Pakistan Monetary policy effectiveness in controlling inflation

Pakistan Monetary policy effectiveness in controlling inflation Inflation adversely affects the overall growth, the financial sector development and the vulnerable poor segment of the population. There is clear consensus that even moderate levels of inflation damage real growth Inflation decreases the real income and also induces uncertainty. Considering such adverse impacts of inflation on the economy, there is a consensus among the worlds leading central banks that the price stability is the prime objective of monetary policy and the central banks are committed to the low inflation. Hence the central banks have adopted inflation as the main focus of monetary policy, targeting inflation explicitly or implicitly as and when required. Motive The objective of the thesis is to investigate the linkage between the excess money supply growth and inflation in Pakistan and to test the validity of the monetarist stance that inflation is a monetary phenomenon. The thesis will examine that whether the monetary policy adopted has been effective to control the rate of inflation. In my thesis I would like to analyze the money supply and inflation rates in Pakistan in order to prove the hypothesis. Hypothesis Hypothesis 1 Null Hypothesis: Monetary policy is effective in controlling inflation in Pakistan. Alternative Hypothesis: Monetary policy is not effective in controlling inflation in Pakistan. Hypothesis 2 Null Hypothesis: Inflation is a monetary phenomenon. Alternate Hypothesis: Inflation is not a monetary phenomenon. Introduction This paper examines the role played by the monetary policy in controlling prices. Whether the policy makers have been successful in predicting the behavior of prices effectively or not. For this purpose the model is considered having monetary variables like monetary assets and monetary expansion and inflation as a dependent variable. The model is estimated for the period of 1950-2005. It tries to measure the effective of monetary policy during different regimes. The results indicate that correlation between monetary assets and inflation is not that strong for Pakistan which means that the monetary policy has not been that effective in predicting the price movements in Pakistan. There is a strong need for adjustments by the policy makers. Another result that I got from the study is that monetary expansion and inflation are related significantly and they tend to determine the direction of one another at times but inflation is also related to other factors. These days economies of all countries whether underdeveloped, developing as well developed suffers from inflation. Inflation or persistent rising prices are major problem today in world. Because of many reasons, first, the rate of inflation these years are much high than experienced earlier periods. Second, Inflation in these years coexists with high rate of unemployment, which is a new phenomenon and made it difficult to control inflation. Economic policies tend to increase the general public welfare and monetary policy supports this broad objective by focusing its efforts to promote price stability. The objective of monetary policy in Pakistan, as laid down in the SBP Act of 1956, is to achieve the targets of inflation and growth set annually by the Government. In recent years money supply increased rapidly and some researchers thought this increase in money supply was going to translate quickly into inflation. But inflation did not grow much and empirical evidence shows that shocks to the petrol and meat supply mainly affected inflation. In the long-run the relationship between money supply and price is very strong and their correlation is almost one. Lucas (1995) emphasized the long-term relationship between money and prices in his Nobel Prize lecture by mentioning McCandless and Weber (1995). For the short-term relationship, empirical evidence of relationship between money growth and inflation is weak and unclear. A variety of studies on money demand yield very dissimilar results. As result, it is difficult to establish a straight relationship between these two variables in the short-term. This paper tries to measure the relationship between money growth and inflation for Pakistan. The paper consists of following sections: Introduction, The need to control inflation and the monetary policy in Pakistan, Literature Review, Empirical results, conclusion and recommendations. The need to control inflation Price stability is key to long run growth prospects. Effective management and prediction inflation expectations is required to ensure that the prices are stable. With stable prices, economic decisions can be made with less uncertainty and therefore markets can function without concern about unpredictable fluctuations in the purchasing power of money. On the other hand, high and unanticipated inflation lowers the quality of the signals coming from the price system as producers and consumers find it difficult to distinguish price changes arising from changes in the supply and demand for products from changes arising from the high level of general inflation. High inflation lowers the effectiveness of the market system. High and unanticipated inflation makes it impossible to plan for relatively longer outlook, creating incentives for households and firms to shorten their decision horizons and to spend resources in managing inflation risks rather than focusing on the most productive activities. The competing goals of growth and price stability, which may seem to be at odds with each other, in fact boils down to a single objective i.e. price stability. In this backdrop, there is no surprise that