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.
Oceans at grave risk
The tragedy of the commons and the grave consequences for the state of marine ecology are highlighted in this new report. Covered with passion in this blog. Climate change, pollution and over-fishing are two fundamental problems for the oceans. More details here from the International Programme on the State of the Ocean (IPSO) website.
The report identifies a number of important policy approaches to tackle the problems - The scientists say that the ‘precautionary principle’ must be used in terms of oceanic impacts, in other society shouldn’t don’t proceed with activities unless they are proven to be largely safe for marine ecosystems. And they argue for much stringer use of property rights by widening the size of international marines of the sea.
TED Talk: Jeremy Jackson: How we wrecked the ocean
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...»Do you agree that the government should provide support to the UK car industry?
This is a fairly classic A2 macroeconomics question, and one that the European Automobile Manufacturers Association has been considering at their meeting in London last week. Their conclusion? That non-European governments should scale back assistance for their own automotive industries, but at the same time governments in Europe should support the industry’s efforts to cut car emissions.
read more...»Unit 3 Micro: Economies of Scale in Solar Power
How about this for economies of scale in the renewable energy industry? A new photovoltaic park has opened in Les Mées in France, By the end of 2011, solar panels will cover 200 hectares and produce around 100MW, making it the biggest solar array in France.
AQA A2 Economics - European Context
Each of the AQA a2 economics papers contains data response questions where understanding and awareness of the context of the economics of the European Union comes into play. We have a EU Economy in Focus study companion which is published in updated form each year. Details are available here. One area for revision focuses on the analysis diagrams that might be used to support your answers to EU context questions, I have put together a listing of topic areas where a diagrammatic approach might pay dividends - it is not exhaustive of course, merely some suggestions that might be useful. It appears below:
read more...»EU Economics: Comparing the UK with Europe
Stephanie Flanders has posted a very useful blog examining Eurozone growth, and whether the UK can best be compared to France and Germany or to Greece, Portugal and Spain. She starts with Ed Balls rejection of the Chancellor’s habit of likening the position of the UK economy to those of the southern states which are struggling so badly at present; the Shadow Chancellor believes a better comparison would be with our traditional competitors in northern Europe.
read more...»A2 Macro: Chinese investment in the EU
There is much focus on Chinese foreign direct investment in Africa and Latin America - China is also making huge investments in Australia as my friend Mark Johnston writes about in this blog. Here Euro News looks at investment in the European Union by Chinese owned businesses. New motorways in Poland ahead of the 2012 European Football Championships, co-financed by the EU, are being built by Chinese companies. The Chinese are also buying up public debt, in Greece, Spain and Portugal.
EU Enlargement - Evaluating the Impact
Many of Europe’s newer member states have outperformed established EU countries since they joined the single market in 2004 and 2007. And as a result there has been a process of convergence in average living standards and improved employment opportunities. Europe’s new nations have injected extra dynamism into the region despite inevitable teething problems along the way.
For students revising aspects of EU enlargement here is a streamed version of a presentation I gave to a Tutor2u event in London a few weeks ago
A streamed version of the presentation is available here
PDF Handout of the presentation
Related news issues
Germany expects influx of Polish workers (BBC news, April 2011)
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A2 Micro: EU Aviation - State Aid and State Ownership
I have put together a short revision exam-style question for AQA Unit 3 (Micro) focusing on some of the issues / problems facing the European Airline industry. Many of the established airlines are part-state owned and the question of nationalisation, government emergency funding / state aid was highly topical this time last year in the wake of the recession and the volcanic ash crisis. The document can be downloaded below and I have linked also to some other A2 micro revision resources
EU_Airlines_State_Aid_Nationalisation.pdf
read more...»The economic & social benefits of migration
My own students know that I am strongly in favour of open migration and oppose the government’s attempts to impose artificial caps on economic migrants from outside of the EU. A hat tip to Philippe Legrain for spotting this article from today’s Guardian which is heavily tilted towards the longer-term economic and social benefits of migrants for the UK economy. So David Cameron wants to talk about immigration? Bring it on As a partial counter-balance perhaps I should link you towards a piece in the Daily Mail by Andrew Green: Why is the BBC STILL so hideously biased on immigration? I have also linked below to some of our recent blogs on the migration issue. And here is a link to a presentation on the enlargement of the EU that I gave in London back in February 2011.
