermore, PEMANDU also reported that while the global healthcare travel is a multi-million dollar industry, Malaysia is yet to get a sizeable share.The said industry is expected to generate USD75 billion of revenue in 2010 at the global level, while Malaysia is expected to make about USD0. 1 billion. The statistics provide a brief sight on the development in the country weighted against the global development. Malaysia should therefore be proactive enough to catch up with the global progress to stay competitive in the i ndustry. To enable this, the players and responsible parties must quickly recognize potential constraints that can hamper the development and address the issues well.The Required Expertise and the Potential Economic Opportunities Based on previous arguments, medical tourism offers bountiful opportunities and chances. In order to remain competitive at the global stage, marketing strategies should be revised against the present circumstances. Marketing the medical expertise and offerings should be distinctively conducted. The primary concern of assessing an excellent marketing strategy is the effectiveness of the strategies implemented.StuartKregor (2005) argued that defining marketing excellence for medical-related industry is different with that of the commercial-based industry. As customer is the centre of marketing excellent in the industry, the paper suggested that the effectiveness of marketing strategies should then be done by measuring the customer’s satisfaction over t he service provided. Therefore, all other marketing excellence measured by considering the profit, return on investment or sales as in any other commercial industries should be changed to be more customer-oriented rather than organizationaloriented. Building he strategies can be done by â€Å"developing, communicating and delivering the right emotional benefits to the targeted customers† (Stuart-Kregor, 2005, pp. 117). The right emotional benefit here is viewed as brand by Stuart-Kregor (2005). This paper is in agreement with the argument, which is to develop the marketing strategies by focusing on the emotional benefits (brands), and assess the effectiveness of the strategies by measuring the satisfactions of the customer. Further discussion on this is available in the next section. 171 The science of excellent marketing strategies would be wasted without a good delivery system.The state of local expertise, technologies and facilities must be attended to in order to assess t he quality of the service offered against the global level. This is where the industry should strive to be as similar as other excellent providers. The commodification of medical tourism (Chee, 2007) is an evident of this occurrence. Dunn (2007) argued that patients are making choices on medical tourism destinations based on how similar is the service delivered, especially concerning patients from industrialized nations, and the service is expected to come with much lower price.Consequently, it is observed that patients are not looking for low cost products at the expense of the quality in the industry. Successful players realize this and capitalize on the factors well. This explains the rapid movement of workforce and technologies across the four corners of the world. India as an example has been successful in luring its medical doctors who have been trained and worked abroad to return with their internationally recognized expertise and work in the country.Thailand and United Arab Emirates have been successful in rearranging for international collaboration in the industry (Schroth and Khawaja, 2007). Through these strategies, the countries have been able to keep their expertise, technologies and facilities up with the global standard. Proposed Strategies of Reviving and Sustaining Medical Tourism: The Case of IJN With the national governments’ involvement recently (Chee, 2007; Noor Hazilah, Roslan Johari and Kadar, 2010; PEMANDU, 2010), the industry has been attracting the interest of many concerned parties.Since the medical tourism is fast becoming a commodity (Chee, 2007), its marketing strategies should be focusing more on brands and less on products to be distinctive than other providers. As in Malaysia, the country is capable of offering similar products with the rest of other players in the world. While Malaysia has been focusing on cost all this while, it is suggested then for the country to deliver a unique brand which is capable of attracting the interest of potential medical tourists, without desecrating the cost advantage.In order to do so, it is particularly important for the players to implement the export market orientation behaviours within their organization, which are generating, disseminating and responding to the export market intelligence (Cadogan, Diamantopoulos and de Mortanges, 1999). Consequently, Malaysia is expected to be able to woo medical tourism patients even more. Hazilah et al. (2010) reported that a medical tourist spends double than a regular tourist while they are in the country. This high buying power therefore is capable of generating more economic opportunities.The medical tourist needs are also offering a lot of opportunities for Malaysian. Apart from medical attention, they need to have accommodation for their accompanying family members. New jobs have been underway to better serve the medical tourists, such as the healthcare broker. A healthcare broker assists the patient to choose a medic al institute and arrange for the patient’s needs while in here, including visa, accommodation and holiday arrangement. Thanks to the internet, these can be arranged prior to the patient’s arrival in the country.To describe more of these strategies and opportunities, this paper choose to present the IJN as a case study merit the discussion. The National Heart Institute or Institut Jantung Negara (IJN) has been established in 1992. The privatization of the institute was done on many premises, especially concerning the potential it has to expand its expertise and to liberalize the 172 financial capabilities of the institute. IJN did not take long to materialize that. A year after its privatization the institute has been able to be financially liberalized and hence reduce the government intervention in its administration.By now, IJN has accomplished a great number of medical milestones recognized not only in the country and the region, but also internationally. To further advance ahead in medical industry, IJN is joining its local peer private institutions to take part in the global medical tourism industry. The previous mentioned factors of global medical tourism industry’s progressive development served as the basis for IJN to be a part of the industry. Besides, like Singapore, the medical tourism industry in Malaysia is receiving a lot of government’s assistants.Being a nationally structured industry, medical tourism therefore is regarded as a potential industry in which would be able to position IJN better. The Malaysian government has been playing an active role in developing the industry in Malaysia since 1998. The main driver of this is to revive the private medical industry after the 1997 Asian economic downturn which has affected the industry very badly. The success story of Thailand which managed to get the industry out of the crisis by focusing on delivering the service to foreign patients has prompt the government to encoura ge private players to do the same.Consequently, while Thailand has been restructuring the industry without much government involvement, Malaysia and Singapore has been leveraging the industry well with cooperation between the public and the private sectors. IJN has been viewing this very positively and has since become a significant player in the region. While being rapidly developing the industry, the players recognized several major constraints which are able to slow down the progress. Coordination is a key constraint. To increase coordination, the Association of Private Hospitals of Malaysia (APHM) was formed to increase coordination between the private players.The steadily increasing number of foreign patients and revenues generated since 1998 as shown in Table 1 is an evident of the successful strategies implemented. However the industry, weighted against the global development, was still considered as insignificant. Resulting from the government’s enthusiasm towards med ical tourism as a prospective economic driver industry, and the intensity and potentials portrayed by private sectors, the Malaysia Healthcare Travel Council (MHTC) was established in July 2009.The main purpose of the council is to coordinate promotional activities of medical and healthcare tourism industry in the country. As a part of the economic transformation program, the industry is expected to shift their attention to generate higher patients’ volume, expand the target market beyond Indonesia which is currently the main market of the industry, create alliance across border, and enhance customer experience in the first phase of the strategy. In the following phase, more attention is given on mproving the infrastructure and specialists capacity to attract the more profitable in-patient segment (PEMANDU, 2010). 173 Table 1. The Volume of Foreign Patients and Revenue Generated by Medical Tourism Industry in Malaysia Year 1998 2001 2002 2003 2004 2005 2006 2007 2008 Medical Tourists/Foreign Patients 39,114 75,210 84,585 102,946 174,189 232,161 296,687 341,288 374,063 Revenue (RM million) 14. 1 n/a 35. 9 58. 9 105. 0 150. 9 203. 66 253. 84 299. 