most of the central banks aim at maintaining low and stable inflation. Central banks place more weight and demonstrate increased willingness on controlling inflation relative to output growth, and financial and exchange rate stability. Effectiveness of monetary policy in Pakistan Generally, historical evidence does reflect that Pakistan has been a high inflation and high interest economy given its inherent structural weaknesses. The role and effectiveness of monetary policy appears more visible in the 2000s when financial sector reforms started bearing fruits in terms of a more market based money and foreign exchange markets. Entering the 21st century, the loose monetary policy stance in the face of low inflation, low growth and low twin deficits, along with structural measures to open up the economy and alleviate some first round constraints, triggered the economy on a long term growth trajectory of above 7 percent. Monetary policy stance was however altered as the inflationary pressures started to build up in 2005. At the end of the fiscal year, the economy, which had been showing sustained steady growth since FY01, registered a historically high level of growth (9 percent), average inflation rose sharply (9.3 percent) and the external current account balance turned into deficit (-1.4 percent of GDP). Coinciding with these developments, the fiscal module started to show signs of stress as the fiscal balance was converted into a deficit and the stock of external debt and liabilities, which had been declining since FY00 after the Paris Club rescheduling, began increasing. These indicators largely capture the high and growing aggregate demand in the economy on account of sustained increase in peoples income. With the emerging domestic and global price pressures, SBP tightened its monetary policy after a prolonged gap of a few years. The efforts to rein-in inflation, however, proved less effective due to a rebound in international commodity prices and a rise in domestic food bearing fruits in terms of a more market based money and foreign exchange markets. Entering the 21st century, the loose monetary policy stance in the face of low inflation, low growth and low twin deficits, along with structural measures to open up the economy and alleviate some first round constraints, triggered the economy on a long term growth trajectory of above 7 percent. Realizing the complications of monetary management and adverse global and domestic economic developments, the implementation of SBP monetary policy during FY06 varied significantly from the preceding fiscal years. In addition to the rise in the policy rate, the central bank focused on the short-end of the yield curve, draining excess liquidity from the inter-bank money market and pushing up short-tenor rates. Consequently, not only did the overnight rates remain close to the discount rate through most of the year, the volatility in these rates also declined. These tight monetary conditions along with the Governments administrative measures to control food inflation helped in scaling down average inflation from 9.3 percent in FY05 to 7.9 percent in FY06, within the 8.0 percent annual target. For FY07, the government set an inflation target of 6.5 percent. To achieve this, a further moderation in aggregate demand during FY07 was required as the core inflation witnessed a relatively smaller decline in FY06, indicating that demand-side inflationary pressures were strong. In this perspective, SBP further tightened its monetary policy in July 2006 raising the CRR and SLR for the scheduled banks; and its policy rate by 50 basis points (bps) to 9.5 percent. Moreover, proactive liquidity management helped in transmitting the monetary tightening signals to key interest rates in the economy. For instance, the Karachi Inter Bank Offer Rate (KIBOR) of 6 month tenor increased from 9.6 percent in June 2006 to 10.02 percent at end-June 2007 and the banks weighted average lending and deposits rates (on outstanding amount) increased by 0.93 percentage points and 1.1 percentage points, respectively, during FY07. In retrospect, it appears evident that monetary tightening in FY07 did not put any adverse impact on economic growth, as not only was the real GDP growth target of 7.0 percent for FY07 was met; the growth was quite broad based. At the same time, the impact of the monetary tightening was most evident in the continued deceleration in core inflation during FY07. One measure of core inflation, the non-food non-energy CPI, continued its downtrend from YoY high of 7.8 percent in October 2005, to 6.3 percent at end-FY06, and to 5.1 percent by the end of FY07. However, much of the gains from the tight monetary policy on overall CPI inflation were offset by the unexpected rise in food inflation. On the downside, however, broad money supply (M2) grew by 19.3 percent during FY07, exceeding the annual target by 5.8 percentage points. Slippages in money supply growth largely stemmed from an expansion in NFA due to the higher than expected foreign exchange inflows. The pressure from the fiscal account was due to mismatch in its external budgetary inflows and expenditures. With the privatization inflows and the receipts from a sovereign debt offering at end-FY07, the Government managed to end the year with retirement of central bank borrowings, on the margin. By end-FY07, SBP holdings of government papers were still around Rs 452 billion, despite a net retirement of Rs 56.0 billion during the year. Another major aberration in FY07 emanated from the high level of SBP refinancing extended, for both working capital and long-term investment, to exporters. Aside from monetary management complexities, these