Get Summer 2014 Right First Time with tutor2u Exam Coaching & Revision Workshops
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...»
It isn’t supposed to be like this. The 'upside' of the recession and financial crisis was a steep depreciation in the value of sterling. That should have made our exports cheaper and imports dearer, thereby helping the UK to close its huge current account deficit. But as the graph above shows, it just hasn’t happened.read more...»
The numbers are breath-taking and they reflect the growing scale and prominence of Gulf air carriers in the international aviation market. Emirates, Etihad and Qatar Airways together have just ordered over 200 of new Boeing 777X aircraft, a more fuel-efficient version of the 777 jumbo. Here we have the monopsony power of major buyers coming face to face with the duopolistic market power of the dominant aircraft manufacturers - US plane maker Boeing, and European rival Airbus.
Check out our revision notes on monopsony power using the link belowread 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...»
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...»
The Confederation of British Industry has today launched a report called Our Global Future: The Business Vision for a Reformed EU - The report calls for further EU reform not least the completion of the single market in particular in services and the new internet economy. They argue for more free trade deals with other countries and regions.
The report produces estimates – based on past academic studies – that EU membership adds £62bn-£78bn a year to UK gross domestic product, equal to the combined economies of northeast England and Northern Ireland. That works out at £3,000 per household and £1,225 per individual. The fact sheets from the report can be found hereread more...»
In a recent assignment, A2 students were asked to write a 500 word profile on each of two development economists of their choice and to capture their key ideas and connect to one or more current issues in development. I will be adding some of their responses to the economics blog. Here Ben Evans focuses on the work of Daron Acemogluread 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...»
Here at Tutor2u we are really looking forward to the launch of a new programme on BBC - Talking Business with Linda Yueh. Linda has spoken at several of our Tutor2u events in recent years and her ability to communicate important and often complex ideas to a wider public has been clearly evident in her presentations. This is a programme well worth tuning into and sharing with your students. Click here for details. See also: China's Transformation - The Long View (Linda Yueh at the Tutor2u Conference)
Economics student Anthony Beaumont writes on the policies that might sustain an improvement in the Croatian economy as it settles into being the 28th member nation of the EU single marketread more...»
The rate of unemployment in Greece has reached a record of just under 28% of the labour force. To put this into context, in 2008 just before the Global Financial Crisis engulfed much of the EU economy in recession, Greek unemployment was 7.8% (equivalent to where the UK jobless rate is today). Youth unemployment is staggeringly high - the latest figures show that 58.8% of people under the age of 25 are out of work.
There are some tentative signs that the Greek economy may be at a turning point from the trough of a deep and persistent depression. After six years of full-blown recession some macro indicators suggest that confidence is seeping back for businesses and consumers and that the government debt crisis might ease a little. Tourism, which accounts for about a fifth of Greece's economic output and one in five jobs is having a strong year - tourism exports represent an injection in the Greek economy's circular flow of income and spending. Chinese tourists seem to be coming to Greece in much greater numbers!
But Greece has suffered gravely over the last few years - the level of real GDP is 25% lower than it was before the crisis and some economists have started to refer to Greece as a sub-merging economy whose trend growth rate is now negative.read more...»
With a deep recession and persistently high rates of unemployment among younger people. fears are growing about a brain drain in Portugal as highly qualified university graduates leave the country in search of a better life. Peter Wise, Financial Times Lisbon correspondent, reports on what the trend means for the troubled Portuguese economy. Losing "the best of a generation" poses important long-term threats to the competitiveness of the Portuguese economy. Some are moving to Angola and Brazil, the UK has also attracted skilled workers in health care, banking and IT.read more...»
Tomorrow the UK will see its newest High Street bank open 631 branches. However, this new bank will be called the TSB (Trustee Savings Bank) which is a brand that was first created over 200 years ago. The creation of the bank comes from EU directives to split up the Lloyds TSB group and create greater competition in the banking market and counteract any advantage Lloyds TSB might have from being Government-owned.
This link will take you to a short Powerpoint stimulus presentation to be used in class. The presentation gives a brief explanation of the TSB story and has links to a few interesting video clips as well as the branch finder web page so that you can show your students where their nearest TSB is located.
