Small government is beautiful - discuss
Does a smaller Government sector mean more economic growth?
This example of normative economics from The Centre For Policy Studies offers a case that it does.
The CPS is trying to convince you and me, that smaller government leads to lower taxes, less crowding out, more enterprise amongst other outcomes. It is trying to shape decisions about the mixed economy, or change the behaviour of governments and voters.
It might provide some food for thought about what sort of mix of private and public sector is desirable. If you wanted to weigh up the case for more intervention, what would you highlight? Does the data used show that the relationship between government size is based on correlation or coincidence?
BMW - Bavarian Monopolist at Work
BMW have been fined SFr156m ($163m) by Swiss Competition Authorities for restricting the supply of BMW and MINI cars to Swiss purchasers.
read more...»Unit 2 Macro: Evaluation on Supply-Side Policies
Lots of students will be revising the economics of supply-side policies this week with their AS macro paper coming into view. There are different interpretations of what constitutes a supply-side policy measure. I like to label SSP (supply-side policy) to any policy or group of measures where emphasis is given to improving the working of markets, raising factor efficiency, improving the quantity and quality of labour and in lifting the capacity and competitiveness of an economy in a constantly-changing international environment.
Many supply side policies focus on improving incentives and outcomes in the labour market, others are geared towards bettering the performance of markets for goods and services, All of them centre on helping to sustain non-inflationary growth, improve trade performance, lift living standards and create new and fulfilling jobs opportunities.
This revision blog looks in particular at some evaluation points on supply-side approaches:
read more...»Unit 2 Macro: Migration and the UK Economy
A revision blog on the economic impact of migration on the UK economy
read more...»Unit 1 Micro: Revision Presentation on Government Intervention
Here is a short 35 slide revision presentation on government intervention in markets designed for AS microeconomics revision
read more...»Unit 1 Micro: Revision Presentation on the Price Mechanism
Here is a slide share presentation on the price mechanism in action focused in students taking their AS microeconomics papers.
read more...»Improving Evaluation Skills in Economics Exams
Here is an updated version of the WEESTEPS approach to economics evaluation designed to boost the evaluation scores and exam results for AS and A2 students. Paul Bridges is the mastermind behind this superb approach to evaluation - it gives you some great pointers about the evaluative approaches that can be used. Works well for micro and macro - but particularly when you have to evaluate a specific policy intervention in a market / industry / or a macro policy discussion.
read more...»Unit 4 Macro: African Human Development Report 2012
May 15th 2012 marks the day when the African Human Development Report 2012 is published. This will no doubt become a key reference point for students and teachers who are passionate about their development economics.
“Sub-Saharan Africa cannot sustain its present economic resurgence unless it eliminates the hunger that affects nearly a quarter of its people, the United Nations Development Programme (UNDP) argues. More than one in four Africans - close to 218 million people - is undernourished, African governments spend between 5-10% of their budgets on agriculture, well below the 20% average that Asian governments devoted to the sector during the green revolution there.”
Resources:
African Human Development Report 2012
Guardian: Sub-Saharan Africa can only grow if it solves hunger crisis – UNDP
read more...»Unit 1 Micro: Economics of Cocoa Prices
A revision blog on recent developments in the international cocoa market
read more...»Unit 1 Micro: Market Failure Glossary
This blog provides a glossary of many key market failure terms
read more...»Unit 1 Micro: Asymmetric Information
For markets to work, there needs to be symmetric information i.e. consumers and producers have the same level of knowledge about the products, and they know everything there is to know about them. Asymmetric information occurs when somebody knows more than somebody else in the market. This can make it difficult for the two people to do business together. This is an example of information failure in a market
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Unit 1 Micro: De-Merit Goods
This is a revision blog on the concept of de-merit goods
read more...»Unit 1 Micro: Public Bads
A public bad is the opposite of a public good – it provides disutility or dis-satisfaction to people when consumed and therefore reduces our economic welfare.
read more...»Unit 2 Macro: Government Spending
Government spending (or public spending) and in Britain, it takes up nearly half of our annual GDP. Spending by the public sector can be broken down into three main areas:
read more...»Unit 1 Micro: Revision Blogs on Markets and Intervention
Here is a selection of a recent blog resources on topics that appear on the core Unit 1 Syllabus focusing on changing market prices and examples of interventions to address perceived market failures
read more...»Unit 1 Micro: Minimum Wages and Living Wages
The campaign for a living wage has gained renewed prominence in the last year or so. Students and teachers wanting to know more about the minimum and the living wage debate might find this background blog from Channel 4 news relevant and useful. More here on the living wage from the Citizens UK web page.
Competition authorities doing more harm than good?
There have been several examples in the news recently of competition authorities acting in ways which may actually ultimately lead to less competition in several different industries. Read on to find out more.
read more...»Unit 1 Micro: Climate Change Policies - Finding the Right Mix
There are many different market failures when it comes to understanding some of the key environmental problems and challenges of the age. Addressing, attacking and correcting for complex and multiple market failures requires pointing to different policy instruments / interventions. Together can they make a sizeable difference to consumer and business behaviour and lead us away from a “business as usual” approach?
read more...»Unit 1 Micro: Using the Cost-Benefit Principle
The cost-benefit principle is one of those core ideas that can be brought into so many evaluation discussions both in micro and macroeconomics – you should be using it in your papers!