schemes have been distorting the incentive structure in the economy. FY08 was an exceptionally difficult year. The domestic macroeconomic and political vulnerabilities coupled with a very challenging global environment caused slippages in macroeconomic targets by a wide margin. After a relatively long period of macroeconomic stability and prosperity, the global economy faced multifarious challenges: (i) hit by the sub prime mortgage crisis in U.S in 2007, the international financial markets had been in turmoil, the impact of which was felt across markets and continents; (ii) rising global commodity prices, with crude oil and food staples prices skyrocketing; and (iii) a gradual slide in the U.S dollar against major currencies. Combination of these events induced a degree of recessionary tendencies and inflationary pressures across developed and developing countries. Policy-makers were gripped with the dual challenge of slowdown in growth and unprecedented rising inflationary pressures. The external current account deficit and fiscal deficit widened considerably to unsustainable level (8.4 and 7.4 percent of GDP). The subsidy payments worth Rs 407 billion by Government, which account for almost half of the fiscal deficit, shielded domestic consumers from high international POL and commodity prices and distorted the natural demand adjustment mechanism. While the government passed on price increase to consumers, the rising international oil and other importable prices continued to take a toll on the economy. Rising demand has cost the country dearly in terms of foreign exchange spent on importing large volumes of these commodities. Rising fiscal deficit and lower than required financing flows resulted in exceptional recourse of the Government to the highly inflationary central bank borrowing for financing deficit. At the same time the surge in imports persisted. As a result, inflation accelerated and its expectations strengthened due to pass through of international oil prices to the domestic market, increases in the electricity tariff and the general sales tax, and rising exchange rate depreciation. These developments resulted in a further rise in headline as well as core inflation (20 percent weighted trimmed measure) to 25 percent and 21.7 percent respectively in October 2008. Considering the size of macroeconomic imbalances and the emerging inflationary pressures, SBP remained committed to achieve price stability over the medium term and thus had to launch steeper monetary tightening to tame the demand pressures and restore macroeconomic stability in FY09. SBP thus increased the policy rate from 13.5 to 15 percent. Literature Review If inflation is considered as a monetary phenomenon then it is the responsibility of the central bank and the fiscal authorities to achieve price stability. If inflation is caused primarily by food price increases, it would appear that the Ministry of Agriculture should play a key role in containing inflation. Analysis of Money, Inflation and growth in Pakistan (Abdul Qayyum) shows that excess money supply growth has been an important contributor to the rise in inflation in Pakistan during the study period, the study used Correlation analysis with the Country of study being Pakistan. In my research I will try to find the correlation between the monetary assets and inflation, and determine whether the policy makers have been successful to use monetary assets as a measure to predict interest rates. Economic Growth, Inflation, and Monetary Policy in Pakistan: Preliminary Empirical Estimates AHMED M. KHALID*states the State Bank of Pakistanis also under pressure to discuss and design a policy that could provide a stable and sustainable economic growth as well as address the necessary conditions to be part of the global economy. Is Inflation in Pakistan a Monetary Phenomenon (M. ALI KEMAL) finds that an increase in money supply over the long-run results in higher rate of inflation and thus provides support for the quantity theory of money. It establishes that inflation is essentially a monetary phenomenon. However, the money supply does not instantly influence the price levels; the impact of money supply on inflation has a considerable lag of about 9 months. While the study shows that the money supply works through the system in less than a year, it also points out that the system takes rather long to converge to equilibrium if shocks appear in any of the three variables, viz., GDP, money supply, and prices. Primary objective of this research is to check the long-run relationship and short-run dynamics between the money and inflation. In the long run money supply impacts the inflation rates. QTM holds in the long Run, which implies that inflation is a monetary phenomenon. In the short run, the impact of money on inflation is not instant; it affects inflation with lags of about 3 quarters. In the long-run the relationship between money supply and price is very strong and their correlation is almost one. Lucas (1995) emphasized the long-term relationship between money and prices in his Nobel Prize lecture by mentioning McCandless and Weber (1995). Certainly in the long run, inflation is considered to be-as Friedman (1963) stated-always and everywhere a monetary phenomenon. However, other authors have pointed to supply-side developments in explaining inflation. This structuralist school of thought holds that supply constraints that drive up prices of specific goods can have wider repercussions on the overall price level. In Pakistan, increases in the wheat support price have been blamed for inflation. As such, the question money or wheat is not merely academic, but has profound implications for