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Well, it’s April 1st, and so that means time to see if the students fall for my April Fool news story!read more...»
A four minute gem from TED!
In AS and A2 economics exams, especially in the essay questions that require evaluation, axaminers will always reward students who adopt a balanced approach and those who try to reason out and explain their arguments i.e. they demonstrate an awareness of different points of view / different schools of thought in Economicsread more...»
Here is an edited version of a talk given recently by economist Ian Ayres, co-Founder of Stickk.com - Carrots? and Sticks: Unlock the Power of Incentives to Get Things Done’. Some interesting examples although the editing does take away some of the flow of the talk.
One important aspect of the OCR F585 stimulus materials for June 2011 is the economics of competitiveness within the single currency zone - the Euro Area. A conventional view is that some of Europe’s peripheral countries (notably the PIIGS) have become uncompetitive because they have allowed their producer prices, consumer prices and relative unit labour costs to rise. This - in the absence of a compensating exchange rate depreciation - has made their manufacturing and service industries relatively more expensive leading to a deterioration in trade balances, slower growth and stagnating living standards.read more...»
Here are the second set of updated data charts that I have built into my toolkit for the OCR F585 June 2011 paper. The focus of much of the stimulus material is on the economic difficulties in the Euro Area and this collection of charts reflects this - it looks at the output gap, unemployment and gross government debt for the Euro Area as a whole.read more...»
Here are the updated data charts that I have built into my toolkit for the OCR F585 June 2011 paper. The focus of much of the stimulus material is on the economic difficulties in the Euro Area and this first collection of charts reflects this.read more...»
A combination of higher prices and higher oil production means that Opec’s oil revenues may exceed $1 trillion in 2011 for the first time. The International Energy Agency has published some new data on Opec production - the revenue forecast includes exports of natural gas liquids and is not adjusted for the effects of inflation. But if you are a Finance Minister of an oil exporting country the price of crude trading at $115 is welcome news especially given the stimulus spending that some countries have introduced as a response to social and political unrest. On some estimates, Saudi Arabia (the world’s largest oil producer and exporter) needs oil to be priced at $83 for its national budget to balance.read more...»
For a currency that used to have the tag of the “Pacific Peso”, these are heady days for the Australian dollar. The external value of the dollar has reached a 29-year high as the Aussie dollar continues to appreciate on the global currency markets. Our Timetric charts follow the Australian dollar against the US dollar and also sterling.
This is a good mini case study on the factors that determine the value of a currency when it is allowed to float freely in foreign exchange markets
1/ The Australian economy is growing relatively strongly - increasing the expected returns from foreign investment in the economy
2/ Policy interest rates are relatively high (4.75%) - attracting inflows of hot money - short term banking flows that seek the best risk-adjusted rate of return
3/ Trade - the Australian economy has enjoyed a resurgence in the value of exports, notably from selling minerals and liquid natural gas to fast-growing developing countries in Asia
4/ Changing sentiment in the market - foreign exchange market speculators seem to be buying the Australian dollar as a safe haven investment instead of Japanese Yen
In simple terms the expected yield to investors prepared to buy Australian dollars is pretty high - for example compared to that on offer in Japan. This is causing a strong market demand for the Australian dollarread more...»
If you are nearing the end of an A2 microeconomics syllabus and looking for current resources to help with issues of distribution of income and discrimination, the BBC came up with a couple of helpful items yesterday.read more...»
We´ve recently been looking at the Phillips Curve in A2 Economics where past unemployment and inflation data is plotted on a graph and the trade off between the two variables can be observed i.e. you can have low unemployment but only with higher levels of inflation and vice versa. The oil crisis and the stagflation of the 1970s raised questions over Phillips’ work and saw the introduction of supply side economics etc - all very dry stuff and then we found this below and here. Japan´s seemingly never ending periods of deflation have made their Phillips curve look well…a bit like Japan! Who says economists have no sense of humour!read more...»
The Wall Street Journal Blog has this excellent list of ten industrial sectors that are being left behind by technology or have been hurt by cheaper overseas competition - super for getting good examples of industries where structural unemployment is caused by a big shift in the pattern of employment.
At $300 million Starbucks spends more on healthcare insurance for its employees than on coffee beans - read more here from Business Insider.
Visual examples of productive (in)efficiency are a bit thin on the ground so I will use the following picture to start discussion on whether businesses always use the least cost method of production.read more...»
Having gone through the penalty shootout at 2008 UEFA Champions League Final I was informed by students that the AC Milan vs Liverpool final in 2005 was another penalty shootout worth looking at. As well as being a tremendous comeback by Liverpool it was interesting to observe how the penalty shootout progressed.read more...»