1 Another strategy to improve the medical tourism performance is through focusing on specific players.There are approximately 223 private hospitals operating in the country in 2008 (Frost & Sullivan, 2009). Of this number, the government has decided to focus on 35 private hospitals to capitalize on the industry with several characteristics outlined. The characteristics include being a member of APHM, has obtained the Malaysian Society for Quality in Health (MSQH), ISO or other international accreditations, offers major specialties and/or some sub-specialties, provides for a minimum 50 beds, and has its own websites.IJN has been one of the selected 35. The commitment demonstrated by IJN towards the industry is paramount. In order to be internationally recognized, the institute has been striving hard to be in the s ame par with the other international organizations. IJN has been accredited by JCI in 2009, which is a recognition of the strong culture of safety and quality within the organization. The internationally recognized accreditation is expected to improve IJN’s international positioning in the future.IJN realizes that in order to make the most of the industry, it needs to build a customer-oriented system. Beginning in 2006, the institute has been conducting the Customer Focused Program. The program was aimed at transforming IJN into a global centre of excellence by ensuring customers’ satisfaction. In 2008, the institute launched what was designed as the second phase of the program, called Customer Focused Culture. While the CFP was initiated to increase awareness of ensuring customers’ satisfaction, the CFC aimed at internalizing the institute’s shared values across the rganization. IJN also comprehend its capacity constraint which is becoming the largest hi ndrance from going big in the global medical tourism industry. Apart from improving on its culture system, the institute has been adamant in enhancing its infrastructure capabilities. A major extension work has been carried out at IJN to expand its capacities from 270 beds to 432, eight wards to 13, 23 outpatient clinic rooms to 59, and an international patient centre, to improve its service for customers.This is in line with numerous governments’ incentives offered to the private hospitals embarking on medical tourism industry to expand their infrastructure capacities. In August 2009, IJN has its new wing officiated by the Malaysian Prime Minister, who acknowledged that the institute has undergone RM230 million expansion program since 2005. In the same ceremony, the Prime Minister has also announced the proposal for IJN to become a research and development institute, measuring itself against the international best heart institute such as the Cleveland Clinic Heart Centre in the US.These are all evidences of how IJN has been greatly employing the export market orientation behaviors within its organization. In commenting the current development of the industry, IJN has expressed its concern for the country to be more progressive towards promoting medical tourism. 174 The IJN Holdings Group Managing Director, Datuk Mohd. Radzif Mohd. Yunus mentioned that the failure for Malaysia to capitalize on its capabilities in the industry would result to the loss of human capital as they will migrate to other countries with better offers.This is also reiterated by Datuk Syed Hussien Al-Habshee, the Secretary General of National Chambers of Commerce and Industry Malaysia (NCCIM) who said that the country need to step up its marketing efforts of medical tourism if it wants to catch up with Thailand and Singapore. PEMANDU (2010) has confirmed the assertion by reporting on the stronger growth of the industry by neighboring Thailand and Singapore. The set up of MHTC and several other initiatives are therefore deemed as timely to help Malaysia to rise in the industry at the global stage.Conclusion and Recommendation As exemplified in the discussion, medical tourism offers a lot of economic opportunities and hence is indeed a potential contributor to economic growth. However, Malaysia, while has been enjoying the growth of the industry vehemently over the pass few years, has not been capitalizing the industry well compared to the other global players. Therefore, the Malaysian players need to revise their marketing strategies and delivery system, as represented by IJN.The cooperative efforts between the public (government) and the private sectors too must be further carried on, especially for the sake of protecting the interests of the local society and the survival of the medical tourism players. It is strongly suggested for medical tourism players in the country to leverage on their expertise by focusing the marketing strategies on brands rather tha n on products, as well as enhancing on their infrastructure and culture systems to be more export market-oriented. In doing so, however, the players must not disregard the country’s current edge, which is the competitive cost.In terms of theoretical development, this paper is believed to be able to expose the medical tourism niche and its economic opportunities, as well as the marketing strategies fitting the industry. Quite a number of studies involving Malaysian medical tourism industry have been conducted. Nonetheless, this paper presents the scenario from the view of a single case study. It is highly suggested for similar studies to be conducted with the presence of empirical data to see the quantifiable aspects of the industry in the future.With such studies, it is expected that further theoretical contributions can be made, and hence the progress of the industry can then be expedited even more. Reference Ang, Elaine. Malaysian Medical Tourism Growing. The Star, February 14, 2009. Cadogan, J. W. , Diamantopoulos, A. , & de Mortanges, C. P. (1999). A measure of export market orientation: Scale development and cross-cultural validation. Journal of International Business Studies, 30(4), 689-707. Chee, H. L. (2007, January). Medical tourism in Malaysia: International movement of healthcare consumers and the commodification of healthcare. ARI Working Paper, No. 3. Retrieved from www. ari. nus. edu. sg/pub/wps. htm Choy, L. B. (2010, April 13). Medical tourism good for Malaysia’s health. News Straits Times. Retrieved from http://findarticles. com/p/news-articles/newstraits-times/mi_8016/is_20100413/ medical-tourism-malaysias health/ai_n53130944/ 175 Connell, J. (2006). Medical Tourism: Sea, sun, sand and †¦ surgery. Tourism Management, 27. 1093-1100. Dunn, P. 2007. Medical Tourism Takes Flight. Hospitals and Health Networks, 81(11): 40-44. Frost & Sullivan (2009, October 28). Frost & Sullivan: Growing healthcare tourism in Malaysia. Retrieved from http://www. alaysiahealthcare. com/ Garcia-Altes, A. (2005). The development of health tourism services. Annals of Tourism Research, 32 (1): 262-266. Hansen, F. (2008). A revolution in healthcare. Review-Institute of Public Affairs, 59(4), 43-45. Health and medical tourism will boost growth: Datuk Liow Tiong Lai. The Star, November 08, 2008. Retrieved from http://www. wellnessvisit. com/liowhealth-and-medical-tourism-will-boost-growth. php Herrick, D. M. (2007, November). Medical tourism: Global competition in health care. NCPA Policy Report, No. 304. Retrieved from www. ncpa. org/pub/st/st304 Horowitz, M. D. Rosensweig, J. A. , & Jones, C. A. (2007). Medical tourism: Globalization of healthcare marketplace. Medscape General Medicine, 9(4), 33. Leonard, T. (2009, October 28). Medical tourists to bring in RM540mil by 2020. Retrieved from http://www. malaysiahealthcare. com/ Marlowe, J. , & Sullivan, P. (2007). Medical tourism: The ultimate outsourcing. HR. Human Resource Planni ng, 30(2), 8-10. Noor Hazilah Abd Manaf, Roslan Johari Dato’ Mohd Ghazali, & Kadar Marikar. (2010). â€Å"Positioning Malaysia in Medical Tourism†. Paper presented at the International Conference on Marketing (ICMAR), June 2010, in Kuala Lumpur.Panjanadan, S. (2009, August 9). GE looking into enhancing presence in tourism Retrieved from healthcare. http://bernama. com/bernama/v5/newsbusiness. php? id=519842 PEMANDU (2010, September 21). Healthcare-EPP Panels. Retrieved from http://www. pemandu. gov. my/index. php? option=com_content&view=article&i d=619&Itemid=139&lang=en Schroth, L. , & Khawaja, R. (2007). Globalization of healthcare. Frontiers of Health Services Management, 24(2), 19-30. Speech by YB Dato’ Sri Liow Tiong Lai, Minister of Health Malaysia, at the APHM International Healthcare Conference and Exhibition at KLCC,

Discussion Question Essay