economic policy. If inflation is a monetary phenomenon, it is the responsibility of the central bank and the fiscal authorities to achieve price stability. If inflation is caused primarily by wheat support price increases, it would appear that the Ministry of Agriculture should play a key role in containing inflation. In this paper, I would study the relationship between inflation and monetary expansion, to prove that it is not entirely a monetary phenomenon but it is affected by other factors as well. Data Sources and limitations The data covers the period 1950-2005 on a yearly basis. The choice of sample enables us to study the long run relationship between money supply and inflation and short run effects. The period covers the whole monetary policy stance under different rules, and then we also analyze it in periods of different economic growth. We use annual data from 1949-50 to 2004-2005 to investigate the relations between money and prices in Pakistan. The principal data source is 50 Years of Pakistan in Statistics; prepared by the Federal Bureau of Statistics. The other data sources include the regular issues of Economic Survey by Finance Division and Monthly Bulletin by State Bank. Before proceeding further, i would like to point out that the analysis is based on fifty years of Pakistan during which the country has undergone a series of economic and political changes. In particular, there have been significant improvements in the monetary sector as well as its impact on economy in the 1990s. Methodology The tests used will be Correlation Regression Graphical Analysis Model The model used would analyze the inflation against two variables of money supply monetary expansion and monetary assets. Money supply is considered as independent variable. Inflation is considered as dependent variable. Empirical Results Correlation test The correlation between monetary assets and inflation during entire 50 year periods has been as such For a perfect correlation the correlation coefficient should have been + 1 but in this case the correlation coefficient is coming out to be 0.034 which is very near to 0 which shows that the monetary policy is not being effective in predicting the rates of inflation. In the long run money supply is able to determine inflation but in short term it is determined much by the other factors of economy. The linear relationship between monetary assets and inflation is not that strong. There is small correlation which means in the long run it is effective but not in the short run. For effective monetary policy the correlation between money supply and inflation should be one but here the correlation is much less and is nearer to O. Regression Test between monetary assets and inflation This table displays R, R squared, adjusted R squared, and the standard error. R is the correlation between the observed and predicted values of the dependent variable. The values of R range from -1 to 1. The sign of R indicates the direction of the relationship (positive or negative). The absolute value of R indicates the strength, with larger absolute values indicating stronger relationships. R squared is the proportion of variation in the dependent variable explained by the regression model. The values of R squared range from 0 to 1. Small values indicate that the model does not fit the data well. Here the model doesnt fit the data well the R square is very small. The larger the F The larger the F (the smaller the p-value) the more of ys variation the line explained so the less likely H0 is true. We reject when the p-value The F statistic is the regression mean square (MSR) divided by the residual mean square (MSE). If the significance value of the F statistic is small (smaller than say 0.05) then the independent variables do a good job explaining the variation in the dependent variable. If the significance value of F is larger than 0.05 then the independent variables do not explain the variation in the dependent variable. Here the F value is greater that 0.05 which means it is not explaining the dependent variable. Inflation= 6.504 + 0.00* monetary assets The beta coefficient tells how strongly independent variable is related with dependent variable. R2 is a statistic that will give some information about the goodness of fit of a model. In regression, the R2 coefficient of determination is a statistical measure of how well the regression line approximates the real data points. An R2 of 1.0 indicates that the regression line perfectly fits the data. The variation explained by monetary assets in inflation is not much which tells us that the policy has not been that effective. The correlation between the monetary assets and the inflation has not been much significant. Monetary expansion and inflation has significant relationship and at times one determine the other this means that we have to accept hypothesis that it is a monetary phenomenon but add that it is affected by other factors as well like oil and food prices. Why Inflation is alarming and needs to be controlled High and persistent inflation is a regressive tax adversely impacting the poor and economic prospects. The poor hold few real assets or equity, and their savings are typically in the form of cash or low-interest bearing deposits; this group is most vulnerable to inflation as it erodes savings. Moreover, high and volatile inflation has been found to be detrimental to growth and financial sector development. High inflation obscures the role of relative price changes thus inhibiting optimal resource allocation. Inflation hurts growth once it exceeds a certain threshold. A number of empirical studies have established that the relationship between inflation and growth