Empirical paper assignment Essay Example | Topics and Well Written Essays - 1000 words

Empirical paper assignment - Essay ExampleThe accuracy of estimation is subject to unlike factors some of which be beyond control of economists. However in most cases there are counterweights that alleviate balance an error in estimation. This means that in a normal estimation there are over and underestimations that cancel out partially or completely. The fact that stands out in the economists estimation is that these overestimations pass by year after year and indications point at misinformed estimates. Overestimation of interest rates on judicature bonds has some serious results. Higher acceptation costs imply that the government sets aside more monetary resource to cover this cost. The end effect is that the government will reduce budgets for other functions and allocate more pecuniary resource for paying up its public debt.According to the article, economists puzzle a duty come up with slipway to increase economic growth. The reasons for this overestimation could be an increase in the amount of funds available for borrowing and to avert any stagnation of bond rates. According to Jared, increased funds available for loaning have the effect of pushing down the costs of borrowing. This can only mean that the estimation techniques used by the economist could be overlooking the increase. Secondly, cost of borrowing is reduced by economic forecasts that indicate growths and inflation. In instances where inflation or reduced economic growth is predicted, costs of borrowing fall. In order to preserve this fall, economists overestimate bond rates so that this acts as a stimulant that will prevent material drop in borrowing rates.Another aspect of effects of bond rates overestimation is that they sink a wrong impression of economic performance. The cost of borrowing influences calculations on Gross Domestic proceeds since in effect it influences the rate of economic growth. Later in this assignment we shall have a pictorial representation of the public debt expressed as a