Tim Harford’s new book Adapt is a terrifically good read - just packed with interesting ideas and told with a flourish that makes it tough to put down. Reviewed here. I am really keen for all of my students to read it as soon as their exams are over. I have been teaching government failure this week and have used this talk from Tim at the TedX Conference at Warwick University just a few weeks back. This is an enthralling eighteen minute talk exploring the genesis of the changes in US military strategy in Iraq that turned the course of the battle against insurgents and which successfully undermined Rumsfeld’s appalling unwillingness to tolerate dissenting views. Tim’s opening remarks mention the Battle for Haditha - memorably covered in this film directed by Nick Broomfield.read more...»
There has been much coverage in the last few days of the latest data on China’s population trends and in particular strong evidence about the ageing of her population. The demographic dividend of the fast population growth during the Mao era is well and truly over.
The annual growth of the Chinese population is falling away - the average annual growth was 0.57% over the last decade, down from 1.07% in 1990-2000. And when the age structure of the population is analysed, we find that the number of people over the age of 60 rose by about 48m, reaching 13.3 per cent of the population. China’s total population is now 1.339bn – up 5.84 per cent from the last decade. The number of old people in China has grown by more than the population of Spain over the last ten years and there is growing pressure for a reversal of the controversial one-child policy.read more...»
It has been great to see so many students actively making use of the AS and A2 economics VLE resources in recent days - just under 800 of the 3600 students enrolled have accessed the site since the start of last weekend. Hopefully this will increase as the exams come into final focus. Today in our A2 revision session we did a 30 minute group collab on an A-Z of A2 micro and students did pretty well - flagging up over seventy concepts and ideas relevant to what we have covered at A2. I have now extended the list and linked to them using the VLE glossary. I have attached the key concepts list as a word file and students can access the glossary entries if they have a password for the VLE.
Key terms document
Many of Europe’s newer member states have outperformed established EU countries since they joined the single market in 2004 and 2007. And as a result there has been a process of convergence in average living standards and improved employment opportunities. Europe’s new nations have injected extra dynamism into the region despite inevitable teething problems along the way.
For students revising aspects of EU enlargement here is a streamed version of a presentation I gave to a Tutor2u event in London a few weeks ago
A streamed version of the presentation is available here
Related news issues
Germany expects influx of Polish workers (BBC news, April 2011)
The royal extravaganza is expected to boost the UK economy coffers over the coming months by up to £2 billion with an influx of tourists. Subtract the costs of staging the wedding and it represents the boost needed for the economy.
However, it should be factored in that the lost output in the economy due to the public holiday may have had a greater cost.
Read this article from The Guardian
Keynesian thought has been given renewed prominence in recent years with the Global Financial Crisis, deep recessions in many countries and a remarkable monetary and fiscal policy response across continents. An understanding of some key Keynesian themes can be helpful in evaluating macro policies and the search for macro stability and better economic outcomes. Crucially Keynesian economics focuses on psychology, uncertainty and expectations in driving macroeconomic decisions and behaviour. Animal spirits are vital.read more...»
I have put together a short revision exam-style question for AQA Unit 3 (Micro) focusing on some of the issues / problems facing the European Airline industry. Many of the established airlines are part-state owned and the question of nationalisation, government emergency funding / state aid was highly topical this time last year in the wake of the recession and the volcanic ash crisis. The document can be downloaded below and I have linked also to some other A2 micro revision resourcesread more...»
I have adapted a recent exam question in the global sugar market and the debate about sugar & salt consumption, obesity and market failure to create a new mock exam question for AQA Unit 1 students. It is available for download below.
Topical revision for macro economists, another Hayek Keynes Rap.read more...»
The graph below (source Carpe Diem) shows how manfacturing production in the US is on the up while unemployment in the same sector is rising. What can explain this anomaly?read more...»
I’ve collected together some useful revision resources for my Year 13 students on the topic of Development Economics. Read on for download details…read more...»
Here is my regularly-updated selection of books for economics students keen to demonstrate a commitment to independent thought and active learning. Please reflect and comment on what you have read in your UCAS statement!
