The OECD Insights Series
This looks like a potentially useful teaching resource for colleagues wanting to update on developments in international economics. The OECD Insights publications provide what the OECD says are reader-friendly books that uses OECD analysis and data to introduce some of today’s most pressing social and economic issues. Further details here:
The titles so far are
International Migration: The Human Face of Globalisation (2009)
International Trade: Free, Fair and Open? (2009)
Sustainable Development: Linking economy, society, environment (2008)
Human Capital: How what you know shapes your life (2007)
There are two forthcoming publications
From Crisis to Recovery
Fisheries: While Stocks Last?
Germany speeds ahead
After a terrible 2009 in which real GDP dropped by 4.9%, the German economy has posted the biggest increase in her quarterly GDP since West was unified with the East. German gross domestic product expanded by 2.2 per cent rate in the second quarter compared with the previous three months. German industry is riding on the back of a rebound in demand in the global economy (her manufacturing businesses are closely tied to swings in the world economic cycle) allied to the competitive boost of the recent depreciation of the euro against the US dollar.
Steve Evans reports on the surging German economy
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81 million young workers unemployed in 2009
The global financial and economic crisis has spurred a record increase in youth unemployment according to a new report from the International Labour Organisation.
This deeply important structural issue for the UK and many other labour markets is not confined to developed nations. In developing / emerging economies where 90 per cent of young people live, youth are more vulnerable to underemployment and absolute poverty. The ILO reports that 152 million young people, or about 28 percent of all the young workers in the world, worked in 2009 but remained in extreme poverty in households surviving on less than US$1.25 per person per day in 2008.
More here from the Guardian and here is a link to the ILO report on the problems of youth unemployment in the global economy. And a report on long-term youth unemployment in the UK from the Telegraph.
Debt crunch for Japan?
This speech from the Japanese Prime Minister reported on the BBC news website could not be starker. He argues that the Japanese economy is so riddled with debt that it risks causing a new economic implosion - worth reading ahead of the Unit 4 AQA paper this June as supporting for evaluation on the economics of budget deficits and sovereign debt.
Australia divided on a mining super-tax
Windfall taxes are undeniably popular for politicians. On the pretext of “excess profits” there is always pressure for a government to tap the super-high profits of industries enjoying high profits on the back of high commodity prices and a fast growth of market demand. The Australian government plans a super tax on the profits of the Australian mining industry but it is facing huge opposition to the proposal. Are one-off taxes equitable and efficient? We have tried them before in the UK including windfall levies on north sea oil and gas companies, the banks and Gordon Brown’s infamous raid on the pension funds - but with very mixed results.
Paul Krugman at the LSE
This is a reprise of a blog posted last summer following Krugman’s talk at the LSE. So much of what he talked about remains relevant today especially the challenges facing macro-economic policy-makers when deflationary and debt dangers continue to lurk.
”“The central problem of depression-prevention has been solved, for all practical purposes.” Robert Lucas, 2003
In a world of depression economics many of the standard rules of economics no longer apply. The global economy remains in the grip of a sustained downturn, the duration of which might make Japan’s “lost decade” look favourable in comparison. And macro policy-makers are grappling with an infection that has proved highly resistant to the usual doses of anti-biotic. Despite a remarkable attempt at stimulating demand – through the acceptance of large fiscal deficits and the dual attack of conventional and unconventional monetary policy – things seems to getting worse albeit more slowly.
This seemed to me to be gist of the core message from the first of the Lionel Robbins lectures delivered by the 2008 Nobel Prize Winner for Economics, Professor Paul Krugman of Princeton speaking at the LSE this evening.
read more...»Finding new opportunities among the economic wreckage
I am reprising this blog entry from a year ago partly because Robert Frank is one of my teaching heroes. But also because his idea of a steeply progressive consumption tax continues to have such resonance today as we seek to find ways of re-balancing our economic systems away from excessive and often wasteful consumption towards saving and productive investment. Read on and you will find out about positional goods, status races and the case for taxing consumption more and saving less.
read more...»Warnings of hysteresis for the EU economy
This is an updated blog post on the topic of hysteresis in the EU economy. The recession and financial crisis may lead to a permanent loss in potential economic output and a slower trend rate of growth in the future according to a study by the European Commission. The fall in potential GDP will be an example of hysteresis effects across the European economy and the cyclical downturn in output and jobs creates long term damage.
read more...»Sumo - shifting competitive advantage?
Food for thought from the changing world of Sumo
Greek’s shadow economy and institutions
Economic institutions matter! From the credibility of central banks to the roles played by legal systems in upholding property rights and the need for a functioning system of government in collecting tax revenues and making sure that each dollar or euro or pound of state spending is money fairly well spent. I enjoyed reading Tyler Cowen’s piece in the New York Times today - among many others he senses that an eventual default and departure from the Euro is probably the best approach that greek can take.
