This is a revealing perspective on the challenges facing China in producing enough food to feed the hundreds of millions of Chinese squeezed into their ever growing cities.
China's policy makers are trying to increase the size of farms to exploit economies of scale and get their farmers to focus on cash crops. But the reality is that China will have to import a huge amount of food in the years to come - this creates big opportunities for farmers in China's trading partners.read more...»
Here is an extract from a recent speech by Charlie Bean at the Bank of England - the full speech can be found here: www.bankofengland.co.uk/publications/Docume...
For the economic recovery to be both sustained and sustainable we really want to see three things happenread more...»
One of the most significant roles of a modern government is to ensure that the economy performs to its full capacity. The government has to consider the performance indicators like inflation, unemployment and economic growth and devise policies to achieve their aims. In this session we will consider the options that fall into the fiscal and monetary policyread more...»
In this session from our macro revision workshop, we are focus on the performance of the UK economy over recent years and see how economic growth appears to follow a cyclical patternread more...»
Falling unemployment, declining inflation and stronger growth – we are seeing a better picture for the UK in 2014? But can it last?
After several years of weak expansion, the UK economy is enjoying a relatively strong cyclical recovery. Can the UK continued to experience a recovery in output, jobs and investment? Will the recovery be balanced and sustainable? How resilient is the UK? What are some of the major threats to growth in 2014 and beyond? This revision presentation hopefully provides some context.read more...»
A revision presentation used at the workshop in Dubai on aspects of supply-side competitiveness in the UK economyread more...»
The nominal exchange rate is a key adjustment tool to help countries avoid traumatic balance of payments crises. And when a country is in a crisis, external adjustment is delayed and more difficult under a pegged exchange rate regime. These are the central findings of research by Atish Ghosh and colleagues, to be presented at the Royal Economic Society’s 2014 annual conference.read more...»
American economist Hyman Minsky was an interesting character who pops up around the edges of many of the things I read. The BBC posted an article about him that I recommend, with the provocative title Did Hyman Minsky find the secret behind financial crashes?
I’ve just summarised what the article describes as 5 key ideas that he presented in his work.read more...»
The UK’s official inflation benchmark, the Consumer Prices Index, slid to 1.7 per cent in February – the lowest for more than four years. What are some of the main factors causing inflation to fall below target?read more...»
A significant 5 year rail infrastructure investment plan adds weight to the belief that capital spending will be a major driver of the next phase of the UK economic recovery. Network Rail is state owned, a not-for-profit business whose commercial returns are reinvested into the rail network.read more...»
Britain’s current account deficit for 2013 as a whole (4.4% of GDP) was greater than in any other developed economy and the widening current account gap is raising fresh concerns about whether the UK's economic recovery is balanced and sustainable.read more...»
There seems little that is stopping the surge in London house prices at the moment but do you think the rapid acceleration of prices is good for either London or the wider UK economy?read more...»
Here is a good example of an inward investment project likely to create a strong multiplier effect for the economy of East Yorkshire.read more...»
I thought it worthwhile sharing my resources which I have been collecting for students (and teachers alike). I have been promoting them on Twitter (@Economics_KSF) through scoop.it but for those of you not on there, the link for the scoop.it boards are here:read more...»
The government wants more new homes to be built, so too do hard-pressed home-buyers facing a continued problem of low property affordability. But cautious construction companies are reluctant to press ahead favouring share buy-backs (returning money to their shareholders) and only a limited expansion of new building.read more...»
Here is a revealing quote from a special study published in March 2014
"Simply put, too much of the city’s essential infrastructure remains stuck in the 20th Century—a problem for a city positioning itself to compete with other global cities in today’s 21st Century economy."
Which city do you think this report was referring to?read more...»
For years the government has tried to lift research and development spending as a share of national income - but seemingly to no avail. The latest data finds that the UK is spending less on R&D than any other EU country. What might this mean for the supply-side competitiveness of the economy?
The data finds thatread more...»
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 including the Bank of England. If output is well below its potential, nominal interest rates should be kept low, to try to stimulate the economy. And a large output gap should keep cost and price inflation low. Prices are hard to put up in a depressed economy.
See: http://www.bbc.co.uk/news/business-23145755 for a discussion of the changes made to the policy of forward guidance.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...»