1. Briefly describe Moore law. What are the implications of this law? Are there any practical limitations to Moore law? Moore’s Law is a hypothesis stating that transistor densities on a single chip double every two years. Moore’s law describes a long-term trend in the history of computing hardware. The number of transistors that can be placed inexpensively on an integrated circuit has doubled approximately every two years. Moore’s law is a rule of thumb in the computer industry about the growth of computing power over time. Attributed to Gordon E. Moore the co-founder of Intel, it states that the growth of computing power follows an empirical exponential law. Moore originally proposed a 12 month doubling and, later, a 24 month period. Due to the mathematical nature of doubling, this implies that within 30-50 years computers will become more intelligent than human beings. The implications of many digital electronic devices are strongly linked to Moore’s law: processing speed, memory capacity, sensors and even the number and size of pixels in digital cameras.All of these are improving at (roughly) exponential rates as well. This has dramatically increased the usefulness of digital electronics in nearly every segment of the world economy. Moore’s law precisely describes a driving force of technological and social change in the late 20th and early 21st centuries. Transistors per integrated circuit. The most popular formulation is of the doubling of the number of transistors on integrated circuits every two years. At the end of the 1970s, Moore’s law became known as the limit for the number of transistors on the most complex chips. Recent trends show that this rate has been maintained into 2007. Density at minimum cost per transistor. This is the formulation given in Moore’s 1965 paper. It is not just about the density of transistors that can be achieved, but about the density of transistors at which the cost per transistor is the lowest. As more transistors are  put on a chip, the cost to make each transistor decreases, but the chance that the chip will not work due to a defect increases. In 1965, Moore examined the density of transistors at which cost is minimized, and observed that, as transistors were made smaller through advances in photolithography, this number would increase at â€Å"a rate of roughly a factor of two pe r year†. Power consumption. The power consumption of computer nodes doubles every 18 months.Hard disk storage cost per unit of information. A similar law (sometimes called Kryder’s Law) has held for hard disk storage cost per unit of information. The rate of progression in disk storage over the past decades has actually sped up more than once, corresponding to the utilization of error correcting codes, the magnetoresistive effect and the giant magnetoresistive effect. The current rate of increase in hard drive capacity is roughly similar to the rate of increase in transistor count. Recent trends show that this rate has been maintained into 2007.Network capacity. According to Gerry/Gerald Butters, the former head of Lucent’s Optical Networking Group at Bell Labs, there is another version, called Butter’s Law of Photonics, a formulation which deliberately parallels Moore’s law. Butter’s law says that the amount of data coming out of an optical fiber is doubling every nine months. Thus, the cost of transmitting a bit over an optical network decreases by half every nine months. The availability of wavelength-division multiplexing (sometimes called â€Å"WDM†) increased the capacity that could be placed on a single fiber by as much as a factor of 100. Optical networking and dense wavelength-division multiplexing (DWDM) is rapidly bringing down the cost of networking, and further progress seems assured. As a result, the wholesale price of data traffic collapsed in the dot-com bubble. Nielsen’s Law says that the bandwidth available to users increases by 50% annually. 2. What is a quad core processor? What advantages does it offer users? Quad-core processors are computer central processing units (CPUs) that have four separate processing cores contained in a single device. Intel and AMD, two popular CPU manufacturers, both produce quad-core processors. Quad-core processors carry several advantages over normal single-core processors, though there is skepticism as to how much of an advantage they are for the average computer user. Multitasking. Perhaps the most significant benefit of quad-core processors is their ability to handle several applications at the same time. When you run a few different programs on a single-core processor, it slows down from running data calculations for many programs at once. With a quad-core processor, each core is responsible for a different process, so even running four demanding programs can be possible without experiencing much delay from a lack of processing power. Future Programs. One of the frequently cited benefits of quad-core processors is that they are â€Å"future proof.† As of summer 2009, there are not many programs that can utilize the full power of a quad-core processor, but programs and games capable of using multiple cores in parallel will be developed in the future. If and when this happens, computers without multiple cores will quickly become obsolete while those with quadcore processors will likely remain useful until developers make programs that can utilize an even greater number of processors. Taxing Processes. Another area in which quad-core processors will yield significant benefits is in processes that require calculations on large amounts of data, such as rendering 3D graphics, compressing CDs or DVDs and audio and video editing. Enterprise resource planning and customer relationship management applications also see a noticeable benefit with quad-core processors. Power Consumption. The integrated architecture of a quad-core processor uses less power than if the four cores were split into separate physical units. This is important, since the  amount of electricity required by computer power supplies has risen quickly in recent years. Also, newer CPUs are beginning to use 45nm architecture, which requires less power and produce less heat than the larger 60nm processor architecture. Criticism. Until programs take full advantage of multiple cores, there will not be a significant difference in performance between quad-core and dual-core processors, and perhaps even quad-core and single-core processors. Considering the rapid progress of computer technology, there may be processors with eight, ten or more cores by the time programs are developed that properly utilize parallel processing of many cores. 3. What would be an advantage for a university computer lab to install thin clients rather than standard desktop personal computer? Can you identify any disadvantages? A thin client is an aesthetically slim PC used as an access point for server-based computing. It has fewer parts and requires fewer components to run; hence, it has numerous cost efficiency benefits. Although thin client benefits are remarkable, we must also look into their disadvantages. Thin client computing fits a lot of work environments. Since thin clients do not need to be in the same place as their server, the setup presents thin client benefits that are mostly practical. Clients can be taken into the harshest of work places like dusty desert camps and can be deployed even after the occurrence of a natural disaster. Thin clients are also perfect for environments where space is a big issue. A thin client has an inherent space-conserving attribute since they come in one piece with only the monitor showing while the unit is hidden behind it. Some even mount on walls with only the peripherals and the monitor exposed. Even work places with very little budget room to run air conditioning systems can be expected to gain with thin client benefits in their facilities. The absence of dynamic or moving parts to serve one’s computing purpose entails less generation of heat. This is mainly because thin clients make use of solid state devices like flash drives instead of hard drives. However, as ideal as a server based computing may all seem, there are notable disadvantages which concern costs and performance abilities. Below is a rundown of advantages and disadvantages you should consider before deciding to use thin client computing in your university computer lab. Advantages of Thin Computing: Lower Operational Costs- An office environment where several workstations are involved will access a single server unit, thereby reducing the operational costs covering these related actions: * Setting up the device takes less than ten minutes to accomplish. * The lifespan of thin clients is very long since there are no moving parts inside each unit. The only parts that need constant replacements are the peripherals which are external to the unit. This brings cost efficiency in the maintenance aspect which means when something breaks on the client’s end, it can be as easy as taking a replacement unit to replace the broken one. Even wear and tear is considerably unnoticeable. * Energy efficiency- A thin client unit is said to consume 20W to 40W as opposed to the regular thick PC where power consumption during operation mode consumes 60W to 110W. In addition, thin clients themselves need little to no air conditioning at all, which literally means less operating costs. Whatever air conditioning needed is demanded and supplied at the server area. * Work efficiency- The thin client work environment can be far reaching and extensive; it can provide quick access to remotely located workers, also operating on server-based computing. Superior Security – Since users will only have access to the server by network connections, security measures like different access levels for different users can be implemented. This way, users with lower access levels will not be able to see, know, or in worst case scenarios, hack into the confidential files and applications of the entire organization since they are all secured at the server’s end. It is also a way of securing the data in the event of natural disasters. The servers will be the only machines that need to survive the disaster as the server is the main location of all the saved data. Immediately after the disaster, new clients can easily be connected to the server as long as the server is intact. Lower Malware Infection Risks – There is a very slim chance of getting malware on the server from a thin client. The client inputs to the server will only be coming from the keyboard, mouse actions, and screen images. Thin clients get their software or programs from the server itself. The software updates and virus scanning applications as well as patches will be implemented only on the server. At the same time, the servers will be the one to process information and store the information afterwards. Highly Reliable –Business organizations can expect continuous service for longer durations