Pre-U Economics

Demerit goods in action

Two news stories catch the eye today with respect to demerit goods.

Firstly, the government plans to reclassify cannabis as a class B drug - but will this have any impact on its levels of use? Arthur Ma, in a related blog entry, has explored the issue in greater detail here.

Secondly, alcohol abuse is harming the health and productivity of the UK’s workers. According to the BBC, one on three employees admits being hungover at work.

Asian Rice Crisis

The credit crunch is rivalled, arguably, by increasing food prices as a cause of economic (and human) concern in 2008.

This article from the BBC looks at some of the implications and you can watch/show videos on the rice crisis here.

Interrelated markets and climate change

An article in The Times recently explored the economic implications of reducing demand for oil and energy in the West.

Getting real…?

Despite continuing problems in the financial sector, UK consumers are defying the odds and doing what they know best - shopping.

Mind Map: Credit Crunch

Our A2 macro group mind-mapped the Credit Crunch in a lesson on Friday, a text summary appears below and the original map is also available as a pdf file.

Credit Crunch in 3:07

I teach a General Studies course on Friday mornings and will be looking at the credit crunch and the link between financial and economic crises tomorrow.

Stormy Weather

The UK has been battered by uncomfortable and volatile conditions and fears over damage to property this week - and the weather has been awful as well.

When it rains, it pours, and this is as true for the macroeconomy as anything else.

The Big Question looks at carbon trading

Plenty of environmental economics in today’s edition of the Independent. The regular Big Question feature looks at the costs and benefits of carbon trading in the wake of the government’s support for fresh investment in coal fired power stations. Read The Big Question: What is carbon trading, and will it help in the battle against climate change?

Their editorial lays into Chancellor Alastair Darling for being ready to sacrifice environmental targets because of a faltering economy.

“Environmental levies need two key features. The first is that they be substantial enough to change behaviour. The second, and no less important, is that the proceeds are seen to be channelled into green schemes, or to provide tax breaks for those who make more environmentally friendly choice.”

Read: Make the polluters pay, and give the others a break

Finally there is a feature on how the effects of climate change tend to hit disproportionately the poorest communities around the world - the costs of adapting to climate change are enormous and some regions and communities are least able to cope.

More environmental news and features in the Independent are available here

The Decoupling Debate

The D word - ‘decoupling’ - is at the heart of the debate regarding global economic prospects for 2008 and beyond.

The term refers to the shift by developing economies - and newly industrialising countries in particular - away from dependence on strong demand in the West for their products. 

UK Economy in Charts - March 2008

Our monthly streamed chartroom presentation on developments in the UK macroeconomy is now available here and you can also download it as a PowerPoint presentation direct from the website. It might be useful as a revision resource for students studying current developments in the economy at AS and A2 level. The presentation contains 25 data charts current up to the close of the markets yesterday.

1. A slowdown is underway
2. Although purchasers’ demand remains fairly robust
3. Capacity limits have become less of a problem
4. But firms are under pressure to raise prices
5. Export orders are solid – helped by a falling £ - Euro exchange rate
6. Gloom on the high street?
7. And confidence is dropping sharply
8. On more than one measure
9. Most types of consumer borrowing look softer
10. As the housing slowdown deepens
11. A real turning point for residential property?
12. Expectations data says “yes”
13. Business optimism looks fragile
14. But strong profits will be a support in an economic downturn
15. And the weakening £/Euro will boost the UK export sector
16. A slowdown and a weaker currency should help to improve trade
17. Much will depend on the MPC’s scope to cut interest rates
18. And whether cheaper money actually feeds through the system
19. There are inflationary pressures
20. Not least from food
21. The budget deficit is already pretty large 16 years into a recovery
22. And a wider surge in global prices
23. And government spending will not provide much of a ‘real’ stimulus
24. Can the UK avoid stagflation?
25. Yes we can!