Externalities of Nitrogen Pollution in Europe
Roger Harrabin reports on fresh research on the impact of air pollution on Europe’s natural habitats. A classic example of negative externality effects - already targeted by the EU natural habitat directive, but a regulation that appears to be ineffective.
“Earlier this week, the European Nitrogen Assessment - the first of its kind - estimated nitrogen damage to health and the environment at between £55bn and £280bn a year in Europe, even though nitrogen pollution from vehicles and industry had dropped 30% over recent decades.”
More here: Nitrogen pollution ‘costs EU up to £280bn a year’
The report can be accessed here
Soap powder cartel leaves stain on colluders
The EU Competition Commission got into a LATHER about alleged price fixing by a number of multinational soap and washing powder producers and in a ruling today they have imposed fines on Unilever and Procter & Gamble €315.2m ($456m) for fixing washing powder prices in eight countries within the single market. An investigation was prompted by whistle-blowing from Henkel, a German competitor (manufacturer of Persil) and so the investigation CYCLE began. Unilever was fined €104m and Procter & Gamble was fined €211.2m. Henkel was not WHITER THAN WHITE but under EU cartel rules, it avoided a hefty fine because of alerting the authorities to the price fixing scheme.
read more...»OCR F585 June 2011: A Brain Drain from Spain?
High unemployment, declining real wages and worsening employment prospects might be causing a surge in net migration out of the Spanish economy. The economic and social consequences of high unemployment figures prominently in the OCR F585 stimulus material for the June 2011 exam. One in five under the age of 30 in Spain is unemployed, and a staggering 64% of those age 16 to 19 are unemployed. Youth unemployment rates in Spain are higher than both Egypt and Tunisia
Official data shows that 118,000 people left the country in the two years to April 2010 - many of them heading to Germany where economic growth is strong and unemployment rates are falling. There is also growing evidence of younger Spaniards heading to Latin America. 30,000 Spaniards moved to Argentina between June 2009 and November 2010 — an 11 per cent increase over that period. Some 6,400 went to Chile — a jump of 24 per cent in the same timeframe — and 6,800 headed for Uruguay, an increase of 16 per cent.
If the brain drain effect gathers momentum consider some of the possible consequences for the Spanish economy.
Canadian Press: Portuguese, Spaniards seek new lives in old colonies as they face dead-end future at home
Spanish jobless level hits another record high (April 29th)
Focus on Ireland’s Economy
Ireland is an economy suffering an economic, financial and political crisis. Her freedom to operate an independent macroeconomic policy is constrained by her membership of the single European currency and there are many who doubt that Ireland will be able to achieve a sustained recovery without some form of debt default. Our charts below track some of the key macroeconomic indicators for the Irish economy and below them we have gathered together recent blogs on Irish economic issues.
read more...»A2 Macro: Back to Roubini - a Year On!
Almost a year ago I headed to the LSE to hear Nouriel Roubini launch a new book “Crisis Economics”. The notes that I took at the time are reprised below and reading through them again, I am struck by just how accurate the Roubini assessment was of where the next phase of the financial and economic crisis would move. Many of the remarks are relavant to students preparing for the OCR F585 paper for June 2011 and also for other A2 macro students wanting some evaluative comments on the international economic crisis.
I have repeated my comments from the May 2010 blog and they appear below. There has been some minor editing and I have supplemented the blog with some charts drawn from the team at Timetric.
read more...»OCR F585 June 2011: Euro Area on the Rocks?