since thin clients can have a lifespan of more than five years. In as much as thin clients are built as solid state devices, there is less impact from wear and tear through constant use. Disadvantages of Thin Computing: Client Organizations are Subject to Limitations – Since the thin clients do most of their processing at the server, there will be setups where rich media access will be disabled. Some of these concerns are the result of poor performance when simultaneous access to multimedia on the thin client is taking place. Heavy and resource-hungry applications like Flash animations and video streaming can slow the performance of both the server and client. In corporate organizations where video conferencing and webinars are often  carried out, presentation of materials and web-cam/video communications can be adversely affected. Requires Superior Network Connection – Using a network that has latency or network lag issues can greatly affect thin clients. It can even mean rendering the thin clients unusable because the processing will not be fluently transmitted from the server to the client. This makes the thin client very hard to use in these cases since the response from the server will affect both the visual and the processing performance of the thin client. Even printing tasks have been observed to hog bandwidth in some thin client set-ups, which can affect the work going on in other units. A Thin Client Work Environment is Cost Intensive – For any plans of converting a regular work station into a thin client work environment, it is advised that comparative cost analysis be performed. Thin client set-ups have been noted to be cost efficient only if employed on a large-scale basis. Comparison of regular workstations using the same number of regular PC units should be made versus a work environment set-up that makes use of a dedicated server and the same number of thin clients. In some cases the cost of installing the server itself is already far more expensive than all the regular workstations combined. This is aside from the fact that a thin client unit can cost as much as a fully-equipped PC. Nevertheless, some argue that the benefits of thin clients, as far as cost and maintenance efficiency are concerned, will offset the initial costs. Besides, as a capitalized investment, the costs can be spread out for at least five years. Still, the excessiveness of the fees involving different licenses, which include software for every station, Client Access Licenses (CAL) for clients and server, as well as tracking and managing licenses, will tie up a substantial amount of business funds and may take too long to recover. Thus, smaller business organizations are advised to carefully consider such costs before venturing into server-based or thin client computing. Single Point of Failure Affects All – If the server goes down, every thin client connected to it becomes barely usable. No matter how many clients are connected, if the server becomes inaccessible, all work processes will come to a standstill thereby adversely affecting business-hour productivity. References http://research.microsoft.com/en-us/um/people/gray/moore_law.html http://en.wikipedia.org/wiki/Cloud_computing

Shadow Kiss Chapter 16

Sixteen â€Å"SO ARE YOU,† HE TEASED. â€Å"Yeah, but I just thought – â€Å" â€Å"That I was human? Because of the bite marks?† â€Å"Yeah,† I admitted. No point in lying. â€Å"We all have to survive,† he said. â€Å"And dhampirs are good at figuring out ways to.† â€Å"Yeah, but most of us become guardians,† I pointed out. â€Å"Especially men.† I still couldn't believe he was a dhampir – or that I hadn't spotted it right away. Long ago, dhampirs had been born from humans and Moroi getting together. We were half-vampire, half-human. Over time, Moroi started keeping themselves separate from humans. Humans grew too plentiful and no longer needed Moroi for magic. Moroi now feared they'd become human experiments if ever discovered. So no more dhampirs were being made that way, and in a bizarre genetic twist, dhampirs getting together with dhampirs couldn't make more dhampirs. The only way my race kept reproducing was through Moroi mixing with dhampirs. Normal logic would make you think that a dhampir and a Moroi would make children who were ? Moroi. Nope. We came out with perfect dhampir genes, half and half, mixing some of the best traits of both races. Most dhampirs came from dhampir women and Moroi men. For centuries, these women had sent their kids off to be raised somewhere else, so that the mothers could go back to being guardians. That's what mine had done. Over time, though, some dhampir women had decided they wanted to raise their children themselves. They refused to be guardians and instead banded together in communities. That's what Dimitri's mother had done. Lots of ugly rumors surrounded these women because Moroi men often visited in the hopes of getting cheap sex. Dimitri had told me that a lot of these stories were exaggerated and that most dhampir women weren't that easy. The rumors came from the fact that these women were almost always single mothers who had no contact with their kids' fathers – and because some dhampirs would let Moroi drink blood during sex. It was a kinky, dirty thing in our culture and was where the nickname for these non-guardian dhampirs had come from: blood whores. But I'd never even thought about a male blood whore. My mind was reeling. â€Å"Most guys who don't want to be guardians just run off,† I said. It was rare, but it happened. Guys bailed on guardian school and disappeared to hide out among humans. It was another disgraceful thing. â€Å"I didn't want to run off,† said Ambrose, seeming very cheerful about all this. â€Å"But I didn't want to fight Strigoi either. So I did this.† Beside me, Lissa was stunned. Blood whores stayed on the fringes of our world. Having one right in front of her – a guy, no less – was incredible. â€Å"This is better than being a guardian?† I asked in disbelief. â€Å"Well, let's see. Guardians spend all their time watching out for others, risking their lives, and wearing bad shoes. Me? I have great shoes, am currently massaging a pretty girl, and sleep in an awesome bed.† I made a face. â€Å"Let's not talk about where you sleep, okay?† â€Å"And giving blood isn't as bad as you think. I don't give as much as a feeder, but the high's pretty neat.† â€Å"Let's not talk about that either,† I said. No way would I admit that I knew Moroi bites were indeed â€Å"pretty neat.† â€Å"Fine. But say what you want, my life's good.† He gave me a lopsided smile. â€Å"But aren't people, like†¦well, aren't they mean to you? They must say things†¦Ã¢â‚¬  â€Å"Oh yes,† he agreed. â€Å"Horrible things. I get called a lot of ugly names. But you know where I get the most grief from? Other dhampirs. Moroi tend to leave me alone.† â€Å"That's because they don't understand what it's like to be a guardian, how important it is.† It occurred to me, with some unease, that I sounded exactly like my mother. â€Å"It's what dhampirs are meant to do.† Ambrose rose, unkinking his legs and giving me a face full of muscled chest. â€Å"You sure? How would you like to find out what you're really meant to do? I know someone who might be able to tell you.† â€Å"Ambrose, don't do it,† groaned Lissa's manicurist. â€Å"That woman's crazy.† â€Å"She's psychic, Eve.† â€Å"She's not psychic, and you cannot take the Dragomir princess to go see her.† â€Å"The queen herself goes to her for advice,† he argued back. â€Å"That's a mistake too,† grumbled Eve. Lissa and I exchanged looks. She'd latched onto the word psychic. Psychics and fortune-tellers were generally regarded with the same disbelief as ghosts – except that Lissa and I had recently learned that psychic abilities we'd previously believed to be fantasy were actually part of spirit. Hope that she might have stumbled onto another spirit user shot through Lissa. â€Å"We'd love to see a psychic. Can we go? Please?† Lissa glanced at a nearby clock. â€Å"And soon? We have a flight to catch.† Eve clearly thought it was a waste of our time, but Ambrose could hardly wait to show us. We put our shoes back on and were led out of the massage area. The spa rooms had been in a maze of halls behind the front salon, and we soon found ourselves in another maze that was farther back still. â€Å"There's no directory here,† I said as we walked past closed doors. â€Å"What are these rooms for?† â€Å"Everything and anything people will pay money for,† he said. â€Å"Like what?† â€Å"Ah, Rose. You're such an innocent.† We finally reached a door at the end of the hall. We stepped inside and found a small room that only held a desk. A closed door sat beyond it. A Moroi at the desk looked up, obviously recognizing Ambrose. He walked over to her, and the two got into a quiet argument as he tried to get her to let us in. Lissa turned to me, keeping her voice soft. â€Å"What do you think?† My eyes were on Ambrose. â€Å"That all that muscle's going to waste.† â€Å"Forget the blood whore thing already. I mean about this psychic. Do you think we've found another spirit user?† she asked eagerly. â€Å"If a party boy like Adrian can be a spirit user, then a woman who tells the future probably can be too.† Ambrose returned to us, grinning. â€Å"Suzanne was happy to fit you into the schedule before your flight. It'll be just a minute while Rhonda finishes up with her current client.† Suzanne didn't look very happy about fitting us in, but I didn't have time to ponder that because the inner door opened and an older Moroi man walked out, entranced. He gave Suzanne some cash, nodded at the rest of us, and left. Ambrose stood and made a wide sweeping motion toward the door. â€Å"Your turn.