I have taken out quite a bit of banking stuff because I think we are all getting pretty bored of this! More this time on the inter-play between Economics, Geography, Biology, Mathematics and History – which I find much more interesting! No author appears more than once! As always I am bound to have made some terrible omissions and I am happy to amend the list based on the recommendations of blog readers. Please do leave a comment below. I have added in some links to relevant book reviews.
Anyway - here is my current selection!read more...»
I am delighted to say that Ian Stewart, Chief Economist for Deloitte has agreed to speak at our annual Economics Teacher National Conference. Ian has a wealth of experience in understanding the ebbs and flows of the macroeconomy and judging the health of corporate Britain as the economy seeks a durable recovery.
He will be presenting Deloitte’s latest view on prospects for the UK with a particular focus on the decisions that businesses are taking on jobs, investment, mergers and takeovers and much more besides.
Ian is the author of the excellent Deloitte Monday Briefings - a tremendous resource for students and teachers who like to have an intelligent and focused updated on key economic developments and emerging policy themes.
The 2011 Economics teacher National Conference takes place at the superb British Library Conference Auditorium, St Pancras, London on Wednesday 29 June 2011 starting at 1030am.
The aim of the day is for Economics teachers from many different countries to enjoy some presentations and discussions on issues of contemporary importance and also to refresh their passion and enthusiasm for this great subject!
Coffee and other light refreshments are available at the venue from 9.30am and the lunch at the British Library is usually tremendous.
Our venue is just a couple of minutes stroll from Euston, St Pancras and King’s Cross. There is a complimentary drinks receptions straight after the event for those who wish to celebrate the approach of summer and the end of the academic year. And an added treat this year will be the chance not only to pay a visit to the British Library itself, but also the newly opened hotel at St Pancras!
There are great prices for departmental deals - both for this event and also the Business Teacher National Conference on Thursday 30th June.
This is a new eight-page revision briefing note for students taking AS and A2 macroeconomics courses on developments in the Chinese economy and their impact on the UK and the wider global economy. Fans on our Facebook page voted for it and we will be adding some more revision briefings in the next week based on the votes and preferences on the page! What is happening in China and in China’s changing economic relationships around the world is and will continue to have a profound impact on the UK and European Economy - this revision briefing looks at some of these connections. Download it here in pdf formatread more...»
When teaching minimum prices, I tend to use examples from agriculture that don’t actually exist anymore so this short video clip on minimum pricing in the Nashville transport market will be a welcome addition.read more...»
Here is an essay plan on this question: Assess the extent to which a rise in imports may affect macroeconomic performance (25 marks). Like many macro questions, the focus is on the longer-term performance of the economy – this requires a brief explanation at the start of the answer – e.g. economic growth, unemployment, inflation and material well-being. The essay plan can be downloaded using the link below:
Here is a revision idea. Take a broad topic - in this case the economics of monopoly - and get students to enter items for an A to Z on that topic. Here is an A-Z relating to monopoly, I am sure we have missed out lots of ideas, can you add some in? If so please leave a comment!read more...»
This revision note considers some areas of the AS micro course where price elasticity of supply can become important in your analysis. The document can be downloaded below:
At A2 level you are expected to be able to use analysis diagrams to show the effects of changes in short and long run production costs on a firm’s prices, profits and output. This two page revision note available to downlaod in pdf format looks at changes in costs and how they might affect pricing in imperfectly competitive markets. Download using the link below
We are on the search for handy revision Mnemonics for use with economics - can people recommend ones that they find useful?read more...»
This revision note looks at possible conflicts between macroeconomic objectives and some of the policy prescriptions for over-coming them. When conflicts arise, choices have to be made about which objectives are given greatest priority. This is a different issue – for example which ought to be the main objective of macroeconomic policy. These choices will vary from one country to another since the needs of different nations will differ according to their stage of economic development.
Download using this link:
Our first entries have started arriving so this is a good time to remind people of the 2011 competition essays and how to enter!