Is the Euro Area on the rocks? Yes according to economist Roger Bootle writing in the Telegraph. He argues that there are four facets to the Euro Area crisis - debt, uncompetitiveness, property price deflation and fragility in the European banking system. These are themes well known to students preparing for the OCR F585 paper in a few weeks time.
“Given the multi-faceted nature of the euro’s problems, this mixture of depression and deflation is extremely dangerous. Because it reduces aggregate demand, fiscal austerity will intensify the downward pressures on house prices and undermine the quality of banks’ assets!”
A2 Macro: Paul Mason’s blogs on the Euro Crisis
For incisive comment on the issues facing the Euro Area, Paul Mason is hard to beat at the moment. Here is a link that tags his recent articles on the Euro Crisis.
ECB breaks rank and raises interest rates
The European Central Bank has become the first of the four major central banks to lift policy interest rates since the start of the global financial crisis. This decision came on the same day as Portugal applying for emergency support in a bail out that might be worth Euro 80 billion. David Blanchflower, a former member of the Monetary Policy Committee has called the move “a big mistake” hinting that Spain - where more than 80% of mortgages are on variable interest rates - is more vulnerably to financial distress than many are prepared to admit.
The ECB is starting to move their policy interest rates towards normal levels - but this tightening of monetary policy starts with the Euro Area suffering 10 per cent unemployment - it takes a hawkish central bank to start increasing the cost of borrowing money when one in ten people in the currency union is out of work and when the Euro has already been appreciating against the US dollar threatening the strength of an export-led recovery for the currency union. The ECB was forced to reverse a rate rise in the autumn of 2008 when the financial crisis took hold. Might they have to do the same sometime this summer?
It seems that the ECB has confirmed that the Euro Area will now experience a two-speed currency union for the next few years with Germany leading a group of fast-growing countries and the debt-ridden periphery (the PIIGS) condemned to grow more slowly and suffer the impact of a period of painful fiscal austerity.
Eurozone interest rate rise explained (BBC news)
Guardian: Portugal bailout analysis: Is Spain next for EU help? - video
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EU Economics - Portugal Reaches for Bail Out
Portugal has requested an emergency bail out from the European Union to address it’s sovereign debt crisis. It becomes the third Euro Area economy to require help from European partners in the wake of bail outs for Ireland and Greece.
The move came after the Portuguese government was forced to pay an interest rate of more than 5% for borrowing money for just one year and in the expectation of the European Central Bank raising policy interest rates in the near future. The Portuguese economy has a major state-sector debt crisis as our Timetric chart below shows. And the economy has been performing poorly for several years with rising unemployment and a steep fall in relative living standards. Already several of Europe’s new economies (including Slovenia and the Czech Republic) have overtaken Portugal in terms of income per capita (PPP adjusted). Portugal’s long-term credit rating was downgraded by Moody’s by one notch to Baa1 earlier on this week.
BBC: EU austerity drive country by country
Independent: Portugal seeks €80bn bailout as third nation falls to eurozone crisis
Guardian: Portugal’s bailout was all but inevitable
Bloomberg: Goldman Sachs Says Portugal Is Last Euro Nation to Seek Bailout
Independent, Sean O’Grady: If Spain fails, it will be too expensive to save
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Focus on Poland
Poland is the largest of the central and eastern european countries (CEECs) to have entered the European Union Single Market in the recent enlargement process. And her macroeconomic record during and after the global financial crisis stands comparison as one of the best of the twenty seven EU member nations. Recession has been avoided and the economy is set to continue a long run of economic growth that is (slowly) bringing about a rise in relative living standards and a sustained fall in unemployment. The Guardian newspaper has been running a series on New Europe and this set of articles focuses on some of the challenges and opportunities facing Poland as Europe seeks to drag itself into a durable recovery phase.