† Lissa and I walked inside the other room. Ambrose followed and closed the door behind us. It was like walking into someone's heart. Everything was red. Plush red carpet, a red velvet couch, velvet brocade wallpaper, and red satin cushions on the floor. Sitting on the cushions was a Moroi in her forties, with curly black hair and equally dark eyes. There was a very faint olive cast to her skin, but her overall look was pale, like all Moroi. Her black clothing stood out in stark contrast to the red room, and jewelry the color of my nails gleamed on her neck and hands. I expected her to speak in a spooky, mysterious voice – one with an exotic accent – but her words sounded blandly American. â€Å"Please, sit down.† She pointed to some cushions across from her. Ambrose sat on the couch. â€Å"Who've you brought?† she asked him as Lissa and I settled down. â€Å"Princess Vasilisa Dragomir, and her guardian-to-be, Rose. They need a fast fortune.† â€Å"Why do you always want to rush these things?† Rhonda asked. â€Å"Hey, it's not me. They have a plane to catch.† â€Å"It'd be the same if you didn't. You're always in a rush.† I shook off my awe of the room enough to pay attention to their easy banter and similar hair. â€Å"Are you guys related?† â€Å"This is my aunt,† said Ambrose fondly. â€Å"She adores me.† Rhonda rolled her eyes. That was a surprise. Dhampirs rarely had contact with their extended Moroi family, but then, Ambrose was hardly normal. Lissa was intrigued by all of this too, but her interest was different from mine. She was studying Rhonda intently, trying to find any indication that the woman might be a spirit user. â€Å"Are you a gypsy?† I asked. Rhonda made a face and began shuffling some cards. â€Å"I'm Roma,† she said. â€Å"A lot of people call us gypsies, though the term isn't exactly accurate. And really, I'm Moroi first.† She gave the cards a few more shuffles, then handed them to Lissa. â€Å"Cut, please.† Lissa was still staring, half-hoping she might see an aura. Adrian could sense other spirit users, but she didn't have that skill yet. She cut the cards and handed them back. Rhonda put the deck back together and dealt out three cards to Lissa. I leaned forward. â€Å"Cool.† They were tarot cards. I didn't know much about them, only that they supposedly had mystical powers and could tell the future. I didn't believe in that stuff much more than I'd ever believed in religion, but then, until recently, I'd never really believed in ghosts, either. The three cards were the Moon, the Empress, and the Ace of Cups. Ambrose leaned over my shoulder to peer at the cards. â€Å"Ooh,† he said. â€Å"Very interesting.† Rhonda glanced up at him. â€Å"Hush. You don't know what you're talking about.† She turned back to the cards and tapped the Ace of Cups. â€Å"You're on the verge of a new beginning, a rebirth of great power and emotion. Your life will change, but it will be a change that takes you in a direction that, while difficult, will ultimately illuminate the world.† â€Å"Whoa,† I said. Rhonda then pointed to the Empress. â€Å"Power and leadership lie ahead of you, which you will handle with grace and intelligence. The seeds are already in place, though there's an edge of uncertainty – an enigmatic set of influences that hang around you like mist.† Her attention was on the Moon as she said those words. â€Å"But my overall impression is that those unknown factors won't deter you from your destiny.† Lissa's eyes were wide. â€Å"You can tell that just from the cards?† Rhonda shrugged. â€Å"It's in the cards, yes, but I also have a gift that lets me see forces beyond what ordinary people can perceive.† She shuffled the cards again and then handed them to me to cut. I did, and she flipped three more over. The Nine of Swords, the Sun, and the Ace of Swords. The Sun card was upside down. Now, I knew nothing about this stuff, but I immediately got the feeling I was about to get a raw deal compared to Lissa. The Empress card had shown a woman in a long dress, with stars on her head. The Moon had shown a full moon with two dogs below it, and the Ace of Cups had shown a bejeweled chalice filled with flowers. Meanwhile, my Nine of Swords showed a woman sobbing in front of a wall of swords, and the Ace of Swords was a boring hand holding a plain iron sword. The Sun at least looked cheerful. It had what looked like an angel riding a white horse, with a brilliant sun shining above. â€Å"Shouldn't that be flipped right-side up?† I asked. â€Å"No,† she said, eyes on the cards. After several moments of heavy silence, she said, â€Å"You will destroy that which is undead.† I waited about thirty seconds for her to continue, but she didn't. â€Å"Wait, that's it?† She nodded. â€Å"That's what the cards say to me.† I pointed at them. â€Å"Seems like they've got a little bit more to say than that. You gave Lissa a whole encyclopedia worth of information! And I already know I'm going to kill the undead. That's my job.† Bad enough I'd gotten a minuscule fortune. It was also totally unoriginal. Rhonda shrugged, as though that were some sort of explanation. I started to say that she'd better not even think about charging me for that crap reading when there was a soft knock at the door. It opened, and to my surprise, Dimitri stuck his head inside. His eyes fell on Lissa and me. â€Å"Ah, they said you were in here.† He walked in and noticed Rhonda. To my further surprise, he gave her a low nod of respect and said very politely, â€Å"I'm sorry to interrupt, but I need to bring these two to their flight.† Rhonda examined him – but not in a checking-him-out kind of way. It was more like he was mystery she wanted to figure out. â€Å"There's nothing to apologize for. But maybe you've got time for a reading of your own?† With our similar views on religion, I expected Dimitri to tell her he had no time for her scam-artist fortune-telling. Yet the look on his face stayed serious, and he finally nodded, sitting down beside me, letting me smell the sweet scent of leather and aftershave. â€Å"Thank you.† His words were still perfectly polite. â€Å"I'll be brief.† Rhonda was already shuffling up my useless cards. In record time, she had them ready for cutting and had dealt out three cards in front of Dimitri. The Knight of Rods, the Wheel of Fortune, and the Five of Cups. I couldn't get a feel for these. The Knight of Rods was what it sounded like, a man on horseback with a long wooden spear. The Wheel of Fortune was a circle with strange symbols floating in the clouds. The Five of Cups showed five knocked-over cups spilling some kind of liquid out while a man stood with his back to them. Her eyes flicked over the cards, looked at Dimitri, then looked back at the cards. Her expression was blank. â€Å"You will lose what you value most, so treasure it while you can.† She pointed to the Wheel of Fortune card. â€Å"The wheel is turning, always turning.† The reading wasn't as good as Lissa's, but he'd gotten a hell of a lot more than me. Lissa elbowed me in a silent warning to be quiet, which startled me at first. Without even realizing it, I'd opened my mouth to protest. I shut it and glowered. Dimitri's face was dark and thoughtful as he stared at the cards. I didn't know if he knew anything about this stuff, but he was staring at the images as though they really held all the secrets of the world. At last, he gave Rhonda another respectful nod. â€Å"Thank you.† She nodded back, and then the three of us rose to catch our flight. Ambrose told us the readings were on him and that he'd settle up with Suzanne afterward. â€Å"It was worth it,† he told me. â€Å"Worth it to see you think twice about your fate.† I scoffed. â€Å"No offense, but those cards didn't make me think much about anything.† Like everything else, this just made him laugh. We were about to leave Suzanne's little waiting room when Lissa suddenly dashed back to Rhonda's open doorway. I followed after her. â€Å"Um, excuse me,† Lissa said. Rhonda looked up from more shuffling, her face troubled. â€Å"Yes?† â€Å"This is going to sound weird, but†¦um, could you tell me what element you specialized in?† I could feel Lissa holding her breath. She so, so wanted Rhonda to say she hadn't specialized, which was often the sign of having spirit. There was still so much to learn, and Lissa loved the ideas of finding others who could teach her – and she especially loved the idea of someone teaching her to foretell the future. â€Å"Air,† said Rhonda. A soft breezed rustled through our hair to prove the point. â€Å"Why?† Lissa let go of her breath, disappointment washing over me through her link. â€Å"No reason. Thank you again.†

Skidelsky Warwick Lecture