The 2011 Royal Economic Society Essay Competition for students is launched today. The RES judging panel has settled on five essay titles covering a range of macro and micro economic issues. They are listed below. The first prize will once again be £1,000 together with an engraved trophy. The deadline for submitting essays will be Monday16th of May at 2400 hours. All essays must be submitted online using the official entry form.
For 2010 nearly two hundred schools and colleges from across the UK and beyond submitted entries from their students and there were 600 essays entered. We are hoping that the 2011 competition will prove equally popular. The maximum word count for entries is 2,000 words. The word count includes footnotes, but excludes references and bibliography. Please note that entries to the competition should be unique (i.e. not published elsewhere or submitted to other essay competitions.
Here are the selected essay titles…read more...»
The Boston Globe’s Big Picture has just published a set of remarkable photos. Collectively they are a stunning set of images that reminds one of the economic and social costs of the disaster and the nature of externalities - and colleagues may want to return to this resource to stimulate discussion and support visual learners. Here is the link.
Here is a revision note on the economics of twin deficits. Twin deficits refer to a situation where an economy is running both a fiscal deficit and also a deficit on the current account of the balance of payments. The revision note is available for download as a pdf file.
The Australian Government released unemployment figures showing the rate of unemployment falling ot 4.9%. This figure is lower than previously expected and is now now influencing the value of the exchange rate in Australia. The article makes reference to the possible implications on the interest rate in the economy over the coming months to counteract.
Task: The article in the Australian Times could be used as a revision lesson for AS or Year 1 IB Economists to review the links between different macroeconomic variables.read more...»
What should the state sector of the economy provide? How much should be left to the private sector allocating scarce resources through the incentives of the price mechanism? Is the provision of public goods the most important reason for accepting the existence of government involvement in the economy? These questions revolve around the idea of public and private goods – please understand the key characteristics of public goods and why they might not be provided optimally by the private sector – giving government a role in financing them for our collective (social) benefit. A one page revision note on public and private goods designed for AS (Unit 1) micro economics can be downloaded here. Revision_Public_Private_Goods.doc
A revision note on aspects of industries in which there is strong market power among one or a few businesses. Most markets are competitive with a number of suppliers (producers) competing for the demand of consumers. Some are more competitive than others. At AS level it is important to understand some of the factors that lead to market (monopoly) power and to evaluate the costs and benefits of markets where monopoly power exists together with the effects of different types of government intervention. The revision note is available to download here: Revision_Market_Power.doc
The Easter 2011 edition of econoMAX - our digital resource for AS & A2 Economics - is now available for subscribing schools and colleges. Details of the new articles are provided below.read more...»
Japanese consumer confidence fell in the immediate aftermath of the devastating earthquake and tsunami last month. Households across the nation became considerably less willing to purchase consumer durables and people were more worried about their jobs, incomes and overall livelihood. Many Japanese, out of respect for the victims, have also shied away from making luxury or big-ticket purchases.
The Herald and Tribune features and very interesting article on this topic.
Lesson Activity: This article could be a good starting point following the Easter break as a review activity in preparation for the upcoming AS examination in May.
Here is a superb short piece from Jonah Lehrer on aspects of behavioural economics and in particular, the sue of nudges to control calorie consumption in restaurants and to get us to use less energy in our homes. The law of unintended consequences makes a guest appearance - compulsory calorie information on menus in New York City have seen calorific consumption edge higher over five years. Data on relative energy consumption within a neighbourhood have shown only marginal gains in energy efficiency. There is a superb phrase in the piece - “the nudges of policy makers must compete against the nudges of the marketplace…Sometimes, we don’t need a nudge. We need a shove”.
A hat tip to Tim Harford for flagging up the article on his Twitter page - and a reminder that I regard Tim’s new book “Adapt” as one of the must-reads this summer. It is a tremendous book for economics students - reviewed here.
Following on from Geoff’s post on Smartphones and Creative Destruction, and my post on the fantastic video clip on the ideas of politicians vs economists, here is further proof that politicians will often focus on the “destruction” rather than the “creative”.read more...»
In September I highlighted some of the economic changes in Cuba. This caught my eye this morning.
