Euro crisis hits Eurovision
Amidst the depths of concern about where the Greek crisis and the eurozone might take us, can I offer a lighter note. Putting aside UK contingency planning to deal with mass immigration and Bankia’s request for a 19bn bailout, perhaps the ultimate indicator of the crisis is the news that Spanish TV has instructed their entrant to the Eurovision Song Contest that she is not to win.
If Pastora Soler wins with her ballad Quedate Conmigo (Stay With Me), then according to the rules of the contest the public broadcaster of the nation that wins must host the following year. And Spain’s broadcaster TVE cannot afford that at the moment.
Surely this explains how/why countries choose their Eurovision entry, and is a great example of game theory which we should use in the classroom?
Greek Euro Exit Flowchart
Here’s a good one for the end of the week, if you want a discussion regarding the possible outcome(s) of the € currency crisis, or a handy revision tool. This Guardian interactive page is very helpful.
Unit 2 Macro: Migration and the UK Economy
A revision blog on the economic impact of migration on the UK economy
read more...»Unit 2 Macro: Human Development Index (HDI)
The Human Development Index (HDI) forms part of the annual human development report and is a composite measure of economic and social welfare that has three main components. At its most basic it focuses on longevity, basic education and minimal income and progress made by countries in improving these three outcomes. The inclusion of education and health indicators is a sign of successful government policies in providing access to important merit goods such as health care, sanitation and education. World Human Development Map
1. Knowledge: First an educational component made up of two statistics – mean years of schooling and expected years of schooling
2. Long and healthy life: Second a life expectancy component is calculated using a minimum value for life expectancy of 25 years and maximum value of 85 years
3. A decent standard of living: The final element is gross national income (GNI) per capita adjusted to purchasing power parity standard (PPP)
“Human development is the expansion of people’s freedom to live long, healthy and creative lives; to advance other goals they have reason to value; and to engage actively in shaping development equitably and sustainably on a shared planet. People are both the beneficiaries and the drivers of human development, as individuals and in groups” Source: HDR Report, November 2010
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Unit 2 Macro: The Output Gap
How much spare capacity does an economy have to meet a rise in demand? How close is an economy to operating at its productive potential? Has the recession damaged the economy’s productive potential? These sorts of questions all link to an important concept – the output gap. The output gap is the difference between the actual level of national output and the estimated potential level and is usually expressed as a percentage of the level of potential output.
read more...»Peston on The Eurozone
As the Eurozone continues to be bufferted by instability in Spanish Banks, and uncertainty over Greek membership of the single currency. Robert Peston fronts a programme on The Euro on BBC2 tonight.
It remains to be seen if he offers any answers to Mervyn King’s observation, that the UK biggest trading partner, the euro area, is “tearing itself apart without any obvious solution,”
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012
The quarterly Inflation Report is an opportunity for the Bank of England to flesh out their latest forecasts and thoughts on the direction of the UK economy and it is safe to say that the May report will probably be best remembered for a remarkable statement from the Bank of England Governor Mervyn King.
“We have been through a big global financial crisis; the biggest downturn in world output since the 1930s; the biggest banking crisis in this country’s history; the biggest fiscal deficit in our peacetime history; and our biggest trading partner, the euro area, is tearing itself apart without any obvious solution. The idea that we could reasonably hope to sail serenely through this with growth close to the long-run average and inflation at 2 per cent strikes me as wholly unrealistic.”
In short:
* Economic growth for 2012 - forecast has been cut to just 0.8%
* Consumer spending will continue to fall this year as real living standards for millions of people are squeezed
* The rising cost of borrowing in the wholesale money markets is increasing costs for banks and is putting upward pressure on the price of business loans and mortgages
* Now sees significant chance of negative annual GDP growth in 2012. Raises near term inflation forecast - CPI inflation inflation to fall back to target before the middle of 2013
* It may take a long time to get the UK economy back to previous growth / inflation paths: ““There’s no obvious reason to believe we can’t get back to original path [of economy pre-crisis] but may take 10/15/20 years” - a realisation of the severity of the shock to the global financial system and the aftermath
* Weak growth forecasts for 2012 assumes that there will not be a collapse / breakup of the single currency
Bank governor warns of eurozone crisis ‘storm’
Bank of England warns of euro crisis ‘storm’ (BBC news video)
A sticky wicket for the Bank (Stephanie Flanders)
Bank of England Inflation Report Data Sections
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Eurozone Crisis - Lessons Learnt
Last week I attended a very interesting lecture at the LSE on the Eurozone crisis, given by Leszek Balcerowicz, a Polish economist who is former chairman of the National Bank of Poland and Deputy Prime Minister.
