Get Summer 2014 Right First Time with tutor2u Exam Coaching & Revision Workshops
There’s been lots of media coverage of a recent anniversary: it was five years ago in March 2009 that the Bank of England took the dramatic step of cutting interest rates to their lowest level in more 300 years. And there they have stayed - with some predicting they will stay low for a while longer yet.
How about a quick bit of analysis (why the Bank took the move) and then some evaluation? I’m suggesting an evaluation based on a recent Guardian article. Has it been a good move? Well – it depends – on who you are, for a start.read more...»
Here is a revision presentation for an AS Macro topic - economic growthread more...»
Here is a revision presentation for an AS Macro topic - the multiplier effect, the accelerator effect and Keynesian economicsread more...»
Here is a revision presentation for an AS Macro topic - the economic cycleread more...»
Here is a revision presentation for an AS Macro topic - macroeconomic equilibriumread more...»
Most of the commentary on the UK’s economic recovery focuses on consumers. Are they taking on too much debt again to finance their spending? Is there a bubble in house prices, as people get excited about bricks and mortar again? Certainly, in terms of its sheer size, spending by consumers is by far the biggest component of GDP, making up around 60 per cent of total domestic expenditure.read more...»
Here is a revision presentation for an AS Macro topic - aggregate supplyread more...»
In this independent research assignment, Year 12 Economist Doug Feagin considers some of the factors influencing the macroeconomic performance of Mexico - a fascinating country and one of the MINT cluster of countries discussed by Jim O'Neill in his recent programmes for the BBC.read more...»
Here is a revision presentation for an AS Macro topic - aggregate demandread more...»
Here is a revision presentation for an AS Macro topic - the circular flow and macroeconomic objectivesread more...»
A selection of video resources for students and teachers interested in Keynesian economicsread more...»
A selection of video resources for students and teachers interested in Keynesian economicsread more...»
Robert Peston looks at the astonishing investment in urban infrastructure in China in recent years - 30 new airports, 26,000 miles of motorways and a new skyscraper every five days have been built in China in the last five years - required viewing for those interested in a key aspect of Chinese economic growth and development. Link to How China Ruled the World (BBC World)read more...»
He might have only had his feet under the Governor's desk for 8 months but BOE Governor Carney has announced changes to the role of the MPC for a second time as forward guidance has been overhauled.
Norway has for many years recorded an enviable macroeconomic performance. It regularly tops the international rankings for the Human Development Index (HDI) and it has one of the highest figures for GNI per capita (PPP) among developed nations. It records huge current account surpluses in excess of 10% of GDP each year and strong growth and surging revenues from oil and gas production have given the Norwegian government a fiscal position that many other countries would die for! Unemployment is the lowest of any European country.
That said there are some signs that the economy is suffering from an over-dependence on oil and gas - it is at risk of the Dutch Disease?
The Dutch Disease is the idea that economic growth from exploiting and exporting natural resources can crowd out investment in other sectors, in part due to a strengthening exchange rate which causes a sharp rise in relative unit labour costs. High wages are also seen as a factor behind a trend decline in the average hours worked and a rise in the drop-out rate from high school education.
Manufacturing wages in Norway have climbed by more than 150 per cent since 1997 against just 50 per cent in the US and Germany They are now 60-70 per cent higher than the weighted average of Norway’s trading partners, meaning “that for every hour worked here we need to be 60 per cent more productive”. (FT, 7 Feb 2014)read more...»
Celebrations in Ireland as the credit ratings agencies no longer regard Irish government debt as ‘junk’, according to the BBC. What does this mean and why does it matter? Here are some bond market reminders and links, helping to explain how governments borrow, and at what cost.read more...»
In this short interview from the Financial Times, John Authers discusses with Roger Bootle, managing director of Capital Economics about the sources of the resurgence in growth in the UK economy. Bootle argues that there is little sign of economic re-balancing, consumption is the main driver of recovery and net exports are subtracting from growth at the moment.
The current account deficit is widening - Bootle find this a deeply depressing shift and hints that the UK economy remains heavily dependent on exporting to weak-growing European markets.read more...»
New data on the UK economy shows another quarter of above trend growth. Here is an updated six chart presentation on the economic cycle that might be useful for teaching macro in the classroom. Download as a powerpoint fileread more...»
Here are ten questions for students wanting to check their understanding on supply-side economic policies .... and improve their bobble shoot tekkers at the same time! Courtesy of our sister site Zondleread more...»
The concept of the’ output gap’ is central to mainstream macroeconomics. It is not merely of academic interest. The Office for Budget Responsibility (OBR) has a specific requirement to estimate the output gap, which it defines formally as “the difference between the current level of activity in the economy and the potential level it could sustain while keeping inflation stable”. The output gap is a key consideration for central banks around the world. If output is well below its potential, interest rates should be kept low, to try to stimulate the economy. And a large output gap should keep inflation low. Prices are hard to put up in a depressed economy.read more...»