The economic changes may provide students with some food for thought over the merits or demerits of command economy particularly associated with the allocation of scarce goods and services.read more...»
UK businesses are sitting on a pile of cash and need to loosen the purse strings and invest more according to new research from Ernst and Young. Their latest macroeconomic forecast for the UK can be found here.
There has been a shift in the share of total factor incomes flowing to workers and a corresponding rise in the share of profits in GDP (by factor income). Ernst and Young find that wages and salaries in the UK fell from 46.5% of GDP to 45.3% last year, while the share of non-financial company profits increased from 15.9% to 16.2%. The non-financial company financial surplus increased from £56 billion to £71 billion, almost 5% of GDP helped by a fall in interest payments on debt and a sharp fall in dividend payments.
For economists at Ernst and Young, the cash mountain provides a big opportunity for the UK economy. They are urging companies either to step up capital spending commitments including creating extra capacity to export products. Or return surplus cash to shareholders through bigger dividends. The Ernst and Young forecast shows business investment in the UK increasing by 12.3 % this year and another 14.1% in 2012. With housing investment slowly recovering, this easily outweighs the effect of lower public sector investment, pushing total investment up by 5.7% this year and 8.1% in 2012.
Higher investment provides a boost to aggregate demand and also the economy’s productive capacity. And a rise in exports will help to re-balance the economy. For cash to be committed to investment projects requires sufficient business confidence and this is where the Keynesian idea of animal spirits becomes so important to where the UK economy is heading over the next year or two.read more...»
Here are some key terms relating to taxes and subsidies - two key forms of government intervention. We have also linked to recent blogs on these concepts.read more...»
In your AS and A2 economics exams, try to introduce relevant supporting evidence and examples into your arguments. The examiners will always reward reference to recent developments in particular industries and markets, and events in both the domestic and international economy. Exam questions will often say “using the data and your own knowledge”, this is a clear signpost that the exam requires you to bring into your discussion some ideas and evidence drawn from your own reading and exam preparation.read more...»
Here is a selection of key terms connected to competition and monopoly. We have also linked to some recent blog articles on these concepts.read more...»
The Chinese? No, but they’re not far off according to the graphic below from Business Insider and found here.read more...»
No doubt you have found in your revision that many factors can influence the direction of a single economic variable. For most key issues there are many short-term and longer-term contributing factors and strong students are aware of multiple causation and can bring this explicitly into their answers. For example…read more...»
Here is an updated word document covering many of the key UK macroeconomic indicators - focusing on aggregate demand, growth, inflation, the labour market, fiscal and monetary policy, trade and exchange rates. It provides a summary of the data from 2009-2011(forecast) and provides brief comments on each - designed as a revision aid for students taking their AS and A2 Economics papers this summer. The document can be downloaded using these links:
My own students know that I am strongly in favour of open migration and oppose the government’s attempts to impose artificial caps on economic migrants from outside of the EU. A hat tip to Philippe Legrain for spotting this article from today’s Guardian which is heavily tilted towards the longer-term economic and social benefits of migrants for the UK economy. So David Cameron wants to talk about immigration? Bring it on As a partial counter-balance perhaps I should link you towards a piece in the Daily Mail by Andrew Green: Why is the BBC STILL so hideously biased on immigration? I have also linked below to some of our recent blogs on the migration issue. And here is a link to a presentation on the enlargement of the EU that I gave in London back in February 2011.
Key terms related to economic efficiency are provided below and we link to related articles from recent economics blogs
Economic efficiency is about making the best use of our scarce resources among competing ends so that economic and social welfare is maximised over time
Allocative efficiency: Allocative efficiency occurs when the value that consumers place on a good or service (reflected in the price they are willing and able to pay) equals the cost of the resources used up in production. The technical condition required for allocative efficiency is that price = marginal cost. When this happens, total economic welfare is maximised.