The following blog outlines his thoughts, but also includes useful links to articles to read.
Using the crisis as a case study will hugely benefit A2 students as it encompasses many of the topics covered in the syllabus.
Grexit - Andrew Balls on Greece and the Euro
Following on from Ben Christopher’s article, a BBC Radio 4 interview with Andrew Balls, an investment fund manager, and younger brother of The Shadow Chancellor on the possibility of a Grexit - Greek exit from the Euro.
read more...»How do we promote growth in Europe?
Read on to find out about an interesting BBC News report published today investigating what can be done to promote growth across Europe…
read more...»Knoema: ‘The Youtube of Data’
I have found Knoema incredibly useful for collecting data and imagine it would be an excellent site for teaching colleagues and researchers, particularly with its focus on Economics. The Guardian’s data team have a good article on it today.
read more...»Unit 4 Macro: Spanish unemployed head to Argentina
Catastrophically high unemployment in countries such as Spain are causing people to leave the Med in search of work elsewhere and thousands are trying their luck in South America. This short video from Al Jazeerah news looks at the growing number of people heading to Argentina looking for a job or perhaps the chance to start a new business. Watching it is a chance to revise some of the factors that affect the geographical mobility of labour? This Economist report looks at some of the causes of geographical immobility of labour.
read more...»Unit 4 Macro: The Euro Zone Crisis (Revision)
Here is a revision blog on some of the key economic challenges facing the seventeen member nations of the Euro Zone or Euro Area
read more...»Unit 2 Macro: Revision on Interest Rates and the Exchange Rate
The exchange rate measures the external value of sterling in terms of how much of another currency it can buy. E.g. in July 2011 £1 would buy you $1.65 and Euro 1.17. The daily value of the currency is determined in the foreign exchange markets (FOREX) where billions of $s of currencies are traded every hour. The value of the pound in the currency markets depends in how strong is demand for the currency relative to supply
Many factors affect the external value of one currency against another and one of these factors is the level of interest rates in a country compared to other economies. Money moves around the world economy seeking the best risk-adjusted rate of return. The rate of interest available on deposit in the banking system of a particular country is a factor that might drive what are known as “hot money” flows into and out of a particular currency.
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 4 Macro: Pain in Spain as Fiscal Austerity Bites
Over a million people supported a general strike in Spain last week in protest at the announcement of the deepest fiscal squeeze in Spain’s post-Franco history. Corporation tax has been increased (in contrast to the UK where business profits tax is being cut), departmental budgets are being slashed and energy bills are rising. There are wage cuts for civil servants and unemployment benefits are being held - cut in real terms. This is fiscal austerity on a huge scale and carries big political risks.
Faisal Islam from Channel 4 wrote in his blog that “to inflict numerical statistical austerity on a country with mass unemployment and already in recession is shock therapy that I cannot remember for an industrialised nation.” One cannot help make comparisons with the stronger economic situation in Germany where it has just been announced that public service salaries will rise 6.3 % over the enxt two years. This will boost consumption, increase demand & contribute to growth as Germany continues to recover from the 2009 recession.
I have put together a selection of charts on key recent developments in the Spanish economy focusing on growth, unemployment, the size of the fiscal deficit and other key macro indicators. There are also some links to newspaper coverage of the budget cuts and some news video clips.
read more...»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 3 Micro: EU Imposes Further Price Cap on Mobile Phone Companies
For several years the European Union Competition Commission has been targeting the oligopolistic mobile phone industry accusing it of damaging consumer welfare with high roaming charges when people are travelling and working within Europe. Yesterday marked another landmark in the battle between the regulators and the industry.
read more...»Austerity - Portuguese experience
Those who are interested in the ‘austerity’ title for the RES essay competition might find this article on the BBC website useful. Today there is a general strike planned in Portugal, in protest against the country’s austerity measures. Portugal’s three main parties all voted in favour of stringent austerity measures for the country. The new government, voted in last summer, has privatised several industries, cut public sector wages and raised taxes, including VAT. They have been praised by Brussels for their approach, and the latest government estimate put its budget deficit for 2011 at close to 4% of GDP, well below the official target of 5.9%. In this interesting piece of writing, many different perspectives are offered of the effects of these measures, ranging from an increase in bad behaviour in schools to an increase in home-grown vegetables.