Britain's exports of whisky have been growing strongly in recent years helped by a lower pound and fast-rising demand from whisky drinkers in emerging markets. Whisky exports set to rise to £4.5bn by 2017 even though sales to traditionally strong markets in the European Union have stalled because of persistent recession in countries such as Spain, Portugal and Italy. This Channel 4 news report looks at the experiences of two whisky producers - one a small-scale manufacturer and the other the giant Diageo to consider prospects for UK exports as a way of strengthening the recovery,read more...»
Here is a superb five minute news video from the Financial Times that could serve as an excellent introduction to both micro and macroeconomics. Helped by EU structural funds, Portugal has invested huge sums in their motorway network; indeed Portugal has four times more motorway road space per head of population than the UK. However beset by persistent recession and the lagged effects of high fuel prices, many of these gleaming new roads are virtually empty - a waste a scarce economic resources. Road traffic has fallen more in Portugal than in any other European country in the past 15 months. Peter Wise, Lisbon Correspondent, reports on why empty roads provide a revealing insight into the depth of the country's recession.read more...»
Potential defaults in the Euro zone have been in the news again. In Portugal, the ruling coalition parties and the main opposition Socialists have been unable to agree on a European Union-led bailout plan after days of talks. Yields on the country’s 10 year bonds have approached 7 per cent, compared to the 1.5 per cent in Germany. There has been some improvement this week on the news that an early general election has been avoided, but yields still remain over 6 per cent.read more...»
John Kay looks at the lack of evidence for the effect of quantitative easing as a driver for economic growth. He is excellent on some of paradoxes of the impact of QE on the macroeconomy of countries where it has been tried.
The main effect of QE according to Kay is to boost asset prices and the one certain consequence of this is that those who have assets - such as homeowners and stocks and shares - will benefit.
We strongly recommend that ambitious students take a look at some of the other articles written by John Kay - check out his web site by clicking this linkread more...»
Cambridge economist Mike Kitson argues here that the Euro Zone will eventually collapse after a number of difficult years. As pressure again mounts in the Eurozone leading Cambridge economist Michael Kitson says the euro might 'stagger on' for a few more years but eventually it will disintegrate. Policy makers have been papering over the cracks in the Eurozone and causing major problems for many member countries which are trapped by tight fiscal rulesread more...»
Whilst the UK appears to remain the most Eurosceptic of the EU member states, other countries are lining up to join the exclusive club we're so keen to distance ourselves from. I suppose it is like having a season ticket to watch Manchester United when you are a Manchester City fan.
Croatia is the latest member to join the EU despite all of the recent Economic problems in Greece, Spain, Portugal and Cyprus, and joins the party just as the collective is about to make a huge trade agreement with the USA.
As an interesting lesson-starter (this activity will last about 10 minutes), are your students able to identify the location of all 28 member states if they are presented with a 'blank' map of Europe. The Balkan and Baltic states pose the greatest challenge!
The Powerpoint file accessed below poses that question. Teachers can run the show and then reveal the 28 countries on their screens or give out the student worksheets (with corresponding map) before going through the correct answers. Note - there are two possible worksheets - the first asks students to apply a number to the given list of the 28 states and the second is blank and asks students to fill in the names of the 28 states in the 'map' order (and is therefore a little more challenging).
Click on this link to access the file. This link will take you to a Google Drive post where you can then download the file to your own computer.
The struggle to achieve meaningful and significant reform of Europe's controversial and hugely expensive farm support system will probably go on for many years. The latest attempt at changing the basis for payments made by the Common Agricultural Policy (CAP) appears to have fallen foul of intensive lobbying by farm groups in some of Europe's largest and wealthiest countries.
In this BBC news video Roger Harribin reports on the watering down of reform proposals. The CAP began in 1962 as a way to increase food production. It costs around $75bn (£48.7bn) per year in subsidies to farmers, funded by taxpayers. The Commission wants farmers to earn some of their subsidies, for example by protecting the environment, but farm ministers are fighting back. The subsidies available to some of the largest farm businesses can top Euro 1 million each year and they seem set to stay.read more...»