is nonlinear. At low levels of inflation, inflation has either no impact or a positive impact on growth. However, once inflation exceeds a certain threshold, it has an adverse impact on long-run growth. High inflation also inhibits financial development. Financial market institutions are intermediaries that reduce frictions between savers and investors (including adverse selection, moral hazard, or conflicting time preferences). Inflation makes this intermediation more costly because inflation tax lowers long-run real returns. As a result, credit is rationed and financial depth is reduced. As in the case of growth, there appears to be a threshold beyond which inflation adversely affects financial sector developments, while there are no negative effects at low levels of inflation. The adverse effect of inflation on financial development is one mechanism by which inflation can hurt growth. For example, Loayza and Ranciere (2005) find a positive long-run relationship between financial development and growth in a sample of 75 countries. In Pakistan, periods of low inflation are associated with high growth rates and vice versa. Between 1978 and 1991, inflation was 8 percent on average and real per capita growth averaged 3 percent. Between 1992 and 1997, inflation increased on average to 11 percent, while real per capita growth fell substantially and averaged only 1 percent. Finally, between 1998, inflation was reduced again to an average of 5 percent, and real per capita growth displayed a dramatic recovery. Of course, there are other factors that determine growth in the short-run and in the long-run [e.g. van Rooden (2005)]. Nonetheless, Pakistans growth performance has been best when inflation was contained to 8 percent or lower. Conclusion Hypothesis 1 Null Hypothesis: Monetary policy is effective in controlling inflation in Pakistan. Alternative Hypothesis: Monetary policy is not effective in controlling inflation in Pakistan. Result: Reject Null Hypothesis and Accept Alternate Hypothesis. Hypothesis 2 Null Hypothesis: Inflation is a monetary phenomenon. Alternate Hypothesis: Inflation is not a monetary phenomenon. Result: We accept our hypothesis but add here that inflation in Pakistan is not entirely a monetary phenomenon, it is a monetary phenomenon in long run, but in short run it is affected by other factors as well like food and oil prices. The rejection of first hypothesis shows that there need to be steps taken by policy makers to combat the inflation rates. The empirical results presented in this paper show that monetary factors determine inflation in Pakistan. Broad money growth and private sector credit growth are the key variables that explain inflation developments with a lag of around 12 months. A long-run relationship exists between the CPI and private sector credit. The food price affects inflation in the short run, but not in the long run. Recommendations The following areas need attention and are key for effective monetary management. Effectiveness of monetary and fiscal coordination would be helpful. For effective analysis of developments and policy making, timely and quality information is extremely important. Information is not available with desired frequency and timeliness. Also there are concerns over the quality of data. Unlike many developed and developing countries, data on quarterly GDP, employment and wages, etc. is not available in case of Pakistan. Moreover, the data on key macroeconomic variables is usually available with substantial lags. This constrains an in-depth analysis of the current economic situation and evolving trends, and hinders the ability of the SBP to develop a forward-looking policy stance. Unlike many countries, both developed and developing, there is no prescribed limit on government borrowing from SBP. Borrowing from the central bank injects liquidity in the system through increased currency in circulation and deposits of the government with the banks. In both cases, the impact of tight monetary stance is diluted as this automatic creation of money increases money supply without any prior notice. Improve the effectiveness of monetary policy is to prohibit the practice of government borrowings from the SBP. Another issue is to make a clear distinction between exchange rate management and monetary management. It is impossible to pursue an independent monetary and exchange rate policy as well as allowing capital to move freely across the border. Since the SBP endeavors to achieve price stability through achieving monetary targets by changes in the policy rate, it is not possible to maintain exchange rates at some level with free capital mobility. This can only be achieved by putting complete restrictions on capital movements, which is not possible. SBPs responsibility is to ensure an environment where foreign exchange flows are driven by economic fundamental and are not mis-guided by rent seeking speculation. In conclusion, it is imperative that above steps be taken urgently. Over the period, however, this needs to be complemented with much deeper structural reforms to synchronize and reform the medium term planning for the budget and monetary policy formulation process. Several studies and technical assistance have provided extensive guidance in this area, but the lack of capacities and short term compulsions have often withheld such reforms. What is important is to recognize that a medium term development strategy, independently worked out, would help minimize one agency interest which has often been a source of coordination difficulties. It would also help the budget making process more rule based than the incrementally driven process to satisfy conflicting demands.