Productive efficiency: The output of productive efficiency occurs when a business in a given market or industry reaches the lowest point of its average cost curve. Output is being produced at minimum cost per unit implying an efficient use of scarce resources and a high level of factor productivity
Dynamic efficiency: Dynamic efficiency occurs over time. It focuses on changes in the consumer choice available in a market together with the quality/performance of goods and services that we buy. Economists often link dynamic efficiency with the pace of innovation in a market and also the degree of real competition between rival businesses
Roger Harrabin reports on fresh research on the impact of air pollution on Europe’s natural habitats. A classic example of negative externality effects - already targeted by the EU natural habitat directive, but a regulation that appears to be ineffective.
“Earlier this week, the European Nitrogen Assessment - the first of its kind - estimated nitrogen damage to health and the environment at between £55bn and £280bn a year in Europe, even though nitrogen pollution from vehicles and industry had dropped 30% over recent decades.”
This blog provides revision definitions of concepts related to production, costs and profits and also links to recent revision blogs and revision presentations for students taking their Unit 1 Economics papers. Click to the bottom of the blog for the related revision posts.read more...»
Is the multi-function and ubiquitous smartphone one of the best examples of creative destruction. This article “10 Things Killed by the Smartphone” points to a clutch of devices and products whose demand has been affected by the mass volumes of data-heavy smartphones that now dominate the market.
Nintendo 3DS and Sony PSP
Personal Video Players
Portable GPS Navigation Devices
Personal Digital Assistant (PDA)
Telephone Directory Assistance
Information is a crucial concept in AS micro economics and in this blog we bring together some key definitions related to information issues and also some of the recent blogs and revision presentations on information economicsread more...»
The price mechanism figures heavily in the AS micro syllabus. Below we have provided definitions of some key terms and also link to recent blog items and revision presentationsread more...»
Key poverty concepts are defined here and we link to recent blog articles on these concepts
Absolute poverty: Absolute poverty measures the number of people living below a certain income threshold or the number of households unable to afford certain basic goods and services. The United Nations definition is a severe and persistent deprivation of basic human needs.
Relative poverty: Relative poverty measures the extent to which a household’s financial resources falls below an average income threshold for the economy for example equivalised household income below 60% of median incomes
Poverty trap: The poverty trap affects people on low incomes. It creates a disincentive to look for work or work longer hours because of the effects of the tax and benefits system.
Well, it is in the opinion of my students anyway, and they lay down a challenge to other schools to beat it!read more...»
A few years back we talked of the China Effect - where the rapid transformation of the Chinese economy and the huge growth of high volume low labour-cost manufacturing was acting as a supply-side cause of lower prices in the world economy. A decade or more of this may be coming to an end as the Chinese economy risks experiencing several more years of higher inflation and slower economic growth.
This article from the Telegraph “China inflation threat underestimated” reports on research from economists at Legal & General Investment Management that pinpoints of some of the inflationary impulses in the Chinese economy - notably the surge in credit, higher food and other commodity prices and the rapid rise in wage costs in urban areas as cities find the pool of cheap labour from the countryside is not running behind demand and creating labour shortages. This piece from the Economist provides a super chart on what has happened to Chinese wage costs in recent times. China’s tricky wage dynamics Despite recent increases - wages in Chinese manufacturing in 2008 were still only about 4 per cent of those in the USA.
If the Chinese authorities are truly serious about controlling inflation we can expect further tightening of monetary policy in the coming months driving the Yuan higher and curbing the rate of growth of real GDP. China has a new growth target of 8% per annum. Might this prove to be an over-estimate if the over-heating economy enters a clear slowdown phase?
BBC News: China grew at a robust 9.7%, as inflation hits highs
Al Jazeera: China’s inflation continues to rise
The EU Competition Commission got into a LATHER about alleged price fixing by a number of multinational soap and washing powder producers and in a ruling today they have imposed fines on Unilever and Procter & Gamble €315.2m ($456m) for fixing washing powder prices in eight countries within the single market. An investigation was prompted by whistle-blowing from Henkel, a German competitor (manufacturer of Persil) and so the investigation CYCLE began. Unilever was fined €104m and Procter & Gamble was fined €211.2m. Henkel was not WHITER THAN WHITE but under EU cartel rules, it avoided a hefty fine because of alerting the authorities to the price fixing scheme.read more...»