In my third and fourth lectures examine the monetary and fiscal confusion which as reigned in the last five years -the experiments with ‘unorthodox monetary policy' and the austerity drive in fiscal policy -as policy makers sought a path to recovery. In my fifth lecture 1 kick at the causes Of the crisis from the standpoint of the world monetary system. Finally, I ask the question: what should post-crash economics be like? What guidance should economics offer the policy-maker to prevent further calamities of the kind we have just experienced?What should students of economics be taught? In this lecture I will consider only those bits of pre-crash orthodoxy relevant to policy making, tit main emphasis being on UK developments. Theories of expectation formation played an overwhelming parting shaping the theory of macroeconomic policy; with changes in the way economists modeled expectations marking the different phases of theory. I will treat these in roughly chronological order, s tarting with the Keynesian theory. II.UNCERTAIN EXPECTATIONS Keynesian macro theory dominated policy from roughly 1945-1975. The minimum doctrine -not in Keynes, but in accepted versions of Keynesian theory -to justify policy intervention to stabilize economies is: SLIDE 1 1. Uncertain expectations, particularly important for investment, leaving investment to depend on ‘conventions' and ‘animal spirits'. 2. Relative interest-inelastic of investment. 3. A) sticky nominal wages (unexplained) and b) sticky nominal interest rates (explained by liquidity preference).The first point suggested investment was subject to severe fluctuations; the last suggested there was a lack or weakness of spontaneous recovery mechanisms- ii the possibility of ;under-employment equilibrium'. This led to a prescription for macro-policy: to prevent or minimize fluctuations of investment demand. Point 2 in combination with b suggested primacy of fiscal over monetary policy for stabilization. SLIDE 2 ‘For Keynes, it was the tendency for the private sector, from time to time, to want to stop spending and to accumulate financial assets instead that lay behind the problems of slumps and unemployment.It could be checked by deficit spending'. (C J. Also and D. Makes (1985), in D. Morris (De. ) ‘The Economic System in the UK†, 374) ‘In the standard Keynesian economic model, when the economy is at less than full capacity, output is determined by demand; and the management of economic activity and hence employment is effected by managing demand'. (ibid, 370) Mention in passing, that there was a theoretical and social radicalism in Keynes obliterated in the standard postwar Keynesian model.For example, he thought insufficient demand was chronic and would get worse; and that, in consequence, the longer term survival of a free enterprise system depended on the redistribution of wealth and income and the reduction in hours of work. I will return to these points in my last lecture. Demand- management The government used fiscal policy (variations in taxes and spending) to maintain full employment, while keeping short term interest rates close to some ‘normal' (or expected) level. Eel. Monetary policy was largely bypassed as a tool of demand-management.The government forecast real GAP for the following year by forecasting year on movement of its expenditure components: consumption, fixed capital formation, stock building spending, and net exports. Budget deficits then adjusted to maintain full employment. There was no explicit modeling of expectations, though attention was paid to the issue of ‘confidence'. The prevalent view was that the confidence of the cuisines community was best maintained by a commitment to full employment. It was different with the balance of payments.With sterling convertible into foreign currencies at a fixed exchange rate, governments also needed to retain confidence of non-resident holders of sterling, so the two requirements of confidence might pull in different directions. ‘Stop-Go' was the result. Stop-Go not withstanding, fiscal activism proved highly successful, aided by the long post-war boom. The budget remained in surplus with current account revenues exceeding expenditure and with borrowing mostly stricter to finance public investment not covered by current-account surpluses.Chancellors from Crisps to Macmillan were even tempted to extend this-above-the-line surplus to an overall surplus by covering capital expenditure below the line from revenue yet this was not achieved 1 . Nonetheless, the public-sector borrowing requirement (ESP.) fell from an average of 7. 5% of GAP (1952-1959) to 6. 6% of GAP (1960-1969). The national debt-to-income ratio fell from 3:1 in 1950 to 0. 7:1 in 19702. Unemployment was consistently below 2. 5% and inflation was low. Ill. THE RISE AND FALL OF PHILLIPS CURVE KEYNESIAN The post-war problem turned out to be not unemployment but inflation. With full capacity utilization, whether generated by Keynesian policy or by benign world conditions, there was always going to be pressure on prices. So the attention of Keynesian policymakers was increasingly turned to fighting inflation, using both fiscal and monetary tools. In this they were also successful for a time. But from the late asses, inflation started to creep up; and the unemployment cost of restraining it started to rise: we enter the era of ‘stagflation'. The underlying theoretical question was: what caused inflation? Was it excess demand or ‘cost-push'?There was no single Keynesian answer to this question. Some Keynesian economists argued that labor market was like any other, with price being determined by the balance between supply and demand. A reduction in the demand for labor would lower its price. Deflation would slow the rise of nominal wages, and hence a rise in the general price level. The question of course was how much deflation would be needed for stable prices? This was not an easy case for Keynesian to argue. Given their belief in sticky nominal wages, the unemployment cost might prove very high.Most Keynesian economists were more comfortable with the ‘cost push' theory of inflation: unions pushing up wages ahead of productivity. Prices rose because business managements raised them; managements raised prices because their costs had risen; costs rose owing to pay increases; and pay increased because otherwise unions would come out on strike. Higher unemployment would not stop them because most of the unemployed could not do the strikers' jobs. In fact, cost-push could occur at levels well below full employment.Short of bringing back mass unemployment, deflating demand would not stop inflation. What was required was a compact with the unions to restrain pay push: incomes policies. Anti-inflation policy in the 1 sass and asses wobbled between fiscal and monetary measures to restrain demand and attempts to reach pay deals with the unions. The Keynesian were rescued from this dilemma by the econometric work Of A. W. Phillips. In 1 958, A. W. Phillips published a famous article which claimed to demonstrate a well-determined relationship between the unemployment rate and the rate of wage increases.The Phillips Curve implied that there was a stable trade-off between unemployment and inflation. The prize was price stability with a small increase in unemployment, way short of the depression. More generally, policy-makers were supposed to have a ‘menu of choice' between different rates of inflation and unemployment. SLIDE 3. ORIGINAL PHILLIPS CURVE The Keynesian policy of demand-management unraveled with the attack on the Phillips Curve by Milton Friedman of Chicago University. In a single lecture in 1 968, he demolished Phillips Curve Keynesian and started the monetarist counter-revolution.Adaptive Expectations Friedman restated the pre-Keynesian idea that there was a unique equilibrium rate of unemployment which he called the ‘natural rate'. Inflation was caused by government attempts to reduce unemployment below the natural rate by increasing the amount of money in the economy. Friedman accepted that there was a trade-off between inflation and unemployment, but that it was temporary, and existed only because workers were fooled into accepting lower real wages than they wanted by not taking into account the rise in prices.But if government repeatedly resorted to monetary expansion (for example by running budget deficits) in order to educe unemployment below its ‘natural' rate, this ‘money illusion' would disappear and workers would put in increased wage demands to match the now expected rise in prices. In short, after a time workers developed inflationary expectations: they built the expected inflation into their wage bargaining. One could not use the Phillips Curve to control inflation in the long run since the Curve itself shifted due to the level of inflation rising. SLIDE 4.FRIEDMAN'S EXPECTATIONS AUGMENTED PHILLIPS CURVE SLIDE 5. One simple version of adaptive expectations is stated in the following equation, where pee is the next year's rate of inflation that is currently expected; p-Eel is this year's rate of inflation that was expected last year; and p is this year's actual rate of inflation: where is between O and 1. This says that current expectations of future inflation reflect past expectations and an â€Å"error-adjustment† term, in which current expectations are raised (or lowered) according to the gap between actual inflation and previous expectations.This error-adjustment is also called â€Å"partial adjustment. † Friedman's work had huge anti-Keynesian policy implications. The five main Ones Were: First, macro-policy can influence nominal, but not real variables: the price level, not the employment or output level. Second, Friedman re-stated the Quantity Theory of Money, the theory that prices (or no minal incomes) change proportionally with the quantity of money. Conversely, fiscal ‘fine tuning' operates with ‘long and variable lags': it is liable to land the economy in the wrong place at the wrong time.Consequently, such stabilization as was needed is much better done by monetary policy than fiscal policy. It lies within the power of the central bank, but not the Treasury, to keep nominal income stable. Provided the government kept money supply growing in line with productivity there would be no inflation, and economies would normally be at their ‘natural rate' of unemployment. Third, Friedman argued that ‘inflation was always and only a monetary phenomenon'.It was the total money supply in the economy which determined the general price level; cost pressures were not independent sources of inflation; they had to be validated by an accommodating monetary policy to be able to get away with a mark-up based price determination strategy; Fourth, Friedman's