Unit 1 Micro: Revision on Rice Prices
A revision blog on developments in international rice prices
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: Revision on Elasticity of Demand (for Rice)
Here is a planned answer to an exam question
“Assess whether the demand for rice is likely to be price elastic or price inelastic”
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 Cartels
Here is a planned answer to this Unit 1 question
“Explain how a producer cartel might affect the supply, market price and output levels of a commodity as well as total revenue for producers”
read more...»Unit 1 Micro: Brazilian coffee buffer stock hit by falling prices
Just a few years ago, Conab, Brazil’s official crop bureau was busy buying up surplus supplies of Brazilian coffee to support the weak global price of high quality arabica coffee. Over the years Conab has accumulated large stockpiles of coffee in their warehouses. Some estimates put the 2002-2003 stockpile purchases at just under 4 million kg together with 1.9m kg bought in 2007-08. The 2009-10 buffer stock purchases are much higher - exceeding 91 million kg. That is a lot of coffee to hold in reserve!
In theory a buffer stock scheme should be profitable when stocks are purchased at a low price and then off-loaded onto the market when prices are higher. Indeed Conab was planning just such a sale earlier this year before favorable weather and the speculators intervened. Better than expected coffee harvests in Brazil have prompted a steep fall in coffee prices and the buffer stock has postponed an intervention into the market.
The coffee price drop is a far cry from last year. Arabica coffee prices hit a 34-year high in March 2011 amid fears of a shortage. Since then, much has changed. From a peak of $3.089 per pound nearly a year ago, prices are down roughly 40 per cent to $1.851 per pound.
Inventories of high-quality beans remain low, but the threat of a shortage has vanished as Brazil is expected to see a bumper harvest this year. This is in contrast to a number of other coffee-growing countries - but Brazil remains a dominant force in the market.
read more...»Unit 1 Micro: Inequality - The Rise of Fuel Poverty
A new report headed up by Professor John Hills from the LSE highlights the growing risks of fuel poverty facing millions of people in the UK and especially those living in lower-income families. At present, the definition of fuel poverty based on whether a household needs to spend more than 10 per cent of its income each year on energy. But this measure has been criticised because it ignores the significant seasonal variation in energy bills and the financial distress that a really large bill can have on people with little or not savings to fall back on.
read more...»Unit 1 Micro: Breaking Down the Cost of Gas
High gas prices impact on millions of households whose energy bills have soared in recent years and have led to a steep increase in fuel poverty among lower-income families. Studying the market for gas is interesting from a micro-economic perspective and a recent article in the Times (covered by a paywall) provided an overview of the breakdown of the cost structure of a typical energy bill from suppliers such as British Gas
read more...»Unit 2 Macro: Might Oil Prices Bring another Recession?
The international price of crude oil has been rising strongly in recent weeks and threatens to be an external factor driving an already weak Euro Zone and UK economy back into recession.
read more...»Unit 2 Macro: The Dash for Gas in Mozambique
In the last twelve months two huge discoveries of natural gas have been made in the East African country of Mozambique. The latest - a deepwater discovery - is said to hold over 210 billion cubic metres of natural gas and investment in exploiting the field could be the major cataylst for a rapid phase of growth and development for one of the world’s poorest countries. The country has large untapped oil, coal and titanium reserves in addition to the gas. According to the UK Trade and Investment body, within 15 years Mozambique could be Africa’s second largest coal producer (after South Africa) and one of the largest coal exporters in the world.
Can it benefit in a sustainable way from exporting these resources or will they prove to be a curse on development?
For many years Mozambique has been afflicted by a brutal civil war which ended in 1992 and then a series of natural disasters including floods in 2001 and 2001 which destroyed much of its infrastructure.Floods were replaced by a calamitous drought in 2002 but more recently the economy has achieved strong growth and progress in lifting people out of absolute poverty. That said, 50% of Mozambicans living on less than $1 a day, foreign aid accounts for nearly half of government spending and there remain severe doubts about whether the dividends of an export-boom in natural resources will feed through the the majority of the population.
The Mozambique government has a 10% stake in the newly-discovered gas fields, it sold a licence to the Italian company Eni to explore for new gas reserves and Eni has committed to building a multibillion-dollar liquefied natural gas terminal in the country as a distribution platform to export mainly to fast-growing Asian economies.