It took the road repair crew 6 days to fix the damage done to the road below left (and more great images found here). After it was announced in Wednesday’s budget that £100 million is to be set aside to fix Britain’s potholes, here’s hoping we can go about filling the holes with something resembling this level of efficiency!read more...»
It’s not always easy to navigate your way through the budget, with its mass of technical detail and complexity. Not all of it is terribly interesting either (nor the manner of presentation).read more...»
A hat tip to Philippe Legrain for spotting this piece in the Wall Street Journal highlighting the chasm in educational outcomes in Portugal (Western Europe’s poorest nation) contrasted with other EU countries. Only 28% of Portuguese aged 25-64 have completed secondary school vs 85% in Germany and 91% in the Czech Republic. “Portugal must generate enough long-term economic growth to pay off its large debts. An unskilled work force makes that hard.” More hereread more...»
This short video from ABC’s Diane Sawyer is a fantastic lesson starter which deals with male vs female unemployment rates in the USA due to the recession and some surprising reasons why the vast majority of jobs added since the economy has started to recover have gone to males.read more...»
Inspired by a similar thing on the Guardian website, I have created Wordle clouds for Budget speeches since 2002. I got my pupils to identify which words appear more frequently in particular years and then suggest reasons why. It becomes quite interesting when you consider which ones were ‘election’ Budgets!
The presentation is available on slideshare here
The PowerPoint presentation can be found here
Lawrence Smith from UCLA spoke at the RSA tonight about his new book - The New North… in particular a cluster of eight countries he groups together as the NORCS - including Canada, Greeland, the USA, Sweden and Norway - nations he feels may be well placed to benefit from sizeable population shifts in the years ahead. The blurb from his publishers says this:
“In 2050, Northern countries – notably Canada, Russia and Scandinavia – will rise at the expense of southern ones. Patterns of human migration will be dramatically altered – and where we are born will be crucial. But, argues UCLA Professor Laurence Smith, humans are adaptable: and there will be gains as a new world takes shape. In this talk, Laurence Smith explores the four forces that are changing the world – climate change, rising population, globalisation and resource depletion – and attempts to predict how they will shape the world between now and 2050.”
Here are some notes from his talk, I will embed a link to the video from the RSA when it is published in a few days timeread more...»
Following on from Richard and Geoff´s recent posts regarding the inclusion of manageable public sector finances as a major macroeconomic objective, government´s are therefore reliant on the ratings awarded to them by the three ratings agencies - Moody’s, Standard and Poor’s and Fitch.read more...»
The BBC have been working with the IFS to study the effects of policies to deal with the recession and with the deficit, on the distribution of income. The results were published yesterday, just ahead of Wednesday’s Budget. Some results are hardly surprising - the richest decile have been hit the hardest - but the bottom decile have taken the next worst effects, and are much less able to deal with them than the richest.
The study concludes that, across the board, real incomes in the UK fell by 1.6% a year between 2008 and 2011, compared with a rise per year of 1.6% during the previous 50 years. However the most important reasons are not so much loss of earnings from unemployment, as loss of investment income due to the historically low interest rates, and low increases in real wages. That loss of income from investments and savings hits pensioner households very hard. However in the fiscal year about to start, the median household income should rise by £120 as a result of tax and benefit changes, the IFS forecast. This “surprising” boost to incomes is a result of changes in personal allowances that have raised net income for many households.
There is much more detail about the findings which is very worthwhile for those studying the distribution of income and the effectiveness of fiscal policy to achieve redistribution. I would suggest starting with Stephanie Flanders’ video report, followed by the BBC news article here and finally back to Stephanie Flanders for her blog about ‘The shrinking pound in your pocket’. It should then be possible to analyse the Chancellor’s announcements in the Budget speech on Wednesday, to consider what further effect his adjustments to fiscal policy will have on.
If you want to extend this a bit further, look at this blog from Richard Young: Macroeconomic objectives: public finances in, income distribution out?
While it may not be much comfort to those struggling with high food and petrol prices, these graphics show that when a long-term, inflation adjusted view is taken, the recent price increases are but a minor blip on a long downward trend.read more...»
Macroeconomic objectives can seem like the contents of the basket of goods used to measure inflation – subject to changes of content and weighting
Take for instance Geoff Riley’s excellent recent blog : Keeping Track of UK Macro Objectives with supporting Timetric graphs
Two things struck me:
- what ever happened to securing an ‘acceptable distribution’ of income
- the inclusion of manageable public sector finances – not mentioned in the AS textbooks used by my students
The fact is that economics is a dynamic subject and new governments bring with them their own set of objectives and priorities.