p ermanent income hypothesis -dating from the early 9505 -suggested that it is households' average long-run income (permanent income) that is likely to determine total demand for consumer spending, rather than fluctuation in their current disposable income, as suggested by the Keynesian consumption function.The reason for this is that agents Want smooth consumption paths. This implied that the degree of self-stabilization of the economy was greater than Keynes suggested, and that consequently multipliers were smaller. Keynesian tried to fight the monetarist onslaught by strengthening Keynesian micro-foundations, especially of observed nominal rigidities. They plopped models with ;menu costs', ‘insider-outsider' labor markets, ‘asymmetric information'. These kept the door open for policy interventions to sustain aggregate demand. Nevertheless, Friedman's impact on macro-policy was swift and decisive.SLIDE 6 ‘We used to think that you could spend your way out of a rece ssion, and increase employment by cutting taxes and boosting Government spending. Tell you in all candor that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of employment as the next step'. Prime Minister James Callaghan (1976), Leader's speech, Blackball ‘The conquest of inflation should be the objective of macroeconomic policy.And the creation Of conditions conducive to growth and employment should be the objective of microeconomic policy'. Chancellor of Exchequer Engel Lawson (1 984), Mass Lecture Discretionary demand-management was out; balanced budgets were back. The unemployment target was replaced by an inflation target. The ;natural' rate of unemployment was to be lowered by supply-side policies, which included legislative curbs on trade unions. V. RATIONAL EXPECTATIONS AND THE NEW CLASSICAL ECONOMICS With rational e xpectations we enter the world of New Classical Economics. RE is the ‘radical wing of monetarism†¦ Est. known for the startling policy conclusion †¦ that macro-economic policies, both monetary and fiscal, are ineffective, even in the short-run'4. Rational expectations first appeared in the economic theory literature in a famous article by J. Mouth in 1961, but only filtered through to policy discussion in the early 1 sass with the work of Robert Lucas and Thomas Sergeant on business cycles, and Eugene Fame on financial markets. The Lucas critique Of adaptive expectations (1976) put paid to the idea Of an exploitable trade-off between employment and inflation.Friedman's adaptive expectations rely on gradual adjustment of expectations to the experienced behavior of a variable. But our knowledge includes not just what we have experienced but current pronouncements of public authorities and theoretical knowledge of aggregate relationships. For example, the Minister of Fi nance announces that he will increase money supply by 10% a year to stimulate employment. STEM tells us that an increase in the money supply will ease prices proportionately. So it is rational to expect inflation to be a year.All nominal values -interest rates, wage rates- are instantly adjusted to the expected rate of inflation. There is not even a brief interval of higher employment. Friedman's distinction between a Keynesian short run in which agents can be fooled and a Classical long run in which they know what to expect disappears. Adaptive behavior is a description of irrational behavior if agents know what to expect already. Notice though that in this example, rational expectations is defined as belief in the STEM.SLIDE 7 Expectations, since they are informed predictions of future events are essentially the same as the predictions of the relevant economic theory†¦ Expectations of firms (or more generally, the subjective probability distribution of outcomes) tend to be di stributed for the same information set, about the prediction Of the theory (or the ‘objective' probability distribution Of outcomes)' (G. K Shaw (1 984), 56) Formally, the rational expectations hypothesis (ERE) says that agents optimally utilities all available information about the economy and policy to construct their expectations.As such, such they have ‘rational' expectations. They are also rational in that they use their expectations to maximize their utility or profits. This does not imply that agents never make mistakes; agents may make mistakes on occasion. However, all that is there to be learnt has already been learnt, mistakes are assumed to be random, so that agents are correct on average. Agents learn the true value of parameters through repeated application of Bases' theorem. Eel they turn their subjective bets into objective probability distributions.An equivalent statement is that agents â€Å"behave in says consistent with the models that predict how th ey will behave†6. Since the models contain all the available information, ii. They are rational expectations models, following the model minimizes the possibility of making expectation errors. At the core of the rational expectations hypothesis is the assumption that the model of the economy used by individuals in making their forecasts is the correct one -that is, that the economy behaves in a way predicted by the model.The math is simplified by the device of the Representative Agent, the sum of all agents, possessed of identical information and utility preferences. This micro-economic device means that the framework can be used to analyses the impact of policies on aggregate welfare, as welfare is the utility of the agents. The implication of the ERE is that outcomes will not differ systematically from what people expect them to be. If we take the price level, for instance, we can write: SLIDE 8 This says that the price level will only differ from the expectation if there is a surprise.So ex ante, the price anticipated is equal to the expectation. [E[P] is the rational expectation based on all information up to date; is the error ERM, which has an expected value of zero, and is independent of the expectation. With rational expectations the Phillips Curve is vertical in the short-run and in the long-run. SLIDE 9. THE SERGEANT-LUCAS PHILLIPS CURVE. With rational expectations, government action can affect real variables only by surprise. Otherwise they will be fully anticipated. This rules out any fiscal or monetary intervention designed to improve an existing equilibrium.More generally ‘any portion Of policy that is a response to publicly available information -such as the unemployment rate or the index of leading indicators -is irrelevant to the real economy' 7. Policy can influence real variables only by using information not known to the public. The Efficient Market Hypothesis The application of rational expectations to financial markets is know n as the â€Å"Efficient Market Hypothesis† (MME), made popular by Eugene Fame (1970, 1976). The MME postulates that shares are always correctly priced on average because they adjust instantaneously and accurately to any newly released information.In the words of Fame, â€Å"l take the market efficiency hypothesis to be the simple statement that security prices fully reflect all available information† 8. So prices can't be wrong because if they were, someone would seek to profit from the error and correct it. It follows that according to the efficient market hypothesis, it is impossible to consistently achieve returns in excess of average market returns (beat the market). In an RE joke, two economists spot a $10 bill on the ground. One stoops to pick it up, whereupon the other interjects, ‘Don't.If it were really $1 0, it wouldn't be there anymore. † The efficient market hypothesis is the modern manifestation of Adam Smith's ‘invisible hand'. Increase d regulation can only aka markets less efficient because regulators have less information than those engaged in the market, risking their own money. There are different versions of the efficient market hypothesis. In its ‘weak' form, investors make predictions about current prices only using historical information about past prices (like in adaptive expectations).In its ‘semi-strong' form, investors take into account all publicly available information, including past-prices. (This is the most ‘accurate' and the closest to rational expectations). In its ‘strong' form, investors take into account all information that can possibly be known, including insider information. Rational expectations models rely heavily on math. Lucas defined expectations as the mean Of a distribution of a random variable. The greater the number of observations of a random variable, the more likely it is to have a bell shaped or Normal distribution.The mean of the distribution, in ordin ary parlance the average of the observations, is called the Expectation of the distribution. In the bell-shaped distribution, it coincides with the peak of the bell. Those who are supposed to hold Rational Expectations (ii all of us) are assumed to know how the systematic parts of he model determine a price. We use that knowledge to generate our prediction. This will be correct except for random influences. We can assume that such random events will also adhere to the bell-shaped distribution and that their mean/expectation will be zero.Thus the systematic or deterministic prediction based on theory is always correct. Errors have zero expectation. The tendency of the MME, as is readily seen, is to rule out, or minimize, the possibility Of bubbles -and therefore crashes; more generally to rule out the possibility of crises being generated within the financial system: historically he most important source of crises. This being so, policy did not have to pay much attention to banks. Fo llowing the acceptance of the MME, the