Other transnational companies are investing in Mozambique. Vale, a Brazilian multinational is spending over $3 billion to rebuild and extend the 425 mile Nacala railway and connect it to a deep water port so that Mozambiquan coal can be exported.
Putting the infrastructure in place will take several years and gas production on a huge scale may not start before 2016. Although new industries brings risks as well as opportunities, the potential for a step change in development in the country is enormous.
read more...»Economics at the Movies - Foods that Make Billions
Here is a link to a you tube video from the BBC looking at the modern food business and the huge profits to be made from the breakfast cereal industry. Part of the series The Foods that Make Billions (cereals, bottled water and yoghurt)
The Foods That Make Billions - Cereals
Unit 1 Micro: Biomass Subsidies and Timber Prices
If you are a fan of laminate flooring, wood panelled walls or neat wood-based fencing for the garden, the chances are that you will be paying higher prices in the years ahead. Despite the Britain offering a temperate climate for a plentiful supply of wood and a well organised system of land registry and plantation management, the UK market price of different types of timber has shot up over the last two years.
read more...»Unit 1 Micro: Supply Shortages Drive Peanut Prices Higher
Supply shortages in key growing regions have caused the price of peanuts to surge to record highs. Peanut prices in Europe are 60% higher than a year ago and the cost of peanuts in the USA has more than doubled in the last twelve months. The price spike is the result of lower production from India, Argentina and the United States.
read more...»European Economics: Resources on the CAP
This blog entry will provide a regularly updated set of links to resources to the European Union’s Common Agricultural Policy and attempts to reform this contentious and complex system of farm support.
Check below for suggested links
read more...»Unit 4 Macro: Prospects for the African Economy
In recent times there have been several new reports focusing on growth and development prospects for the African continent. Contained within them is plenty of useful background analysis and comment for students and teachers who spend time looking at developments and issues affecting Africa as part of their economics studies. Follow the links below for more details:
read more...»Economics of Deforestation
The Human Development Report 2011 reported that deforestation is a severe problem. In the last two decades, Latin American and Sub-Saharan Africa have experienced severe forest losses, especially when compared to the rest of the world.
For economists the economic and social costs of rapid deforestation represent a telling example of the tragedy of the commons where the pursuit of individual self-interest can risk a permanent destruction of natural resources that undermines the sustainability of communities and societies for current and future generations. The United Nations calculates that deforestation and degradation is responsible for nearly 20 per cent of global greenhouse gas emissions.
Will the REDD programme make a difference?
REDD stands for Reducing Emissions from Deforestation and Forest Degradation in Developing Countries and is designed to provide financial incentives funded by advanced nations for developing countries to preserve their forests and instead invest in low-carbon paths to sustainable development.
The UN estimates financial flows of up to $30bn could come from REDD and related initiatives - the scheme effectively allows rich countries to offset their carbon emissions from domestic industries and consumers by funding clean low-carbon development projects in developing countries. But it is highly controversial and opposed by many organisations such as Friends of the Earth and the World Rainforest Movement.
In this blog we have put together some web resources on the issue of deforestation - focusing on causation, consequences and also on some of the policy approaches that might work to bring about behavioural change.
Futures trading explained in 1 minute
This is an excellent, very short video that gets across the key point about futures contracts
read more...»Unit 1 Micro: Economists attack food price speculation
Food prices are now rising by up to 10% a year in Britain and Europe and a new forecast from the United Nations predicts that prices can be expected to rise at least 40% in the next decade. Whilst conventional theories of changes in supply and demand conditions can be used to explain some of the increase in food prices, many economists are concerned that speculation by hedge funds and other investors has amplified the natural volatility of prices driving food prices away from fair values and contributing to a huge rise in global food poverty and hunger. These days, cocoa, fruit juices, sugar, staples, meat and coffee are all now global commodities, along with oil, gold and metals.
Is this the moment to legislate to limit the scope for speculative activity in food markets? The video below provides an excellent introduction to speculation in food markets - it features Neil Kellard, Professor in Finance at the University of Essex
read more...»Unit 4 Macro: World Food Day
Here is one of the short information videos launched by the World Bank on the occasion of World Food Day - excellent as an introduction to the economics of high and volatile world food prices. Every night, 1 billion people go to bed hungry because food is too expensive.
read more...»Can the “invisible hand” solve Africa’s poverty?