The budget crisis facing Greece boils down to excessively high levels of government spending and a failure to collect sufficient tax income. This comes as no surprise when we discover the size of Greece’s shadow economy.
“Greece has a malfunctioning fiscal system in which the shadow economy is estimated to be roughly 20 to 30 percent of the reported economy and tax evasion may run at $30 billion a year. Simply collecting taxes that are legally due would help bring Greece’s books into balance, yet even this simple remedy does not appear imminent.”
Revision Presentation - US Economy Chartroom
Here is a new revision presentation (and slide handout) highlighting key economic data and trends for the US economy. How strong is the early stage of recovery from the recession? In a related blog post I consider some of the ways in which economic events in the USA affect trade, investment and prices in the British economy.
View revision presentation on US Economy Chartroom
Download printable (pdf) handout
EU Economics: - Europe the weak link in the world economy.
A link to an excellent and thought-provoking article by Paul Mason from BBC Newsnight on the implications of the Greek/Euro Zone crisis. He argues that the ripping up of the Euro Zone fiscal rule book and the eventual bail out of the Greek economy shifts the risks to taxpayers in Northern Europe.
“In the 27 member states of the EU, it is France, Germany, Italy and the UK which bear the risk of southern European default. That is to say, the taxpayers of northern Europe. And, as members of the IMF, the industrialised countries of Europe are additionally exposed to the Fund’s €250bn loan.” Stage Three of the financial crisis - hallmarked by an age of austerity poses severe social and political risks across the continent.
In a related feature Professor Joe Stiglitz is interviewed here by BBC World and argues that imposing fiscal austerity by european governments risks plunging Europe into a second recession.
A2 Economics Revision - The US and the UK Economy
This revision note covers some of the macroeconomic connections between the UK and the USA economy.
read more...»A2 Economics Revision - Data Description Revision on BoP
Just as with your AS exams from one year ago, AQA unit 4 macro papers contain data response questions and the first part involves drawing evidence from statistics either in table or chart format - a good example is the one above which tracks the current account balances for the UK and the USA from 1995 onwards. Note that 2010 and 2011 are labelled as forecasts - always something to pick up on when writing about the data in your answer.
read more...»Ireland’s GNP and the Debt Crisis
Despite well publicised attempts to tackle an alarmingly high fiscal deficit, Ireland still has a budget shortfall in excess of ten per cent of national income and a high accumulated national debt measured as a percentage of GDP. But the true situation may be much worse. Low corporate taxes encouraged sizeable inflows of FDI especially from North America, the result being that Ireland’s GDP is much larger than her GNP - a better measure of the national income generated by Irish-owned economic assets. Government borrowing measured against GNP is very large indeed. And Ireland along with countries such as Greece, Portugal and Spain is mired in the classic debt-growth trap - how can it achieve fiscal austerity when national output and real incomes are falling.
Simon Johnson is strong on this issue today - the dangers of sovereign debt
“Debt overhangs hurt growth for many reasons: business is nervous that taxes will go up in the near future, the cost of credit is high throughout society, and social turmoil looms because continued austere policies are needed to reduce the debt.”
Irish Deflation
Deflation has been an issue for the Irish economy over the past 18 months. Given its strong position as one of the European PIIGS, rising unemployment and weak financial system, deflation is just another economic problem among many!
read more...»Japanese economy - exports up but debt squeeze tightens
Here are two useful update articles on some of the issues facing the Japanese economy.
First, the BBC reports on an IMF study that urges the Japanese to take immediate steps to cut their national debt which “at nearly 230% of GDP, is the highest of any industrialised nation.” The IMF believes that economic growth is sufficiently robust at present to take some of the tough fiscal consolidation measures needed. (In contrast to the situation in the UK?). Second, a report that finds that Japanese exports are providing a kick-start to hopes of a recovery in GDP as “emerging Asian markets such as China have been driving Japan’s economy.” Faster growth will be key to Japan breaking free from the latest bout of consumer price deflation.
The UK too is hoping for an export-led recovery in the second half of 2010 and well into 2011 but a dark cloud on the horizon are fears that financial turbulence in the Euro Zone will cause the Euro Zone economy to fall back into recession and the pound to appreciate against the Euro - both factors would hit British exporters looking to grow sales in a region that accounts for well over fifty per cent of our trade in goods and services.
Roubini at the LSE - governments run out of policy bullets
The LSE was packed tonight for a talk and discussion with Nouriel Roubini. It was an occasion to help launch his latest book “Crisis Economics” and Roubini started by arguing that financial crises are now more common than is supposed. Economics textbooks pay lip-service to crises and the conventional wisdom is that systemic crises in the markets are irregular and few and far between. Dr Doom takes a completely different stance believing that the sorts of crises that have dominated the headlines in recent years are best described as White Swans rather than the Black Swans beloved of Nicholas Taleb.