read more...»Unit 1 Micro: Externalities - Deepwater Horizon 2 Years On
This short Al Jazeerah report looks at the aftermath of the Deepwater Horizon disaster and the impact it continues to have on the regional fishing industry. Two years since oil company BP’s Deepwater Horizon rig exploded in the Gulf of Mexico, resulting in a massive oil spill, fishermen in the region are still suffering. The explosion killed 11 people and resulted in the worst accidental offshore oil spill in US history.
read more...»Unit 1 Micro: Revision Question on Road Tolls
I have put together a unit 1 micro markets and market failure question focusing on the economics of motorway congestion and road tolls. It is available as a pdf download if colleagues would like to take a look. I will post some suggested answers in a few days and link back to this blog.
read more...»Royal Mail’s refusal to supply
Here is the sub-heading from the report in today’s Daily Telegraph: “Royal Mail is limiting the number of stamps it supplies to retailers now to ensure it profits from record price rises later this month.” The report goes on “Royal Mail confirmed on Thursday that it had imposed a cap on the number of stamps every shop could buy. Retailers said it was refusing to restock them when they exceeded their allocation.” Ian Murray, the shadow postal affairs minister, says that he will be writing to regulator Ofcom about this rationing of supplies.
read more...»Unit 3 Micro: Revision on Nationalisation
Here is a revision presentation for A2 microeconomics on the economics of nationalisation. This is the process of taking an industry or assets into public sector ownership by a national government it raises important issues concerning economic efficiency and welfare in different markets.
read more...»Unit 1 Micro: Ban on cigarette display advertising
In a fresh move to reduce consumption of cigarettes, legislation has come in force banning the displays of cigarettes for sale in large retail stores. The display ban will apply to shops of more than 280 sq m (3,014 sq ft). Newsagents and small stores can display cigarettes until 2015, giving them time to refit shelves and cabinets.. It is part of the armoury of interventions that have been tried over the years to change consumer behavioural - from real terms increases in cigarette taxes to bans on advertising and ever-stronger advertising and health campaigns. The focus of the ban is to influence younger smokers by removing cigarettes from point of sale display - will it be effective?
This news report below from Al Zajeerah looks at the new measure
read more...»2012 Economics Revision: Ways to Improve your Paper
Here is a revision presentation offering ideas for stronger evaluation and analysis in your AS and A2 economics exam papers. Ten strands are suggested for students who want to build really good answers especially to evaluation questions.
read more...»Unit 1 Micro: The Collapsing Price of Carbon
The price of carbon emissions permits inside the EU’s emissions trading system has fallen to a record low. A sharp fall in total CO2 emissions in Europe has been the driving factor behind the fall in the carbon price. Last year Germany’s CO2 emissions fell by 1.2% and the UK saw a 7.2% reduction. The overall decline in the 27 country ETS was 2.4% in 2011 causing the carbon price to drop below 7 Euros per tonne.
read more...»Unit 1 Micro: Revision on Producer Subsidies
Here is a planned answer to an exam question on producer subsidies
“Discuss the likely effects of a EU beef subsidy on the market for beef production in Wales”
read more...»Unit 1 Micro: Nottingham introduces workplace parking tax
Nottingham has become the first major city in the UK to introduce a compulsory workplace parking levy (WPL). Businesses in Nottingham with more than 10 parking spaces will have to pay an annual charge to the council of £288-per-space.
Critics of the scheme argue that the levy will add to costs and damage profits at a time when the local economy is struggling to drag itself out of recession. They believe that the levy will be an unfair extra charge for people who work shifts or live in areas without adequate public transport have to drive. The Taxpayers’ Alliance which is a fierce critic of what they see as inefficient local government opposes the WPL and say that 96% of Nottingham businesses in the area oppose the charge, with 62% of those businesses claiming that they would now consider relocating their interests.
The council’s defence is that the revenue from the levy will be hypothecated - that is the money will be earmarked to help fund improvements to Nottingham’s tram system, infrastructure with long term economic benefits. Other transport projects will be allocated funding from the tax.
Pricing to ration scarce parking space is an attempt to manage demand for car use within the city centre and to tackle congestion particularly at peak periods. Other cities are said to be interested in launching similar schemes and Nottingham’s experience may well tell us how quickly it will be rolled out in the years to come. A key decision for many businesses is whether to pass on the charge to their employees.
How will the charge be likely to affect:
1/ Demand for city park and ride schemes?
2/ Demand for Nottingham’s tram system?
3/ Demand for tele-working among Nottingham’s businesses
4/ Profits for businesses with more than 10 workers inside the parking levy area?
5/ Demand for public car parks
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The 21st IEA Hayek Memorial Lecture
Last week I attended the IEA Hayek Memorial lecture, given by Elinor Ostrom, Nobel laureate, on common resources and looking beyond government regulation.
The lecture took two parts: a presentation from Professor Ostrom, which was mainly focused on the research methodology, and a Q&A session, where anecdotal research evidence was more forthcoming.
read more...»Unit 1 Micro: Revision on Maximum Rents in Housing
The housing sectors of many towns and cities around the world have often been the target for different forms of government intervention including planning regulations, subsidies and direct price controls.
Price controls are legal restrictions on how high or low a market price may go. They can take two forms: a price ceiling, a maximum that price sellers are allowed to charge for a good, or a price floor, a minimum price buyers are required to pay for a good.
Our focus in this blog is the decision by the authorities in New York to extend arrangement for rent controls for a million rent-regulated units in the Big Apple. This provides an opportunity to look at the basic supply and demand analysis for housing rent controls and build a critical evaluation of some of their effects.
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