Unit 4 Macro: Video Resources on the Euro Crisis
Here is a selection of news video resources that I have been using when teaching the economics (and politics) of the Euro Zone crisis
read more...»Unit 4 Macro: Enlarging the EU
Here are some links to video resources on prospects for further enlargement of the European Union single market.
read more...»Unit 1 Micro - Labour Migration and the Economy
Migration from one country to another has become an increasingly important feature of our globalizing world and it raises many important economic, social and political issues. About 200-million people — about 3% of the world’s population — now live in countries in which they were not born. In the United Kingdom in 2010, the number of international migrants as a percentage of the population rose above 10% for the first time after several years of high rates of net inward migration
read more...»Hours worked vs Productivity
Much of the stuff written about Greece over the last months has accused the Greek people of all kinds of things - living beyond their means, failure to pay taxes, and laziness among others. Recent OECD data, used by Tim Harford in More or Less on Radio 4 (link to the podcast here), suggests that Greeks are not lazy - they actually work longer hours per person than any other European country. However, analysis of the figures a little more depth, which GDP per worker, when it is used as a measure of productivity, putting Greece almost at the bottom of the table. The data (more detail in the article here) does come with a health warning, as unlike figures such as CPI or LFS unemployment it is not collected according to agreed international methods but by individual national statistics authorities. However, it could be useful for students to analyse likely reasons for the difference in number of hours worked and productivity between countries such as Germany and Greece.
The UK comes a rather mediocre 14th in both tables, by the way.
Unit 3 Micro: Volkswagen targets growth markets
Here is a one minute news clip packed with nuggets of good business economics. Profits have more than doubled at German car-maker Volkswagen after the company delivered a record number of vehicles last year. It delivered more than 8.2 million vehicles, up almost 15% on 2010. Listen and watch for information on their acquisitions and competitive strategy especially when targeting fast growing markets in emerging economies especially China, India and Brazil.
read more...»Greek Debt - Its Over, Totally Over!
Another great piece of work by the team at the Guardian here using Xtranormal. This one tries to explain the current situation regarding the Greek debt deal. Is it over? Sorted? maybe not…
read more...»The Economics of Climate Change - Stern 5 Years On
Lord Nick Stern tonight gave the first of three lectures on the ethics and economics of climate change as the annual lecture series in honour of Lionel Robbins started at the LSE.
It is over five years since the publication of the Stern Report and much has happened in the intervening period. Stern however was at pains to emphasise that his core message remained undimmed, namely that the costs of inaction are enormous but the costs of early action to cut emissions are manageable. We have seen in recent years rapid technological change much of which is hugely encouraging in taking us closer to de-coupling the relationship between production and consumption and carbon emissions. But more is needed, Stern is arguing in these three lectures for a new industrial revolution, a deep set of changes to production processes and technologies that happens across every sector. The economics and politics of how progress might be made in moving towards a new revolution will be the focus of the second and third lectures.
LECTURE 1 - Tuesday 21 February 2012
What we risk and how we should cast the economics and ethics
LECTURE 2 - Wednesday 22 February 2012
How we can respond and prosper
LECTURE 3 - Thursday 23 February 2012
How we can get there: building national and international action
Pinterest: Board on Developments in the EU Economy
Here is a new macroeconomic board drawing together news flow on key developments in the European Union economy as the continent struggles to overcome the financial, political, economic and social crisis: Pinterest European Economy Board
Unit 4 Macro: King on the UK Economy
Here are some notes from watching and listening to the Bank of England Inflation Report press conference. As always there was much for students of macroeconomics especially those keen to pick up some of the key thoughts of policy makers as we strive to achieve a sustained recovery.
read more...»China bans its airlines from paying EU carbon tax
On 1st January this year, the EU introduced an Emissions Trading Scheme (ETS) which levies a charge on flights in EU airspace based on carbon emissions. They estimate that this will add between 2 and 12 euros to flight tickets. Airlines are required to purchase emissions permits, like utilities and heavy industry in the EU, and airlines that do not comply face fines of 100 euros for each tonne of carbon dioxide emitted for which they have not surrendered allowances. In the case of persistent offenders, the EU has the right to ban airlines from its airports.
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