Further evidence of the central importance of achieving sustainable public finances are the four indicators selected by the OECD to front its Economic Survey of the United Kingdom 2011
These graphs combine the two main purposes of performance data: they show how the UK is doing over time and in comparison with other countries. Excellent starter activity graphs.
The extended Overview of the Economic Survey of the United Kingdom 2011 makes excellent reading for aspirational student
Interesting graphic below and found here looking at not only carbon emissions per nation on the left, but also per capita emissions on the right with someinteresting results.
“This per capita model, however, points out places where individuals of each country could have the biggest impact on reducing their overall emissions. According to the graphic above, residents of small island nations and territories, like the Virgin Islands, are frequently responsible for a larger than average personal carbon footprint, even if their homeland produces relatively little of the stuff.”
Two great video resources below which could be used for a number of topics from economies of scale and factor substitiution to specialisation and division of labour. It’s amazing to see how much labour has become less and less a part of the car-making process!read more...»
This set of Timetric charts follows what is happening to total consumer spending (in real terms) and the annual rate of change of house prices as measured by the Nationwide House Price Indexread more...»
Rory Sutherland (star of TED and advertising guru) speaks at the launch of my new Global Society at Eton this Tuesday at 8-45pm. If there are any colleagues in the vicinity who would like to come along and enjoy an evening here then please let me know and I will make some arrangements. There is also some space for colleagues who may want to bring along their students.
I am grateful to Tom Whitmey and Leo Barnes for heading over to the lecture and discussion headed up by Lord Nick Stern at the LSE last night. Their notes from the talk are below. I have also added in some new videos from OU learn on policies to cut carbon emissions.read more...»
Traditionally towards the end of an AS macro course we brings things together by focusing on the possible trade-offs or dilemmas facing economic policy-makers not least in an age of great uncertainty and change. I have usually emphasised the following macro economic indicators as being key though others are sure to differ!
* Price stability (low positive inflation)
* Rising employment / an improving unemployment rate
* Sustainable growth of real GDP / national income
* A degree of balance in trade in goods and services (a sustainable external position on the current account)
* Manageable public sector finances - including sustainable debt levels and annual budget financing
In this blog and using the Timetric data I plan to keep all of this data in one place and automatically updated so that I can return to it when needed and so too can students if they need to refresh quickly and easily what is happening in the UK economy. The charts can be found belowread more...»
BBC Business News has an excellent report and supporting video which assesses why the Yen has strengthened following the sad disasters besetting Japan.
An example of how financial flows impact on exchange rate volatility. The normal suspect, currency speculation, may not be the major driver here.
Or are speculators ‘gambling’ that repatriation of funds to finance reconstruction means the Yen will rise in value so ‘buy cheap, now’ and ‘sell later, dear’?
And how can the world’s central banks respond? And why?
Much to debate in classread more...»
Why is Big Society Cluedo easier than normal Cluedo?...read more...»
A little teaser regarding the news that unemployment rose by 27,000 in January to take it to a 14-year high of 2.53 million (LFS measure). Can you explain why this represents good news? It might be useful to know that employment also rose by 32,000. Perhaps Stephanie Flanders can help…
In this three-part series Michael Blastland lays out the history of economic ideas to understand why economics goes wrong and whether it can ever go entirely right.
In the first programme, ‘Gods’, Michael travels to Athens and the site of Aristotle’s Lyceum - where economics as a discipline began. He finds that the first economists were not really economists at all. They were moral philosophers.
Today, questions of morality remain at the heart of economics. Your greedy self-interest is another’s virtuous self-reliance.
And here’s a funny thing. If you think government should get off our backs - for moral reasons of course - you probably think cutting it will be good for the economy too. If you think the government should help people more, you probably also think doing so will stimulate economic growth.
‘Good’ and ‘bad’ sure complicate the sums. Is it any wonder economists can’t agree?
In next week’s programme, ‘Cogs’, Michael travels to Chicago to explore another view of economics - that it is not moral philosophy but a hard science, explaining the irrefutable mechanism of the market.
We are really looking forward to delivering an AS/A2 economics revision day in Madrid on Monday 4th April. A weekend in a capital city is always an exciting treat and we are pretty happy to climb on a plane anywhere if invited! Indeed I am told our Business Studies team is also available to take their presenters on a world tour in sunny climes! We will report back with a photo stream!
A set of Timetric charts following currency movements for non-Euro countries against the Euroread more...»
I will be developing a series of data charts and links to other resources in this blog for students and teachers who want to use developments in the Spanish economy as part of their macro studies. The economy is a member of the single European currency but widely regarded as experiencing deep structural problems and facing a tough adjustment process in the years ahead. At the bottom of the blog we link to recent articles on the Spanish economy. The OCR F585 June 2011 paper focuses on Spain as one of the countries experiencing difficulties within the Euro Area.
