Stephanie Flanders explains Quantitative Easing in 60 seconds
This has to be amongst the best 60 seconds of Economics you’ll ever see on television. The superb Stephanie Flanders takes a leaf out of the RSA playbook to explain the basic theory behind quantitative easing. Wonderful!!
read more...»Unit 2 Macro: The Economic Disaster of Youth Unemployment
The official figures show that there are now more than one million young people counted as unemployed in the UK although the precise scale of the jobless crisis is difficult to measure accurately. Nonetheless, it represents a fundamental economic, social and political problem and one that policy makers must address.
In this video report from Al Jazeerah, Lawrence Lee visits Leeds to find a well qualified nineteen year old with good qualifications but who cannot afford to go to university and is finding it tough to win a place in the police force - his main ambition.
read more...»Unit 1 Micro: Can the UK Computer Games Industry Grow
Britain is one of the world’s biggest exporters of creative products - from live TV shows and music to books, arts, architecture and films the economy has built up an enviable global reputation for excellence and a growing trade surplus to aid our balance of payments.
Computer games falls squarely into this category but, according to TIGA - the trade association representing the UK’s games industry - unless there is renewed government support, the future of this sector is at risk. TIGA claims that the British games industry is suffering a significant ‘brain drain’ as talented programmers and artists leave the country to work abroad.
read more...»Unit 2 Macro: Exporting to the Booming Chinese Economy
Before you read this blog please have a look at another blog written by our good friend Mark Johnston from New Zealand. Students of China and the US economy will find it fascinating!
There are good grounds for no longer calling China an emerging economy - it has arrived! The multiple significance of the rapidly-growing Chinese economy is plain for all to see but for Britain, only a small percentage of our exports of goods and services go there and this must change if Britain is to fully engage with and benefit from the rising might of the Chinese consumer. This article from the Daily Mirror provides a non-technical but clear explanation of the growing purchasing power of newly wealth Chinese, thousands of whom are flocking to western shopping malls to buy premium brands. Chinese foreign exchange reserves are also being used to buy up real assets - last week we heard that a Chinese sovereign wealth fund is set to buy nearly 9% of Thames Water.
read more...»Video Resources on Rising Inequality
In this blog entry we will be bringing together some short video resources that might be useful when teaching and studying the economics of inequality. Please do add some more resources using the comment box at the bottom and we can add them to the listing.
read more...»Unit 2 Macro: Living below the Breadline
This article on the appalling depth of workless households in Liverpool is a reminder of the multiple aspects of relative poverty and economic/social exclusion.
The causes of unemployment are complex - many are structural - but it is hard to draw much if any optimism from reading this article. By some estimates over one third of households in Liverpool have no one in work and second and third generation unemployment is not uncommon. This is a must article for students to read if they want a better awareness of the human cost of non-employment. Read: Below the breadline on Liverpool’s workless estates
read more...»Unit 3 Micro: The Economics of Solar Subsidies
This blog provides a link to a new prezi presentation on the economics of solar subsidies - I have been using it as part of my teaching on aspects of environmental economics for Unit 3 AQA but it might also be useful for unit 1 market failure. I have kept theoretical diagrams out of it and plan to build up relevant analytical concepts such as economies of scale, consumer subsidies, economic and social welfare, government failure et al on a normal whiteboard rather than embed them into the Prezi. I hope it is useful.
Follow the tags at the bottom of the blog entry for more recent articles on solar subsidies such as feed-in-tariffs and other environmental economic resources.
read more...»Inflation - what’s up, what’s down and what’s going to happen next
Just as the Monetary Policy Committee have been saying for a while, inflation is starting to fall back towards their target. The fall to 4.2% in December is rather sharper than expected, and is the biggest monthly fall since April 2009. With further falls almost certain in the next few months as the VAT rise and energy price hikes roll out of the 12-month figures, analysts have commented today that this will leave the opportunity for the MPC to inject further rounds of QE into the economy with less fear of triggering too much demand-pull inflation.
read more...»Indicators of Financial Stability
This mornng the Bank of England published a letter from the Governor to Andrew Tyrie MP, Chairman of the Treasury Select Committee which is discussing financial stability policy. The letter provides some simple indicators that might be used to help monitor financial stability.
read more...»Unit 2 Macro: Videos on Productivity
Here is a selection of short video clips that might be useful when teaching the economics of productivity as part of the AS macro course. I often start with the “Fast Hands” video clip (one minute only) because it raises all kinds of issues about division of labour and the quality of life of people who do these tasks. And the short 25 second clip on the world’s fastest hand is guaranteed to make a mark! If you have some other videos on productivity to share please leave a link in our comment slot at the bottom of the blog.
