Literature and Perspective of Macro-Economic Characteristics
In the era of global revolution , there is an upscaling attention given to the growth of the revenues of a business. On a
oader note, the shareholders and future investors are more intrigued in the accurate forecasting of the business growth models. The purpose of this literature and perspective is to analyze the macroeconomic model and the interlink of the impact of macroeconomic in the variable factors – Financial Management, Financial Literacy and Wealth Management. The resulting inference of this literature research is the inference drawn from the multi-domain models of financial growth as a result of the macroeconomic factors.
The Macroeconomic factors involved in the study were inflation rates, exchange rates, interest rates and GDP. The features of the Macro-economic model includes the following as depicted in the graph by OECD.
According to Maddison XXXXXXXXXXand Bosworth (1993), GDP has constructive equation with the savings rate and the economic growth. If we consider the propensity of a defined population to save have a co
elation with the economic factors enlisted above with the composition of the savings, we will realize that savings has a relation with the security sense, profitability expectations and the long term future plans. The key pattern is the greater the rate of income differentiation in the society, the greater is the savings pattern distortion.
The significance of the Financial Literacy after the global financial crisis due to the ignorance of the individuals ( Mainly households) has a sheer effect on the paucity of the Macroeconomic risks. According to Habschick et al. (2007), the key driving forces of the financial literacy is : i) the changes in the individual needs ii) the changes occu
ing in the financial sector. The impact of macroeconomic is strongly vi
ant in the segments of social part transfers and income composition of the households and the savings habit development is the most profound indicator for the measurement of financial literacy.
The impact of the core concepts of Financial literacy can be
oadly classified into the four segments :
· Financial Knowledge
· Familiarity with finance
· Financial Skills and Awareness
The Financial Management is linked with the macroeconomic factors like cu
ent income scenario, financial wealth and the demographics of a population. The present income scenario linked with the average income composition of a household in the economy and the crucial management of consumption and savings propensity of the household in the diversified segments. The financial wealth defines the net worth of the entity/individual based on the service lines, agri-business or sole-proprietorship revenue generation. This helps in drawing a pre-estimated analysis on the health of the sectors both public and private and calculate the GDP and National Income of the Country. The Demographics of a population, literacy rate and taste and preference patter also determines the management efficiency of financial assets of a household.
Impact on Wealth Management
Economics and Finance go hand-in-hand from the business point of view. When the fluctuations in the interest rates have a strong co
elation with inflation of a global economy, that is where the wealth management and the Macroeconomics crosses paths.
As per HBS review, the points of impact of wealth management :
1) Interest Rates and Investments – The higher the interest rates , the higher is the return stakes to the investor in a blue-chip business.
2) Money Supply and Interest Rates – The higher the money supply due to fiscal measures , the lower is the interest rates.
3) Economic Growth and Unemployment – The higher the economic growth ( higher flow of money in the market), the lesser is the unemployment and wealth-centric behavior.
The literature perspective states that Macroeconomics and finance are intertwined to analyze the business prospects by predictive analysis and financial management. The savings factor is related to the economic growth and income differentiation segments of macro-economics, while the investment decisions of a wealth manager are linked with the interest rates of a global cu
ency. This concludes that today’s macroeconomics have merged with the finance decisions on a
oader to come up with the better outcome in the long run. As per the HBR review, the macroeconomics facet are profoundly accepted in every field/profession as it deals with the core financial links to smarter investment decisions, better understanding of the profitability and policy formulation.
Citations & References
Characteristics of Macroeconomics-OECD Report
1998 Population(Thousands) GDP ( growth %) Inflation Rate Wage Level Investments National Savings 24100 0 26 0 2000 Population(Thousands) GDP ( growth %) Inflation Rate Wage Level Investments National Savings 24700 0 28 0 2002 Population(Thousands) GDP ( growth %) Inflation Rate Wage Level Investments National Savings 25100 0 0 0