Hundreds of millions of people around the world are escaping poverty and becoming middle class. The explosion of new consumers in China, India and other economic powerhouses is changing the global balance of power. The BBC website has a new series on exploring the effects of this shift in global economic power and influence - click here for further research and watch the video below
SPOTTING and identifying new species is always exciting. And the last couple of years has seen the emergence of a new type of economic commentator, the recovery denier. Paul Krugman, the Nobel prize-winning economist, wrote a piece at the end of last year in which he compared the current situation to that of the 1930s. On Newsnight recently, another Nobel economist Joseph Stiglitz poured scorn on my assertion that the US economy has recovered.
But what does the data tell us? In the 1930s, output in America fell by nearly 30 per cent from its 1929 peak. This time, the fall was only 3 per cent, and the level of output is now higher than it was below the crash. The latest US labour market figures show continued growth in employment. Over 5m net new jobs have been created over the past three years, all of which have been in the private sector. Unemployment has just fallen to a four year low.
The scale of the new London Gateway Super deepwater Port is truly stunning and its importance to the economy as a trading nation is hard to underestimate - Britain will have a new world class hub port in a key location impacting on many trades and services in and around the South East and beyond. It has taken 10 years to establish and build this huge new infrastructure project, building eventually started in 2008.
Behind the port sits Europe's largest logistics park connected to the South east by road and rail.
This Financial Times news video looks at the background to the project - it is a good example to consider of the macroeconomic consequences of the investment. What price a new Thames Estuary airport (supported by Boris Johnson) to amplify the transformative impact in the years ahead?
Update: BBC news (November 2013) - click hereread more...»
Here are some links to resources covering the accession of Croatia to the European Union as the country becomes the 28th member nation of the EU Single Market. This BBC news article tracks Croatia's progress from isolation to full membership of the EU. For a fact sheet on Croatia this handout from Eurostat looks pitch perfect! We have also produced a one-page case study factsheet on Croatia for students and teachers - Croatia_Joins_EU.pdfread more...»
The pricing of carbon emissions needs to be sensitive to both long-run climate outcomes and short-term concerns about the macroeconomy. Research by Reyer Gerlagh and Matti Liski reconciles these two timeframes and comes up with optimal prices of between €20 and €130 per ton of carbon dioxide.
An updated version of my EU economy study companion is being researched and written at the moment - but in case this might be useful as a revision resource, here is a stream version of the January 2012 document.read more...»
The UK's membership of the EU is among the hottest of topics at the moment. With the UKIP party doing so well in recent elections and various senior political figures starting to show their real views on UK membership of the EU club even Barrack Obama was giving his opinions yesterday. This doesn't mean that the topic is any more likely to turn up on macro-economic exam papers over the next few weeks at AS and A2 (the OCR AS paper has already been and gone! Hope it went well) - the papers will have been written before the more recent votes.
However, the economic question about the UK's membership has been an important topic for quite a while and so it is worth having a look again just in case it rears its multi-lingual head. Added to that, students of economics will be in an ideal situation over the next few years to be able to make an informed decision in any referendum, based upon having some of the facts and figures and having developed their outstanding evaluative skills on the matter!
With this in mind, follow this link to find a short (10 minute) teaching resource that asks that very simple question - What are the economic arguments for and against remaining in the European Union? The Powerpoint file has a 4 minute timer to give students the chance to think about the answer and then a nice little graphic illustrating some possible answers that they could use in an exam. The BBC have also produced a succinct balanced webpage on a similar question.
The distinguished American academic economists, Carmen Reinhardt and Ken Rogoff, have been very much in the news. Their 2009 book, This Time is Different, was a comprehensive examination of financial crises over the past 800 years. The work received many plaudits and awards. They suggested that when the ratio of public debt to GDP in a country rose above the 90-100 per cent range, the chances of a financial crisis increased sharply. And the consequence was that economic growth in the country would be adversely affected.
The European Union's carbon emissions trading scheme is under huge pressure at the moment and there are many who believe that the market-based system of carbon pricing has effectively collapsed.