The Guardian business web site has this excellent photo stream on life inside the Nissan car factory. Follow them on Twitter
read more...»Unit 4 Macro: France loses her AAA credit rating
It is perhaps a moment of more political than economic significance, but on Friday 13th January 2012 Standard and Poors, a leading credit rating agency announced that France was losing her triple A (AAA) credit rating for sovereign debt. It was part of a larger downgrading of government bonds among a sizeable chunk of Euro Zone countries, the argument being that plans to achieve deficit reduction lacked credibility. France was downgraded, S&P also lowered the long-term ratings on Austria, Malta, Slovakia, and Slovenia, by one notch. The rating levels for Cyprus, Italy, Portugal and Spain were dropped two notches.
Here is a brief Channel 4 report on the news and some other links to the story. Only four Euro Zone countries now have an AAA rating. Do you know who they are?
read more...»Unit 4 Macro: Time to Re-Boot the British Economy
This special blog in the Guardian from Professor Danny Quah of the London School of Economics is superb for Unit 4 students taking their papers in June 2012. in “The UK and the eurozone in the shifting global economy” Professor Quah focuses on many of the underlying difficulties in the UK economy. Digging deeper inside the trade data he finds that, focusing on the UK’s 50 largest trading partners in 2009: 56% of our exports go to the 10 slowest-growing economies in that group. We are missing many opportunities to fully embrace trade and investment with faster-growth countries notably in Africa and Asia.
A note for your diaries if you are within reach of London on Monday 23rd January. Martin Wolf from the FT is speaking on The State of the Global Economy in 2012 - an event not to be missed for fans of his writing and insight. He is speaking along with Jean Michel Severino, nspector general at the French Ministry of Finance. Here are the details.
Newsnight on rebalancing the UK economy
Last night’s edition of Newsnight should be required viewing for all AS and A level economists - and it is a huge shame that it is only available on i-player for another 7 days. Introduced on the shock news that even Tesco is vulnerable to the downturn, it included reports from Andrew Verity looking at whether the British economy will ever wean itself off shopping and the City, and an excellent (and all-female!) discussion including Deborah Meaden and the FT’s Gillian Tett. Try challenging your students to watch and listen to this while noting down every aspect of the syllabus which is mentioned or referred to - that will keep them busy!
There was also a debate between Employment Minister Chris Grayling and disability campaigner Sue Marsh about the government’s welfare reforms, defeated in the House of Lords the night before, and finally Tokyo correspondent Roland Buerk looking at Japanese economic stagnation of the late 1980s and 90s, to consider whether it was a “lost decade” and what could be learnt from it.
Unit 4 Macro: Economics of Fiscal Deficit Reduction
How far, how fast and in what way should the UK government seek to cut the annual budget deficit and improve the state of public sector finances? These questions continue to be at the centre of a fierce debate among economists.
read more...»Unit 4 Macro: Competitive Advantage in Trade (Some Videos)
Here is a selection of short video clips that I use when teaching competitive advantage in markets and when introducing the factors that determine the competitiveness of UK producers in global markets. The focus here is on the UK economy but I will add some more videos to the blog as I work my way through this teaching topic.
read more...»Unit 4 Macro: UK Bond Yields Reach Record Lows
The yields on UK government issued bonds has been falling steadily in recent months and, as we turned into January 2012, the yield on ten year government debt edged below 2% - when the UK government continues to borrow eye-wateringly large sums, why are bond yields so low?
The yield on a bond is the income received from a fixed-interest bond, calculated as a percentage of the price paid for it. So a ten year bond bought for £10,000 and paying a fixed annual interest of £600 would offer a yield of £600 / £10,000 = 6.0% per annum.
If the market price of a bond rises - for example, it rises from £10,000 to £12,000, the fixed interest remains the same (£600) but the yield will fall. £600 / £12,000 expressed as a percentage = 5%.
read more...»Unit 4 Macro: UK Trade Patterns
The Guardian DataBlog has a superb resource here on the patterns of UK exports and imports in 2011. Ideal for printing out and using when introducing international trade. There is more official UK trade data here
Unit 4 Macro: Does Manufacturing Matter?
Vicky Pryce FRSA has a new article on the economic significance of manufacturing industry for UK economic renewal. It is available here from the January 2012 edition of the RSA Journal. In a related article Sir Christopher Frayling FRSA discusses the rise of the Maker Movement.