The coming year looks like it will be a good one. At the start of each of the past five years, the economic scales have been tilted down, and the challenge has been to look for factors which might have tipped them back up. This year, the balance is reversed. The onus lies with the pessimists to prove their case. Not that there are any shortages on this score. For example, King Canute of Twickenham, aka Vince Cable, has solemnly commanded that house prices must stop rising, for fear of a new bubble.read more...»
An important landmark has been reached in the construction of Crossrail, London's £14.8bn rail programme. The tunnelling of 21km of twin-bore tunnels dug beneath the capital is well underway and the project is now at the half way stage assuming things run to plan. The first tunnel was completed in November 2013.
The scale of the project is epic - one of a number of infrastructure projects that are underway or in the planning stage in the UK. the importance of infrastructure investment is often debated by economists. They can affect both aggregate demand and aggregate supply and have wider effects on a nation's competitiveness.read more...»
In November 2013, Anthony Beaumont from Eton College organised a panel event on lessons to be learnt from the Global Financial Crisis. The highly successful event was attended by over 500 students from nearly forty schools and colleges. The panel included Anne Pettifor, Ha-Joon Change, Paul Ormerod and Crispin Odey. Tutor2u was pleased to sponsor the event by producing a colour booklet containing some relevant articles to the discussion. If you would like to have a look at it, please check it out using the streamed presentation below.read more...»
I hope I'm right about this, but there should be plenty of blogs in 2014 on the impact of any economic recovery on inflation, unemployment, trade and so on. At this stage, even the idea of an economic recovery might seem a bit optimistic (Paul Ormerod looks back over 2008-2013 here). After all, we're only talking about the economy getting back to where it was in 2008, in GDP terms.read more...»
The end of a year is a good time to take stock. For the first time since 2007, prospects for the UK for the forthcoming year look unequivocally good. But looking back, just how bad have the last few years been across the developed world as a whole? And how do they compare with previous recessions in a historical context? To keep you out of suspense, the answer to both these questions is ‘pretty bad’. In one key respect, it has been awful.read more...»
If you didn't quite grasp the importance of agglomeration economies in driving and sustaining growth and wealth creation in cities, then this wonderful piece from Bridget Rosewall will do it I am sure! It highlights the importance of vision and a willingness to take risks in bond-funded infrastructure projects in London (and elsewhere). Bridget Rosewall's new short book is available direct from the publishers - click here for details
Two cartoons to illustrate two key issues: Britain doesn't export enough (especially goods) and so has a large current account deficit.
That's not to say that the UK doesn't have significant exports markets - but where?read more...»
Employees in the UK are not being denied their fair share of economic growth, according to research by João Paulo Pessoa and Professor John Van Reenen, director of the Centre for Economic Performance at LSE. Their investigation of claims that wage growth has become ‘decoupled’ from productivity growth finds that decoupling has been overstated and cannot be used to justify redressing the balance between wages and profits.read more...»
An initial change in aggregate demand can have a much greater final impact on the level of equilibrium national income. This is known as the multiplier effect
It comes about because injections of new demand for goods and services into the circular flow of income stimulate further rounds of spending – in other words “one person’s spending is another’s income." This can lead to a bigger eventual effect on output and employmentread more...»
Here is a revision presentation on the economics of producer and consumer subsidies as forms of government intervention in markets. There are a number of up to date examples highlighted together with an evaluation of the benefits and costs of subsidy payments. This is designed as a revision aid for unit 1 students taking their microeconomics papers.read more...»
Long term youth unemployment is a persistent structural problem for the British economy - this BBC news article provides a ray of hope as Nestle announces extra investment in their training / apprenticeships schemes for younger workers. A more pro-active approach from larger businesses would be welcome - offering paid experience to help break the catch-22 of no job without experience, no experience without a job. Nearly one million young people (16-24) are unemployed in the UK, while youth unemployment in Ireland is 28 per cent with more than 65,000 young people out of work.read more...»
Here is a thoroughly updated (20123) 94-slide revision presentation on aspects of fiscal policy - designed for student and teachers taking the AS macro paper.read more...»
I've recently looked at the issue of a smaller slice of GDP going to wages, and here are a couple of links and updates on the minimum wage discussion. For those of you who follow this topic, you’ll also perhaps be familiar with the idea of a living wage, which is based around the argument that minimum wages are too low anyway.read more...»
This topic is of profound importance. It gets the heart of a fundamental economic issue: the distribution of income. When national income rises, does that extra income go into the pockets of workers or capitalists?
The answer is clear cut: labour is getting a smaller slice of the pie. How and why might that be happening, and what might be done? Here are links and summary of a couple of articles, plus a great Economist video clip.read more...»
UK immigrants who arrived since 2000 are less likely to receive benefits and less likely to live in social housing than UK natives. What’s more, over the decade from 2001 to 2011, they made a considerable positive net contribution to the UK’s fiscal system, and thus helped to relieve the fiscal burden on UK-born workers.