- There is a fundamental over-supply of carbon permits in the market - on some estimates, an excess of supply of over 840 million permits (one permit = one tonne of CO2)
- This has caused a sharp fall in the market price of carbon to below Euro 5 per tonne
- At such low prices there is an incentive to use coal rather than cleaner natural gas for electricity generation
- Latest figures show that greenhouse gas output in Europe fell in 2012 by 1.4% - but this is largely the result of very weak economic growth in the EU
(Source: The Economist) - click here
Fantastic interactive website here lets you check out migration flows both inward and outward from any country you care to look at.
Increasing foreign language proficiency could be a key policy tool for encouraging greater mobility of labour between countries of the European Union and reducing the huge differences in rates of youth unemployment. According to research by Professors Ainhoa Aparicio-Fenoll and Zoe
Kuehn, including foreign language studies in the compulsory school curriculum fosters migration across European countries.
The recent debacle in Cyprus has essentially been shrugged off by the markets. The European Central Bank vigorously asserts the crisis in the Euro zone is over. So why is there continued unease about the financial viability of countries such as Spain and Portugal, a morass into which even the French are now being dragged?
Economic theory helps us understand a bit more about why this is the case. One thing which the last few years in Europe have shown very starkly is the massive difference between debt which is denominated in nominal terms and that which is in real terms. Nobel Laureate Chris Sims makes the point clearly in his recently published Presidential Address to the American Economic Association.read more...»
A newly constructed Social Progress Index has been unveiled for the first time with the hope that over time, it might become as widely quoted and recognised as the Global Competitiveness Index as a benchmark of progress made by individual countries in achieving sustainable, balanced and inclusive growth and development. In the 2013 rankings, Sweden comes first and the United Kingdom is second.read more...»
The annual NORFACE migration conference at University College London this week has generated plenty of new research papers on the economics of international migration, a topic that of growing significance for students of globalisation, competitiveness, innovation and growth. Some of the key findings are summarised below together with external links to relevant articles and news reportsread more...»
The European Union has just released some new figures on the spread of hourly labour costs among the member nations of the European Union. Labour costs are made up of wages & salaries and non-wage costs such as employers' social contributions e.g. national insurance payments in the UK. Students who have covered aggregate supply and demand theory might be able to consider why changes in labour costs can have an effect on key macroeconomic indicators such as inflation, demand, exports and growth.
Hourly labour costs are different from unit labour costs - the latter takes into account the productivity of people employed. For example, a 5% rise in hourly labour costs will leave unit labour costs unchanged if productivity rises by 5% over the same time period.read more...»
Germany’s low unemployment is in large part due to the ‘Hartz Reforms’, which started as early as 2003 and have reduced the long-run rate of unemployment by 1.1%. That is the central finding of research by Matthias Hertweck and Oliver Sigrist, to be presented at the Royal Economic Society’s 2013 annual conference.
Unemployment rates across much of Europe have surged to unprecedented levels in recent years, particularly among the southern countries. In contrast, German unemployment has continued to fall even during the Great Recession. The authors conclude:
‘Our results build a solid basis for the macroeconomic effectiveness of such labour market reforms. This is particularly important for policy-makers across Europe who are currently planning to undertake similar structural reforms.’
The scale and depth of the unemployment crisis in Europe is confirmed by fresh figures released by Euro Stat. Unemployment in the Euro Zone was 12.0% in February 2013 and the jobless rate for the European Union as a whole was 10.9%. Last month there were 26.3 million people counted as out of work in the twenty-seven countries within the single market, 19 million of whom live in Euro Zone countries. In the last year alone, unemployment in the Euro Zone has jumped by over 1.7 million but this aggregate figure hides large country differences and persistent regional and local variations. Here is the contextual data to take into the exam:
Here are some links to relevant articles and research sources for June 2013 OCR F585 pre-release case study. Our own toolkit is now available - click here for detailsread more...»
Here is a selection of resources on the Cyprus banking crisis and the controversial bail-in of uninsured large depositors. Particular credit to the team at Saxo Bank for an excellent info-graphicread more...»