At last night’s Senior Economics Society at Oundle we had a riveting talk by Hywel Rees-Jones, Managing Director of CDC, which covered so many areas of the issues of development economics. The talk was entitled “Can the invisible hand solve poverty in Africa?” Whilst conceding that some of the statements were broad generalisations across a variegated continent, Hywel discussed some of the key issues facing Africa.
read more...»Some more ‘creative’ economics props…
Geoff’s post about being ‘dangerously creative’ got me thinking about exactly what props I’ve got lying around my classroom, so I thought I’d share them with the rest of you…
read more...»Zondle Game: 10 Question Quiz about OPEC
OPEC continues to be in the news in an age of high and volatile crude oil prices. Here is a ten question quiz on OPEC created using Zondle designed to test student knowledge of this important international group.
AS Micro: Fears over a century of hunger
Nigel Cassidy reports in this video from BBC news on fears that the world faces “a century of hunger” if the international community cannot agree on new rules regarding food prices. Food security is a hugely important global economic, political and social issue and one of the best resources for keeping up to speed on this is the Guardian’s dedicated page of articles. Here is the link. Check the links at the bottom of the blog for past articles on this topic.
Evan Davis ‘Made in Britain’ - and a new trade data tool to play with
The first episode of a 3-part series, Made in Britain, was shown on BBC 2 last night, and was a really useful hour for economics (or business) students. It examined how and why Britain has lost thousands of manufacturing jobs over the last two or three decades in the low-value part of the sector, with some film of outsourcing shot in China as well as plenty of archive material from this country, but argued that the move to high-end, low scale manufacturing has become Britain’s area of comparative advantage in industrial manufacturing. This included Evan being taken for a test drive in the new McLaren sports car, which was clearly an amazing experience - watch the clip to see his reaction! And this surely emphasises the Economic Importance of Manufacturing to the UK economy - see below! Sadly this episode is not to be broadcast again, but is available on i-player for another 22 days and is thoroughly worth watching. I will certainly be setting the recording machine for the next two programmes, on Mondays at 9.00 on BBC2 - episode 2 is to focus on how innovation can help keep Britain ahead in the global economy.
read more...»AQA ECON4 Context
Geoff’s blog about ECON4 (see below) is fantastic advice, and I hope that my A2 students will spend much of the next 2 days working their way through it, checking they are secure in their knowledge of the topics he has identified, and can apply them to the context areas suggested there. If they have finished all that, and want yet more up-to-date evidence there is plenty in the news in the last few days.
read more...»UK economy - as seen by the Bank of England
Students who want to be able to quote current data and trends in the UK economy could do worse than spending some of their revision time picking out the highlights from the Bank of England’s Agents Summary of Business Conditions, published today.
There is plenty of opportunity to find evidence which can be used to back up evaluative arguments in macroeconomics papers here.
Key points
1/ Growth in domestic markets is sluggish at best, but investment in the export sector looks better, probably driven by the rise in exports to emerging markets, Germany and the US.
2/ The service sector looks far from buoyant, with so much spare capacity that investment intentions are low and recruitment in consumer services is down.
3/ Unsurprisingly, import and raw material prices are driving a need to pass on cost push inflation to buyers, although many found that their power to pass on price increases to consumers was very limited, in spite of widespread awareness of the increase in costs - reflecting fears that price elasticity is very high at the moment.
AS Micro: What´s really behind the oil price rise?
The price of oil continues to rise ($114.61 per barrel) and there a number of reasons put forward why this is so, none perhaps more pertinent than the reason explained in this WSJ article.
read more...»AS Micro: Rising Global Food Prices
This Euro News video report (8 mins) looks at the background to the rise in global food prices and the economic impact. I have linked below to related blog posts on the issue of the economics of food price inflation (also known as agflation)
read more...»
AS Micro: The volatile price of crude oil
Few commodity prices are watched as closely as the international price of crude oil. Brent crude is currently trading at over $122 a barrel - the highest price for over two years. Our Timetric chart is constantly updated and will always show the latest price. We have included below links to many of our recent blogs on the economics of oil prices and some of their micro and macro economic effects.
read more...»International Economic Indicators
I am encouraging my A2 pupils to make better use of macroeconomic data to support their points. I have found the TradingEconomics website very useful for providing an up-to-date selection of indicators for a wide range of countries.
read more...»
