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As an example, consider a whole life insurance policy of one dollar issued on (x) with yearly premiums paid at the start of the year and death benefit paid at the end of the year. In actuarial notation, a benefit reserve is denoted as V. Our objective is to find the value of the net level premium reserve at time t.
The actuarial present value (APV) is the expected value of the present value of a contingent cash flow stream (i.e. a series of payments which may or may not be made). Actuarial present values are typically calculated for the benefit-payment or series of payments associated with life insurance and life annuities .
The first term in the RHS describes short-run impact of change in on , the second term explains long-run gravitation towards the equilibrium relationship between the variables, and the third term reflects random shocks that the system receives (e.g. shocks of consumer confidence that affect consumption). To see how the model works, consider two ...
tables of transaction values, showing, for example, the value of coal used by the iron industry. Usually the database is presented as an input-output table or as a social accounting matrix (SAM). In either case, it covers the whole economy of a country (or even the whole world), and distinguishes a number of sectors, commodities, primary ...
A Lindahl equilibrium is a state of economic equilibrium under a Lindahl tax as well as a method for finding the optimum level for the supply of public goods or services that happens when the total per-unit price paid by each individual equals the total per-unit cost of the public good. It can be shown that an equilibrium exists for different ...
In this equilibrium, relative supplies will equal relative demands: given the relationship of price with supply and demand, since the risk-to-reward ratio is "identical" across all securities, proportions of each security in any fully-diversified portfolio would correspondingly be the same as in the overall market.
Walras's law is a consequence of finite budgets. If a consumer spends more on good A then they must spend and therefore demand less of good B, reducing B's price. The sum of the values of excess demands across all markets must equal zero, whether or not the economy is in a general equilibrium.
As any universal Turing machine can do what any other Turing machine can, a central calculator in principle has no advantage over a system of dispersed calculators, i.e. a market, or vice versa. [25] In some economic models, finding an equilibrium is hard, and finding an Arrow–Debreu equilibrium is PPAD-complete. If the market can find an ...