Geoff and the team are hard at work preparing their comprehensive support pack for teachers and students preparing for OCR A2 Unit F585 on the Global Economy.
We're hoping to have the F585 Toolkit ready to despatch by Wednesday 27 March and we'll email it out to colleagues who request it over Easter if they have already broken up for the holiday.
The OCR F585 Toolkit can be ordered directly online here or by downloading and completing this printable order form.
The Toolkit provides unrivalled analysis and evaluation of each of the 5 F585 research extracts: namely
Extract 1: The birth and growth of the eurozone
Extract 2: New EU member states and the euro
Extract 3: Estonia’s economic growth and development
Extract 5: Estonia’s progress towards sustainable development
The economics news, and this blog, has recently featured the debate between those who favour more government spending on public infrastructure and those who favour sticking to the role of austerity, in the search for growth - see the debate (or spat) between Krugman and Sachs, Vince Cable's article in the New Statesman and Liam Fox's speech to the IEA last week for a range of different views. The idea that more UK spending on 'shovel-ready projects' (if such a thing exists) would help to kick start the economy through multiplied growth of GDP suggests that we don't spend enough. And this view would be borne out by those who suffer damaged car tyres from potholes, hold-ups on the roads and railways from lack of maintenance, and delayed or re-routed air travel when the airports can't cope with adverse weather. However, an article in the Wall Street Journal this weekend suggests that the UK's spending is well ahead of other countries,and that Germany in particular has a real problem with aging, collapsing infrastructure.
Robert Peston has an interesting piece on his BBC blog, considering what the UK's GDP growth would look like if it was possible to extract what he calls the 'bad bits' - financial services and North Sea oil and gas extraction - both of which are in serious decline. He suggests that we have been too dependent on these two sectors, and that both are now in serious decline. In particular, that the global financial services industry is now protecting itself by becoming much more national and less internationally interconnected, so that the City - as the world's most open and global financial centre - has therefore suffered.
Mark Austen considers whether the UK economy has on balance benefited from being outside of the Euro Area in recent yearsread more...»
Evaluating the UK’s macro performance outside of the Euro Zone
- Decision made in 2003 that the UK would remain outside
of the single currency
- UK remains a full member of the single market
- Supportive of further EU enlargement but distanced from deeper fiscal / banking intregration
Crucial question both in the short and medium term is whether non-participation in the Euro makes a significant difference to key macro outcomes
- Real GDP growth, estimated Trend growth (LRAS)
- Core CPI inflation and inflation expectations
- Employment and unemployment rates
- Trade balances (with EU and beyond)
- Trends in relative productivity and per capita incomes
Having German exchange students in my lesson has provided a super opportunity to discuss the position of the German economy within the Euro Area and to compare and contrast macroeconomic indicators between the UK and Europe's largest economy. Here is a selection of some of the video clips that have been used as prompts for discussion.read more...»
I am teaching aspects of the European single currency this week, naturally there are many charts that tell important stories about the macro challenges facing countries inside the euro area. I have made a file of charts available for download and I hope this might be of help to teachers covering the Euro for Unit 4 macro. See the link below:read more...»
This has to be my new favourite story, and it will work particularly well for A2 but for AS too, with elements of micro as well as macro.......
Did you know that China produces 80% of the world's supply of garlic?
Did you know that police in Britain, Ireland, Austria and Poland arrested smugglers for illegally importing at least €3m worth of garlic into the EU last year alone?
To fully understand trade, we must understand the value added at each stage ...... a crucial line in a new report from the OECD on the challenges of measuring the value of trade in a globalised world with deeply integrated supply chains. This is an important issue, traditional trade data rarely tells us the full story - a key evaluation argument that can be made in Unit 4 macro papers.
For example, the OECD report finds that one-third of the total value of motor vehicles exported from Germany actually comes from other countries, while nearly 40% of the total value of China’s electronics exports come from foreign sources.read more...»
An updated glossary of key terms for AS macroread more...»
Here is a link to Paul Mason's recent documentary on the rise and fall of the Spanish economy. A superb hour on the travails of one of the key countries inside the Euro Zoneread more...»