Back in November 2011 Channel 4 news ran a special on the future for UK manufacturing here is a link to a related video
Unit 2 Macro: Factors Driving Business Investment
Profit-seeking businesses will go ahead with an investment if they believe that it will - over its projected lifetime - yield a real rate of return greater than if the money had been invested in the next best alternative way. Opportunity cost is a useful idea to use here. Private sector businesses usually focus on these objectives when investing in new capital inputs:
read more...»Unit 2 Macro: Quantitative Easing in the UK
On 11th March 2009 the Bank of England started a policy of quantitative easing. QE is also called an ‘asset purchase scheme’. It was extended to a total of £275 billion in October 2011 and is likely to be expanded further during 2012.
Other central banks have introduced quantitative easing in recent year through huge purchases of government bonds. Indeed the economist Gavyn Davies, writing recently in the Financial Times has calculated that “around one half of the bonds issued to fund the budget deficits of the US, UK and eurozone since 2008 have been acquired by the Fed, BoE and ECB.”
This is a remarkable change in the conduct of monetary policy in advanced nations.
Unit 2 Macro: Revision Quiz on Economics of Unemployment
Here are some revision multiple choice and type the correct answer questions on aspects of unemployment - designed for students taking AS Macroeconomics. Provide correct answers and see who gets the top score on the crystal cannon! The quiz has been created using Zondle.
read more...»Unit 4 Macro: Video Resources on Unemployment
This blog entry brings together a selection of recent news reports and videos covering the economics of unemployment in the UK and inother countries.
read more...»Unit 1 Micro: Externalities from Metal Theft
If a criminal steals metal from a building yard or a jewellers the impact is relatively isolated but when metal theft extends to lifitng metal from roofs, railway lines and many other public buildings, thousands are inconvenienced and left to pay the cost - negative externalities are clear.
This news report from Al Jazeera looks at the growing economic and social problem of metal theft in London and a second video report from Channel 4 news looks at the external costs of copper theft from cables on the rail network that delays services and puts lives at risk. What are the best options for dealing with this crime epidemic? The Met Police has set up a specialist metal theft unit as part of their response.
read more...»Surveys, statements and predictions for 2012
As one of many turn-of-the-year round-ups, the BBC has polled 34 ‘leading economists’ in the UK and EU to find out what they expect for the EU in 2012. Unfortunately this report of the results doesn’t give details, but says that25 of the 27 respondents expect recession to return to Europe next year, with many finding it fairly likely that the eurozone will break up, and 20% expecting that at least one member will leave during next year.
read more...»European Economics: Resources on the CAP
This blog entry will provide a regularly updated set of links to resources to the European Union’s Common Agricultural Policy and attempts to reform this contentious and complex system of farm support.
Check below for suggested links
read more...»2012 - Carnage on the High Street
There are many retail industry experts forecasting that the early months of 2012 might be tough for some struggling retailers. We will keep this blog post updated on a regular basis as news of some high profile retail failures comes through. And we will link to media coverage of some of the attempts to restructure retailers under the threat of closure.
read more...»Review of the Year in Economics - Guardian
Larry Elliott from the Guardian provides this excellent overview of key developments in the UK and world economy in 2011.
Unit 2 Macro: The UK Housing Market in 2011
This blog provides a chart-based overview of developments in the UK housing market in 2011. The housing industry has a big effect on macroeconomic variables such as output, employment and investment. Has there been a marked recovery in property prices, new housing starts and mortgage lending?
read more...»Unit 2 Macro: Brazil Overtakes UK in Economic Size
The Guardian has reported new research from the CEBR that Brazil is set to overtake the UK to become the sixth biggest economy in the world. The U.S., China, Japan, Germany and France occupy the top five places.
Typically the Sun newspaper gets their economics muddled with this piece of sloppy writing
“BRITAIN will fall to seventh in the league table of the world’s richest countries next year when it is leap-frogged by buoyant Brazil.”
Brazil richer than the UK? The Sun is confusing the size of GDP with the level of real GDP per capita (adjusted to a purchasing power standard). And as our Timetric chart shows below there remains an enormous gap in average living standards between the UK and Brazil.
read more...»Unit 4 Macro: Human Capital and Economic Growth
In A2 macroeconomics the underlying causes of economic growth and development and constraints on both of these are covered in more depth. One of the concepts students might be familiar with is that of human capital.
I have always summarised the idea of human capital as being a measure of the overall quality of the human input available to produce goods and services in an economy. The ONS have published a new study on the value of human capital in the UK and they draw on a definition given by the OECD
read more...»