financial system was extensively De-regulated.Real Business cycle DOGS DOGS modeling takes root in New Classical macroeconomics, where the works of Lucas (1975), Jutland and Prescott (1982), and Long and Peoples (1983) were most prominent. The earlier DOGS models were pure real business cycle (RIB) models. ii models that attempted to explain business cycles in terms of real productivity or consumption shocks, abstracting from money. The logic behind RIB models is clear. If money cannot affect real variables, the source of any disturbance to the real economy must be non-monetary.If we are all modeled as having rational expectations, business fluctuations must be caused by ‘real' and ‘unanticipated' ‘shocks'. (Notice the use of word ‘shock'). These shocks make the economy dynamic and stochastic. Unemployment is explained in these models by rational adjustments by workers of their work/leisure trade off to shifts in product ivity. This is a fancy way of saying that there is never any unemployment. As a result of continuously re-optimizing agents, economies in DOGS models re always in some form of equilibrium, whether in the short run or long run.The economy always starts from an equilibrium position, and even when there is a shock, it immediately jumps onto an equilibrium time path – the saddle path. So the economy never finds itself in a position of disequilibrium. SLIDE 10 ‘The model provides an example of an economy where real shocks drive output movements. Because the economy is Wallabies, the movements are the optimal response to the shocks. Thus, contrary to the conventional wisdom about macroeconomic fluctuations, here fluctuations do not reflect NY market failures, and government interventions to mitigate them can only reduce welfare.In short, the implication of real-business cycle models, in their strongest form, is that observed aggregate output movements represent the time-varyi ng Parent optimum'. (Roomer (2011 ) â€Å"Advanced Macroeconomics†, 204) Translated into English: depressions are optimal; any attempt to mitigate them will only make things worse. Later came the New Keynesian who preserved the basic framework of the New Classical RIB/DOGS models, but added ‘market frictions', like monopolistic competition and nominal rigidities, to make the models more applicable to the real world. Critiques: 1 .The fundamental criticism is that this whole class of New Classical models carries an intellectual theorem -that agents are rational optimizers – to an extreme and absurd conclusion. By postulating complete information and complete markets, ii. By abolishing Keynesian or Knighting uncertainty, they cut off enquiry into what might be rational behavior under uncertainty -such as ‘herd behavior'. They also exclude irrational expectations. Behavioral economics only really took off after the crisis. 2. The aim of New Classical economics was to unify macro and micro by giving macro-economic secure micro-foundations.Macroeconomic models should be based on optimization by firms and consumers. But New Classical models are not well grounded in micro-economics since their account of human behavior is seriously incomplete. 3. Ay defining rational as the mean of a random distribution, the New Classical models rule out as too exceptional to worry about ‘fat tails' – that is extreme events with disproportionately large consequences. 4. The vast majority of DOGS models utilities log-landslides utility functions which eliminate the possibility of multiple equilibrium. 1 5. New Classical models have no place for money, and therefore for money hoarding, which depends on uncertainty. In pure DOGS models there is no financial sector. DOGS models depend on what Goodhearted calls the ‘transversally condition', which says that â€Å"by the end of the day, or when the model stops, all agents shall have repaid all their debts, including all the interest owed, with certainty. In other words, when a person dies he/she has zero assets left' 12. Defaults cannot happen. This is another kind of logical madness.

Answer questions from articles Essay Example | Topics and Well Written Essays - 750 words

Answer questions from articles - Essay Example Schor explains that these statistics underpin the need for the revival of the discourse that will call all individuals and households to reconsider their material requirements. In order for this right to be enforced, she suggests that governments should guarantee their citizens of employment, supply their basic needs, and consider using government income vouchers or transfers (Schor 7). A second element that Schor believes can help overcome the problems in American consumerism is an emphasis on quality of life rather than quantity of stuff. Schor states that it was in the 1970s that the indicators of the quality of the life of Americans stopped reflecting their incomes and the country’s Gross Domestic Product. She states that there is evidence suggesting that earning an income above the poverty line does not necessarily improve an individual’s well-being. She asserts that the lack of emphasis on well-being among the people above the poverty line is an indication of people’s concern with relative rather than absolute income. She states that an alternative explanation to the unlikely relationship between income and well-being could be the fact that increased output undermines factors yielding welfare (Schor 7). She observes that this is seen in the increase in work time, the decline in family leisure and time for one’s community. She offers that these two things exemplify the inverse relationship between growth and social capital. Growth and increased materialism affects a person’s appreciation of personal meaning, social commitment, community, religion, and family, all of which are alternative sets of values. She advises that the labor market should be restructured to allow workers more time to themselves and that companies that require their workers to work for excessive hours should be penalized. Schor believes that this will serve as an alternative indicator of GNP,

The central concepts of finance Essay Example | Topics and Well Written Essays - 3000 words

The central concepts of finance - Essay Example In this case therefore, as argued by Bodie, et al, (2011), if the market is not able to predict its fluctuations, but does asses them as being likely or less likely, then the likelihood can be accessed through mathematical process using the relevant information in the market. Thus, factors such as price reflect all the relevant information that is available in terms of the total value of an asset. With the introduction and analysis of the financial efficiency, this paper provides a comprehensive analysis of the market efficiency types and the approaches to test this efficiency. After the emergence of stock market, there was a widespread concern and controversy that made most of the investors to be keen when participating in the market. The situation was caused by the fact that their approach of making their profits seemed inappropriate. Considering that the stock market is an important component of the capital market, many economists in the world developed serious concerns and intere sts in exploring the trend of stock price. In this case, even though the intentions were different, there has been a central focus on the trend of the capital market in the global financial market. As the efficient market hypothesis became known to many, it became also an important part of the school of rational expectations theory, and one of the theoretical foundations of modern economic principles. As argued by the America financial economist, Fama (1965), if the market price fully reflect the all of available information.

MGMT670 Week 4 Conf Assignment Example | Topics and Well Written Essays - 500 words

MGMT670 Week 4 Conf - Assignment Example A second situation in which SWOT analysis would be useful for the company is to evaluate other companies. A few years ago the firm was looking for a strategic to form a marketing alliance. The executive management team of the company utilized SWOT to evaluate the different partner alternatives. â€Å"SWOT chart can help to uncover opportunities that your company is well placed to take advantage of† (Smith, 2006). A third potential application of SWOT analysis is that it can be used to analyze different locations for international expansion. To fully analyze external opportunities an analyst has to monitor the key macroeconomic forces which are demographic-economic, technological, political-legal, social-cultural (Kotler, 2003). The identification of the strengths of a company can be used to formulate plans and operational procedures to improve the efficiency and profitability of a company. The analytics of opportunities can help an organization gain a competitive advantage. Analyzing the threats of a company is crucial to adequately incorporate a risk management plan. It can also help firms mitigate and resolve problems when they occur through proper strategic planning. Our firm should expand the use of SWOT beyond the executive management team in order to take full advantage of the capabilities and reach of this powerful managerial tool. SWOT analysis is a great tool, but it does have its limitations. For instance the use of SWOT does not provide alternative solutions to managers for specific problems. The analysis is too broad base which hinders the ability of a firm to solve specific problems that are hurting the efficiency, productivity, and profitability of the company. Project management requires the ability of the project managers and his team to prioritize specific issues. The use of SWOT does not help the leader