The South African interest rate market has mainly been focused on vanilla interest rate products and hence can be seen as underdeveloped in this regard when compared, for instance, to the associated equity market. Market participants subscribe this aspect to a lack of demand and sophistication of investors within the market. This is, however, expected to change given the influx of international banks into the South African market over the past couple of years. The current market methodology, for the pricing of vanilla interest rate options in the South African market, is the standard Black model with some mechanism to incorporate interest rate smiles. This mechanism is typically in the form of the SABR model. The most signi cant drawback of this approach is the fact that it models each forward rate in isolation. Hence, there is no way to incorporate the joint dynamics between different forward rates and consequently cannot be used for the pricing of exotic interest rate options. In anticipation of these new market developments, we explore the possibility of calibrating the LIBOR market model to the South African market. This dissertation follows a bottom up approach and hence considers all aspects associated with such an implementation. The work mainly focuses on the calibration to at-the-money interest rate options. A possible extension to the SABR model, while remaining within the LMM framework, is considered in the final chapter. Copyright / Dissertation (MSc)--University of Pretoria, 2012. / Mathematics and Applied Mathematics / unrestricted

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The aim of the thesis is to examine, mainly, how labour market dynamics affect unemployment. We consider labour market models where current decisions - regarding employment, wage setting, and labour supply behaviour - depend on past decisions, and where these lagged adjustment processes interact. These interactions are the centerpiece of the chain reaction theory of unemployment, in which each labour market shock has a chain reaction of unemployment effects. Chapter 1 analyzes two important dynamic influences: (i) the prolonged effects of temporary shocks, called unemployment persistence, and (ii) the delayed effects of permanent shocks, which we call imperfect unemployment responsiveness. Focusing on three countries - Germany, UK, and US - we identify significant labour market lags, and measure the degree to which these lags are responsible for unemployment persistence and imperfect responsiveness. Chapter 2 shows that in multi-equation labour market models containing lagged endogenous variables and exogenous variables with nonzero long-run growth rates the natural rate of unemployment - as conventionally defined for empirical purposes - is not a reference point (a value toward which the equilibrium unemployment rate tends with the passage of time). Chapter 3 evaluates the natural rate and chain reaction theories of unemployment. For an empirical model of the UK labour market, we show that un-employment does not converge to the natural rate, as conventionally defined. Furthermore, we show that the labour market lags account for a substantial part of the UK long-run equilibrium unemployment rate as well as for the movement of UK unemployment over the past one and a half decades. Chapter 4 shows that real inertia (sluggish adjustment of real variables) may have a powerful role to play in generating the real effects of nominal (demand) shocks, and nominal inertia (sluggish adjustment of nominal wages and prices) may be important in propagating real (supply-side) shocks.

ABSTRACT Hotels and the hotel sector is one of the most uprising sector on the market and individuals travels more and in Sweden the capacity of logy and hotels continue to grow. The development of the industry increases the need to more capacity of hotel room in Sweden and in the destination in this study area Örnsköldsvik. The effects of higher competition along actors is an important subject to study because it is one industry that seams to grow with time. The results lead to guidance for similar destinations to see the effect of a changed market. Hotels is important for a destination to offer the potential tourist somewhere to stay and that leads to higher finance for the local area. Recent studies have shown that hotels can be a sign for a destinations welfare and economic stability and is one way for municipality to increase the interested for This thesis aims to describe and analyze the effect of a change market and what this means for the existing actors. Also what+ higher capacity of rooms make for a destination to reach some types of events and conference. To get the results for this study statistic from different database has been collected and is supplemented with interview with the municipality of Örnsköldsvik. It is proven in this study that hotel is important for the development of tourism and is one key factor to attract different events. Keywords: Interactions, Competition, Changed market

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