Barn Burning Essay -- essays papers

Barn Burning Throughout the story â€Å"Barn Burning†, author William Faulkner conveys the moral growth and development of a young boy, as he must make a critical decision between either choosing his family and their teachings or his own morals and values. The reader should realize that the story â€Å"Barn Burning† was written in the 1930’s, a time of economic, social, and cultural turmoil. Faulkner carries these themes of despair into the story of the Snopes family. Faulkner opens the story, â€Å"Barn Burning† in a southern courthouse room of the during the Civil War reconstruction era, also a time of social, cultural, and economic instability. At this point in the story the main characters, Abner (Ab) and his son, Colonel Sartoris Snopes (Sarty) are introduced. Ab is on trial for the malicious burning of a barn that was owned by a wealthy local farmer. For Sarty’s entire life he and his family had been living in poverty. His father, who had always been jealous of â€Å"the good life†, takes his frustrations out against the post-Civil war aristocracy by burning the barns of wealthy farmers. As most fathers do, Ab makes the attempt to pass his traits and beliefs on to his son, whom does not necessarily agree nor fully understand his father’s standpoint. The following passage is an example of how Sarty is taught that both legal justice and wealth is the enemy of his family: He could not see the table where the Justice sat and before which his father and his father’s enemy (our enemy he thought in that despair; ourn! Mine and hisn both! He’s my father!) stood, but he could not hear them, the two of them that is, because his father had said no word yet. After the Justice had declared that there was not a substantial amo... ...cept the end of man†¦ I believe that man will not merely endure: he will prevail. He is immortal, not because he alone among creatures has an inexhaustible voice, but because he has a soul, a spirit capable of compassion and sacrifice and endurance.† I believe that Faulkner displayed this belief throughout this story. He shows that Sarty is a â€Å"soul† that is compassionate when he mourns his father in the last few paragraphs of the story. He exemplifies sacrifice when Sarty must sacrifice the safety and lives of his family members for his own morals. Finally, Faulkner conveys endurance when the child comes to the realization that he may not return to the surviving members of his family, and that he must continue to live on his own. Bibliography: Works Cited Meyer, M., Ed., (1999). The Bedford Introduction to Literature, 5th Ed. Boston: Bedford/St. Martin.