The Roubini lecture is now available on video using this link
read more...»The Financial Crisis and Beyond
Modern economies run on credit and so the collapse in confidence and lending within the international financial system in 2007-09 was bound to bring about a series of after-shocks to global demand, trade and jobs. In this sense, the economic and political crisis in Greece represents a stark example of the ripple effects of the credit crunch as we edge our way forward in an age of instability.
This to me was the key theme running through David Smith’s talk at the Keynes Society on Thursday night. Followers of David’s columns in the Sunday Times will appreciate his unerring ability to capture the essence of what really matters in the economics and business domain. In his presentation David’s narrative provided a tremendously clear overview of the background to the crisis, the shape of the inevitable recession that followed. And, more pertinently, prospects for the UK economy in 2011 and beyond.
read more...»A2 Economics Revision - Changing Pattern of Global Trade & Investment
This new streamed revision presentation guides students through some key evaluation points on the changing patterns in global trade & investment. Ideal for A2 revision.
Revision Presentation on the Changing Pattern of Global Trade & Investment
Greece dropped to junk - serious wobble time for the Euro
Tuesday afternoon and breaking news of a serious downgrade for the Greek economy.The ratings agency Standard & Poor’s has cut Greek’s credit rating three levels to BB+, or junk. Two year bond interest rates are 16% and rising. I am sure this will be huge news in the financial papers in the morning. This BBC news video looks at some of the opposition to the spending cuts the Greek government will be required to make as part of the international financial rescue package.
This BBC news report has a neat six page graphic helping to explain what went wrong with Greece in the eight years since the Euro was introduced into the Greek economy.
Bonds
Both companies and governments can issue bonds when they need to borrow money. The issue of new government debt is done by the central bank and involves selling debt to capital markets. The bond market is also the place where companies may seek to raise funds by issuing new tranches of debt.
read more...»Living in a multi-polar world economy
Although many millions of people in the lowest income countries have suffered greatly from the world recession, for many emerging countries growth has continued apace and the world economy is more resilient than the consensus view believes. This was one of the arguments explored by Jim O’Neill, Head of Global Economics, Commodities and Strategy Research for Goldman Sachs, in his talk to the 40th Anniversary meeting of the Eton College Keynes Society last night. The creator of the BRIC acronym was also quite bullish about prospects for the UK economy, with Britain able to take advantage of a competitive exchange rate and a strong rebound in global economic activity driven forward by fast growth in emerging market countries.
read more...»CEP analysis of the UK economy
On the day that weak economic growth data was released by the Statistics Commission, a hat tip to Romesh Vaitilingam for sending through details of the new CEP election analysis briefing. The latest CEP Election Analysis describes where we are now in terms of macroeconomic performance and the impact on the public finances – and the policy options, focusing on debt reduction and economic recovery, and comparing the parties’ positions. It can be downloaded here.
Stiglitz on USA/China Protectionism (????) Is protectionism occuring?
The India Times features an article penned by Professor Stiglitz regarding an impending trade war between the USA and China. The case as it has been for many years is the assertion that China should be regarded as a ‘currency manipulator’!
read more...»Lessons for the UK from the Irish Recession
Stephanie Flanders offers this timely and well-judged piece from the Irish Republic about how the former celtic-tiger ecoonmy has adjusted to the painful medicine of fiscal austerity after their deep economic recession. She asks what lessons there might be for the political parties fighting the UK election.
The (sovereign) default option is costly
No rich advanced nation has defaulted on sovereign debts since the end of the second world war but should the default option seem attractive governments should beware the longer term costs and consequences. The Economist this week has a feature on some recent research into the impact of sovereign debt default focusing in particular on the experience of Argentina. Three major effects are identified:
read more...»Broadband and economic growth
Investment in broadband capacity and speed has a strong impact on economic growth according to new research.
read more...»Nissan turns over a new Leaf
This is a hugely important announcement and boost for the North east economy whose long term future must be built on competitive advantages in the emerging low-carbon industries of tomorrow. The decision to manufacture the lithium-iron batteries used in the Leaf electric cars is the key to the employment creation effects of the new investment by Nissan. Note too the role played by government financial support. The investment is backed by a £20.7m government grant and up to £220m from the European Investment Bank.
The Nissan car plant is the most productive in the European Union. The plant opened in 1984 and has so far built 5.6 million cars. It produced a third of all cars built in Britain in 2009. Digby Jones sings the praises of businesses such as Nissan in this super interview on the Politics programme a few days ago.
Fed pledges to keep policy rates “exceptionally low”
Here is an interesting approach to interest-rate setting by the US Central Bank - the Federal Reserve. The Fed has pledged to maintain ultra-low interest rates for the time being in a bid to support and sustain a recovery in domestic demand and output and reduce the risk of a double-dip recession later on this year.
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