Guardian - New Europe - Focus on Poland
Larry Elliott: Poland’s past and future mix in Gdansk, the start of the road to the 21st century
OECD Report on the Polish economy
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Tracking the effects of the recession on GDP
An excellent resource for Unit 2 and Unit 4 macroeconomics. Vishnu Padmanabhan from Timetric has this excellent look at the impact of the recession on real GDP growth in OECD countries. Which countries did best and worst in the recession? It turns out that Australia, Poland, Israel and South Korea were the countries least affected by the crisis and all avoided a full-blown recession - experiencing instead a soft landing. Here is Vishnu’s article. Our own growing selection of Timetric charts can be found by scrolling down to the bottom of this blog entry.
The OECD has just produced their annual review of Going for Growth - a largely supply-side look at policies designed to promote long-term growth in productive potential in the world economy. Details can be found here.
AS Macro Key Term: Relative deflation
The term “relative deflation” is generally used to describe an economy with an inflation rate, which has not necessarily descended into negative territory, but is markedly lower than comparable economies. Over time, a low relative rate of inflation can lead to an improvement in price competitiveness in international markets, assuming that there has not been a compensating change in the exchange rate between two countries.
In our data example shown below we track consumer price inflation in Ireland, Spain and Germany. For most of the period shown, the annual rate of inflation in Germany was substantially lower than two of her partners in the European single currency area - this is an example of relative deflation.
read more...»OCR F585 June 2011: Competitiveness
One important aspect of the OCR F585 stimulus materials for June 2011 is the economics of competitiveness within the single currency zone - the Euro Area. A conventional view is that some of Europe’s peripheral countries (notably the PIIGS) have become uncompetitive because they have allowed their producer prices, consumer prices and relative unit labour costs to rise. This - in the absence of a compensating exchange rate depreciation - has made their manufacturing and service industries relatively more expensive leading to a deterioration in trade balances, slower growth and stagnating living standards.
read more...»OCR F585 June 2011: Data Charts (2)
Here are the second set of updated data charts that I have built into my toolkit for the OCR F585 June 2011 paper. The focus of much of the stimulus material is on the economic difficulties in the Euro Area and this collection of charts reflects this - it looks at the output gap, unemployment and gross government debt for the Euro Area as a whole.
read more...»OCR F585 June 2011: Data Charts
Here are the updated data charts that I have built into my toolkit for the OCR F585 June 2011 paper. The focus of much of the stimulus material is on the economic difficulties in the Euro Area and this first collection of charts reflects this.
read more...»Poor human capital in Portugal
A hat tip to Philippe Legrain for spotting this piece in the Wall Street Journal highlighting the chasm in educational outcomes in Portugal (Western Europe’s poorest nation) contrasted with other EU countries. Only 28% of Portuguese aged 25-64 have completed secondary school vs 85% in Germany and 91% in the Czech Republic. “Portugal must generate enough long-term economic growth to pay off its large debts. An unskilled work force makes that hard.” More here
Progress towards low carbon economic growth
I am grateful to Tom Whitmey and Leo Barnes for heading over to the lecture and discussion headed up by Lord Nick Stern at the LSE last night. Their notes from the talk are below.
read more...»Timetric: Currency movements against the Euro
A set of Timetric charts following currency movements for non-Euro countries against the Euro
read more...»Focus on Spain
I will be developing a series of data charts and links to other resources in this blog for students and teachers who want to use developments in the Spanish economy as part of their macro studies. The economy is a member of the single European currency but widely regarded as experiencing deep structural problems and facing a tough adjustment process in the years ahead. At the bottom of the blog we link to recent articles on the Spanish economy. The OCR F585 June 2011 paper focuses on Spain as one of the countries experiencing difficulties within the Euro Area.
May 2011
Migrants pushed towards exit by Spanish jobs crisis (BBC)
April 2011
Spain economy gets IMF vote of confidence
Spanish jobless level hits another record high
March 2011
Spain pledges additional measures to strengthen economy
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