Nonverbal Communication Essay

Among the many different ways that we as human beings communicate with one another, nonverbal communication is one of the most common yet most unnoticed form of communication. Also described as body language, nonverbal communication can be the slightest facial expression or just the certain position of your body in a conversation. Without even realizing it, your body language can show feelings of happiness, awkwardness, nervousness and much more. Furthermore, the study of the movement, facial expressions and posture is called kinesics. Having the skill to understand kinesics is a fundamental tool in all aspects of life. Being able to read other’s body language can help you in a number of situations. By learning more about kinetics, you can open your eyes to a whole new way of reading others as well as presenting yourself appropriately for a given situation. In order to utilize any nonverbal communication skills effectively, you must first be familiar with what it exactly means as well as to recognize what each motion or signal symbolizes. These signals could be anything from the twitch of a nose, to a gaze of the eyes or just the fiddling of hair. To be completely knowledgeable about studying one’s actions, you must learn the deeper meaning behind each gesture. That’s not to say, however, that each signal means the same for everyone in every situation. Noticing that your spouse is not making eye contact with you does not necessarily signify that she or she is telling a lie, although that may be a possibility. Generalizations such as avoiding eye contact or fidgeting to indicate that a person is lying are simply what many studies have shown to be more than likely true in a number of cases. There is much debate as to whether or not non-verbal communication skills should be taught as an aid for medical uses. Of course those in professions such as the psychiatric field, gain a trained eye to notice certain feelings of their patients, but there is question about if the skill is even a teachable subject. A reason being because there doesn’t seem to be any real answer or strict guideline to every action or expression, especially when it comes to discussing the differences between cultures. Yourself and certain gestures that you make can be considered as strange or even insulting. Take eye contact for example. Most people who have grown up in not only the United States, but most Western cultures, use eye contact in a positive way. When making eye contact with someone who you are speaking with, it shows that you are listening and paying close attention to what they are saying. Also, it shows a sense of respect, where the elder in a situation prefers the child to be looking them in the eye while being scolded, showing that they are understanding and paying attention to a lecture. On the other hand, there are negative connotations regarding eye contact when it is being avoided. Usually when someone is not looking you in the eye while speaking to you, it gives a sense that the person is not being truthful. This scenario takes a whole three-hundred-sixty degree change in the minds of other cultures. For example, some Caribbean cultures find eye contact to be offensive. They believe that when a child is being scolded, they should not make eye contact. It is a sign of disrespect, as the child is expected to lower their eyes and show complete remorse. Aside from eye contact, there is a whole spectrum of differences in common gestures between cultures. In many cases, Americans especially fail to understand that the world is very different from the United States. In America, the â€Å"Rock On† symbol is made by closing a fist while leaving only the index and pinky finger extended. Commonly used when listening to music or maybe simply during an exciting situation. On the other hand, traveling to Italy and preforming this hand gesture is not only insulting, but is considered an offense. In Italy, it is a sign that when given by a man to another man symbolizes that â€Å"other men are in relations with his wife†, which is obviously a huge sign of disrespect as well as a personal insult. There are many ways in which cultures differ when it comes to body language, but there are a few universal expressions that are the same across the board. British scientist, Charles Darwin, was the first to recognize the six basic facial expressions as being the same all over the world. They are happiness, sadness, fear, disgust, surprise, and anger. Darwin first made these claims in his book titled The Expressions of the Emotions in Man and Animals. Darwin’s idea about the six facial gestures was later put together  in a study in the 1960’s by Paul Ekman. Ekman was a psychiatrist expert in facial expressions and decided to test the validity of Darwin’s theory. He found that all men, even those from isolated tribes, were able to recognize all six expressions for what they were, proving Darwin correct. http://westsidetoastmasters.com/resources/book_of_body_language/chap5.html http://www.businessballs.com/body-language.htm#body-language-different-cultures http://www.bbc.co.uk/history/historic_figures/darwin_charles.shtml Not only is it important to understand what messages you body language sends while you are in other cultures, but it may be even more important to learn how to carry and present yourself in the workplace. Knowing what sends off confident and powerful signals to your boss or employees can be a key factor in your performance and enables others to take you seriously. It could even be what makes or breaks you being accepted for a position you are applying for. As everyone knows, first impressions are incredibly strong and lasting. Before an interview is begun, there is almost always a handshake with the interviewer. Even before that, theres the moment that you are walking up to that person and your strut and presence or lack of fidgeting approaching the handshake sends signals before you can even present your credentials. They will note if you carry yourself confidently and especially if your handshake is firm or limp. When asked what percentage of communication comes from actual words and speaking, most would think it’s a high percentage. In actuality, only a surprising 7% of communication is derived from words. That leaves 38% to vocal details such as the tone, speed, or volume while speaking. So interestingly enough, 55% of communication is the reading and sending of body language signals. Now the signals that you send may give away what your feeling, or they could be a complete misrepresentation. This is why it is in your best interest to make note of how others are seeing you, so you can make any necessary changes to your behavior. This is obviously easier said  than done, especially if you are among those who have always been the nervous type and tend to perspire or fidget. Fortunately, knowing what your faults are and having the knowledge to correct them can result in making a complete change and eventually landing that promotion that you have sought after for so long. First, understanding the importance of eye contact in crucial. One step of effectively making this connection with an audience is knowing the material you are presenting. If you are constantly referring back to your powerpoint or notes, your obviously not making eye contact which in turn creates a distance that is imperative to avoid. Another tactic is to rid of all objects that could count as a barrier. Standing behind a podium or folder or even crossing your arms will create the distance between you and your audience, and may ultimately end up with a performance that was not your best. Along with making eye contact, it is a good idea to appear animated. Using hand gestures or maybe even moving about the room will create interest which in turn leaves a great impression on the audience.