The positive contribution is particularly evident for UK immigrants from the European Economic Area (EEA – the European Union plus three small neighbours): they contributed about 34% more in taxes than they received in benefits over the period 2001-11.
These are the central findings of a comprehensive analysis of the fiscal consequences of immigration to the UK, published today by the Centre for Research and Analysis of Migration (CReAM) at University College London.read more...»
Suyash Raj Bhandari considers some of the ways in which the rapid expansion and adoption of mobile technology in Africa can act as a spur to growth and development on the continent. We link also to some useful background video resources on this issue.read more...»
BBC Newsnight explores the latest UK growth data and holds a discussion about the durability and nature of the upturn in economic fortunes. Excellent background for evaluating this crucial stage of the cycle.read more...»
Here is a set of ten charts on aspects of the UK economic cycle and growth story for recent years - designed as a possible teaching / handout resource for teachers on an AS macro courseread more...»
This is an updated revision presentation covering some of the factors that determine short run aggregate supply (SRAS) in an economy. Click here to take a quick revision quiz on short run aggregate supply.read more...»
This is an updated revision presentation on aggregate demand in the UK economy - designed for AS macro students. Revision notes on aggregate demand can be found here. Click here to take a revision quiz on aggregate demand.read more...»
I just love the phrase ‘irrational exuberance’. It’s the title of book by Robert Shiller who has just won a Nobel Prize in Economics. But the phrase was coined by the US Federal Reserve Board Chairman, Alan Greenspan, in a speech given at the American Enterprise Institute during the Dot-com bubble of the 1990s.
I will make no attempt to tackle the complex issues that these top Economists were articulating, and instead give a few examples to convey the basics: it’s just not safe to assume economic agents are always making rational choices based on transparent, accurate information.read more...»
Young adults in England have scored almost the lowest result in the developed world in international literacy and numeracy tests. A study by the Organisation for Economic Co-operation and Development (OECD) shows how England's 16 to 24 year olds are falling behind their Asian and European counterparts. England is 22nd for literacy and 21st for numeracy out of 24 countries.
New Labour and the educational establishment harangued us for years about the stupendous success of the system, as record numbers of both passes and A-grades in GCSE and A-levels were registered year after year. The OECD study, by no means the first of its kind, confirms what many suspected. Grade inflation was rampant, and the statistics had as much meaning as the pronouncements about production levels made in the Soviet Union. Actually, that is unfair. When the Soviet Union said 10 million boots had been produced, they really had been. They might have been poor quality and all left-footed, but the boots did exist. It now turns out that many people with GCSE passes can barely read and are virtually unable to add up.read more...»
The entrepreneur is considered crucial in economics: so crucial that they are even described as a factor of production, listed alongside land, labour and capital. Supply side economic approaches often recommend policies that will encourage and support entrepreneurs, as a way of stimulating the economy.read more...»
On the World Bank twitter account, President Jim Kim is quoted as saying that "Properly managed, new minerals wealth could transform Africa’s development." Back in June 2013, a new report from the African Progress Panel looked at this important issue and set out an agenda for maximising Africa’s natural resource wealth and using it to improve well-being.
My own students have been researching the economics of natural resources and whether they can be a blessing and/or a curse to countries seeking sustained growth and development. I just wanted to share one or two of these essays with you because I was delighted with the depth of the independent research on show and the quality of evaluation in their arguments.read more...»
Does migration harm developing countries? Professor Paul Collier is interviewed by the Guardianread more...»
Changes to key interest rates by central banks have a significant impact on economic activity during periods when the economy is expanding. Unfortunately, they seem to have virtually no effect during recessions – the time when the stimulus of monetary policy is most needed.
These are the central findings of research by Professor Silvana Tenreyro and Gregory Thwaites, published by the new Centre for Macroeconomics at the London School of Economics.read more...»
Here is an updated presentation on aspects of the natural resource trap or natural resource curse issue facing low (and also high) income countriesread more...»
There’s been plenty of recent coverage of the fact that Britain needs more investment for a sustained, balanced recovery. Why aren't firms investing more? Many firms are flushed with cash. Interest rates are at a record low. As The Economist notes, profits have been booming in America, reaching the highest proportion of GDP since the second world war. Given such buoyant conditions, you might imagine that businesses are investing like crazy to take advantage of all those great opportunities. Not a bit of it. The ratio of business investment to GDP has picked up since the depths of the financial crisis, but is still close to the lows of previous cycles. Instead, businesses are handing cash back to shareholders, a tactic once reserved for executives who had run out of ideas. In 2011 the value of British share buy-backs was equal to 3.1% of GDP.
Enter a new theory shedding light on this puzzle – why might investment be so low?read more...»
Over 400,000 new cars were registered in the UK last month, the highest number for five and a half years. And while this increase of 12% over sales in September 2012 still cannot compare with Mercedes 21% rise in sales in China, it must surely be a sign of recovery in the UK economy.read more...»
A revision presentation on aspects of the links between investment and economic growth. Plus some slides on the causes of the so-called Middle Income Trapread more...»