Migrants pushed towards exit by Spanish jobs crisis (BBC)
Spain economy gets IMF vote of confidence
Spanish jobless level hits another record high
Spain pledges additional measures to strengthen economy
Where does economic growth come from and how best can a balanced recovery be sustained? These questions are now central to macroeconomic debates in the UK - from the impact of the Coalition’s fiscal austerity programme to key decisions being made by the Bank of England about if and when to start tightening monetary policy. Stephanie Flanders from the BBC has this blog on the growth issue and a revealing and positive report from the North East of England. She also has a two-part series on radio 4 available here. I blogged here about the growth debate last month after attending a lecture at the LSE.read more...»
One aspect of globalisation is that manufacturers source their supplies from around the world. This will depend on the comparative advantage those countries have developed in producing various types of components. Japan produces about 30% of the global output of ‘flash memory’ used in electronic cameras and smartphones, and about 15% of the DRAM memory used in PCs. If something happens to disrupt that supply chain, as is clearly the case after the horrific events in Japan, there will be global effects.read more...»
All twenty-seven nations of the EU are members of the single market. Seventeen countries have entered the Euro Area and share a common currency. Under EU law, as an EU national, you cannot be charged a higher price than local residents when buying products or services anywhere else in the EU, unless the price difference is justified.
Price convergence shows the degree to which prices for goods and services in European Union Member States have moved together, or converged, and is an important indicator of the success of the internal market.
In contrast, price divergence shows the degree to which prices have moved apart. It is calculated by examining the coefficient of variation of the comparative price levels. The lower the coefficient, the greater is price convergence within the EU
Our Timetric chart tracks what has happened to comparative prices within the EU over the years. We see a gradual process of price convergence but there remain widespread and persistent price differences across Europe for similar / standardised products - from petrol to hotel rooms, from clothing to a meal out. I ask students if they can explain some of these price differences and if they can use cost and revenue curve analysis to illustrate them?read more...»
I will keep this blog updated with a selection of video clips relevant to the study of the EU - please check below for some links and embedded videosread more...»
I blogged last week about shifting comparative advantage in the US and Western Europe away from the low skilled low paid jobs towards high tech industries that require higher level skill sets.read more...»
The Guardian has a new series of reports, picture galleries and other resources on New Europe - much here of interest and value for students and teachers who want to broaden their understanding of what is happening within the European Union. Here is the link And you can follow their updates on Twitter.
Having been introduced to Prezi presentation software after reading about it in Andrew Macarthy’s excellent blog, I encouraged my year 11s to use it for a presentation task to do with poverty and was very impressed with the results.
It’s a bit fiddly to begin with but fine once you get the hang of it and a great alternative to PowerPoint. With the permission of the authors (Elena, Gaby, Adriana and Teresa for the first and Juan, Ines, Guillermo and Sofia for the second) I’ve included their Prezi presentations below.read more...»
The latest version of Geoff UCAS Economics Guide (2011) is now available for free download. Please complete the brief form below if you would like to download a copy of the guide, which provides information on applying for economics degrees and on building a strong platform for applications to the UK and overseas.read more...»
Want to purchase a property? Chances are that you will need a mortgage to finance the deal and you will also need to find someone prepared to lend you the money. The fallout from the credit crunch continues to haunt the UK mortgage market with monthly loans to property-buyers stuck at very low levels. The average mortgage interest rate on a standard variable rate loan is low but most mortgage lenders have cut the % loan to housing valuation ratio meaning that buyers must find a hefty deposit to clinch the deal. Our Timetric chart (below) is always updated so you can keep up to speed with what is happening to mortgage lending and the cost of home loans in the UK property market.read more...»
Just starting game theory with my A2 students and economists hold in high regard the penalty kick as a real-life example. Technically the kicker and the goalkeeper play a zero-sum game – any gain for one player is exactly offset by the loss to the other side. If you have read Soccernomics you will be well aware of the events that unfolded in the final between Manchester Utd and Chelsea. Basque economist Ignacio Palacios-Huerta had been recording how penalties were being taken and wrote an academic paper on strategies that players and goalkeepers employed. A mutal friend of Ignacio and Chelsea manager, Avram Grant, brought the two men together and subsequently Ignacio sent Grant some facts regarding Man Utd in particular about their goalkeeper Van der Sar. There were 4 main points:read more...»
A wonderful chart showing the long run path of GDP per capita for the USA, Africa, Western Europe and Asia at constant 1990 prices. The sweep of this data makes for a terrific discussion in the classroom. So too does the second chart which tracks UK population and per capita GDP (measured in US dollars at constant 1990 prices)read more...»