Primary Timber Products Harvested When Selling Trees

The value of the timber you ultimately sell at harvest time is linked to the value of the products these trees can make. Normally, as the size of individual trees in a timber stand increase in height and diameter, the more valuable that stand becomes as more product classes become available. Trees growing into a more valuable class is what foresters call ingrowth and is continually happening over the life of a managed forest. When a strand is properly managed, the best tree species with the highest potential quality are left to grow into high value pine and hardwood sawtimber and veneer and pine poles upon final harvest. Thinnings in these stands can start as early as 15 years to select and remove lower quality trees with lower but substantial values. These lower-valued products come in the form of pulpwood, superpulp, and chip-n-saw and typically comprise the early thinnings. Product classes are generally defined by their size in the form of their diameter. Foresters express the diameter measurement in terms of diameter measured at breast height (DBH). Here are the major product classes defined on a typical timber sale contract: Pulpwood: Considered the least valuable product at the time of a tree sale, pulpwood is of primary importance when thinning a stand. It has value, and when harvested properly, makes some income even while leaving trees of potential higher value. Pulpwood is typically a small tree measuring   6-9† diameter breast height (DBH). Pulpwood trees are chipped into small chunks, chemically treated, and made into paper. Pulpwood is measured by weight in tons or by volume in standard cords. Canterwood: This is a term locally used to describe pulpwood-sized pine trees from which one 2 x 4 board can be cut in addition to the chips used for pulpwood (not to be confused with chip-n-saw). Another name for canterwood is â€Å"superpulp†. Superpulp is more valuable than regular pulpwood, but markets for this product are not always available. Canterwood is measured by weight in tons or by volume in standard cords. Palletwood: Wood for pallets can be a market for low-quality standing hardwood timber that does not make the grade for lumber. These stands have been mismanaged for optimum hardwood sawtimber production and have no potential to make grade lumber. This market is generally available in regions with a large upland hardwood resource. These trees will be sawed into slats for pallet-making. Palletwood is sometimes called â€Å"skrag.† Chip-n-saw: This product is different from canterwood in that it is cut from trees transitioning from pulpwood into sawtimber size. These tree typically range in the 10-13† DBH size. By using a combination of chipping and sawing techniques, these mid-sized trees produce chips for pulpwood as well as small dimension lumber. Chip-n-saw is heavily dependent on tree quality and height which can saw out straight studs. This product is usually measured in tons or standard cords. Pine and Hardwood Sawtimber: Trees cut for lumber fall into two categories, hardwood lumber and lumber from conifers. Lumber from hardwoods and pines typically is sawn from trees with diameters greater than 14† DBH. Trees are cut into lumber but some of the extra material is converted into chips for fuel or paper production. Sawtimber is measured in tons or board feet. The value of these trees is heavily dependent on tree quality meaning straight, solid logs with little to no defect. Veneer: These trees are cut for peeled or sliced wood veneers and plywood. Trees in the product class have a diameter size of 16† or more. By means of a large lathe, the tree is converted into continuous sheets of thin wood. This is used in the manufacture of plywood and furniture, depending on the type of tree. Veneer and plywood is measured in tons or board feet. Value is heavily dependent on tree quality. Source: South Carolina Forestry Commission. Understanding Timber as a Commodity. https://www.state.sc.us/forest/lecom.htm .