John Humphrys in China
John Humphrys of The Today Programme is recording his experiences in China and there have been some interesting news reports and programmes here including a report from a Chinese car manufacturing plant where the focus is now on making and selling vehicles to Chinese customers are part of a re-balancing away from exports towards domestic demand. An autumnal hat tip to Gavin Clarke for spotting this resource,
Asia Rising - Thai Car Exports Speeds Up Growth
One of my former students Alastair Leithead reports on the boom in car production in Thailand and the multiplier effects their export-oriented strategy is having on the Thai economy. Ford has invested hundreds of millions of dollars into expanding car manufacturing capacity in Thailand and Boots is a UK retailer that has seen the opportunities for boosting profits from inward investment.
Krugman attacks the coalition’s fiscal policies
Paul Krugman is currently on a speaking tour and he has used his column in the New York Times to lay into the coalition government’s fiscal plans - confirmed this week with the spending review. Winner of the 2008 Nobel Prize in Economics, Krugman’s strong Keynesian foundations rarely take long to surface and this article is no exception. “The best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it. So is Britain on the road to a lost decade such as that suffered by Japan? Keep reading as many articles as you can on the stimulus v fiscal consolidation debate for it lies at the heart of so much that is important in macroeconomic policy-making at the moment.
A million jobs at risk from spending cuts
Stephanie Flanders looks at the possible employment effects of the government’s spending plans focusing here in government investment spending in rail - where investment programmes can have a big impact on many local economies. Several of the leading business organisations are lobbying for capital spending to be maintained because weaknesses in infrastructure might seriously hamper the sustainability of any future recovery. With long term bond interest rates at almost record lows, the rates of return required for investment to pay its way seem to be fairly low.
Video resources on consumption and saving
I am teaching the determinants of consumption and saving with my AS Macro group and have been putting together a set of short video news reports on factors such as taxation, consumer confidence, house prices, expectations, interest rates and unemployment. My selection of video resources is provided below.
read more...»Apprenticeships for a Silver Generation
The oldest contestant in the new (6th) series of The Apprentice is thirty one! But why should apprentices be concentrated only among those in the early stages of their careers?
The number of people aged fifty and over who are applying for and winning places on apprenticeship schemes has more than doubled in the last few years as this BBC news video explains. Apprenticeship programmes for older workers challenges our common preconceptions about their place in the labour market - and this is a good thing as the debate continues about how best to support and encourage people to stay in work during these challenging economic times. Lifelong learning is not merely a vaccuous slogan - it has a real meaning and is hugely important for the British economy in the years ahead.
This video reinforces the importance of human capital, the need for flexible skills to avoid structural unemployment. And it raises questions about who should and who can fund apprenticeship schemes and their longer-term economic and social benefits.
Video resources on UK economic growth
I have been discussing growth policies for the British economy with my A2 macro groups. Here are some of the short news videos and audios that have been used as a stimulus to discussion
read more...»Creative products lead the world and boost UK trade
Britain is the largest exporter of creative products in the world .... take a moment to allow this to sink in .... Britain stands at the top of the global league table for selling creative goods and services around the world, there is a strong demand for UK-centric cultural and creative output.
The Independent today carried an analysis article on the background to this wonderful success story. In 2009 - during a year when global trade slumped by more than 10 per cent - “the international sales of British TV programmes rose 9 per cent to £1.3bn….. the most popular UK shows and formats to be sold abroad include Strictly Come Dancing, Come Dine with Me and Spooks. The BBC’s commercial arm said its sales and distribution profits in the last financial year rose 4.6 per cent to £64.2m.”
According to the report - North America represented 41% of total export revenue in 2009, with Europe contributing 29% and Rest of World 30%
This is a staggeringly good performance and it is one specific area of our trade accounts where the UK is clearly able to build and sustain a competitive advantage. Trade figures do not lie - they reveal comparative advantage and this is an industry that the government would do well to nurture and support as best it can. It is a proven success.
Here is the Independent article and more here from BBC news
Mortgage equity withdrawal
Mortgage equity is still increasing according to the latest surveys. Homeowners have stopped using their homes as “cash machines” and are still increasing their financial stake in their homes.
Figures from the Bank of England show that homeowners’ equity rose by another £6.2bn in the second quarter of 2010.
From July 1998 to March 2008 homeowners had borrowed an extra £328bn against the rising value of their homes, in a process called mortgage equity withdrawal. This reversal in the trend clearly means adverse affects for consumer spending. Read more here.
IMF signs off on UK’s fiscal plans
The IMF signed off on George Osborne’s fiscal deficit plans today.
The Fund praised the government’s bold strategy to eliminate the deficit within five years. The deficit reduction plan “greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy,” the concluding statement of the mission said.
It welcomed the early action on the deficit and the weight given to spending cuts rather than tax increases.
Irish economy sinks deeper into recession
The latest growth figures for the ailing Irish economy make for sorry reading. National output continues to shrink and this is reducing the size of the tax base from which the government draws revenue to pay off the huge level of debt. This BBC news video provides a background on the debt-recession spiral.
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AS Macro - Circular Flow Questions and Exercise
This is a short activity I have been using with my new AS macro group as we explore injections and leakages from the circular flow and the possible impact on the level of GDP.
Download the worksheet
Circular_Flow_Questions.docx
Hysteresis in the US Economy
The idea of hysteresis from the current recession is well illustrated in this article.
Millions of Americans risk falling out of the job market forever, the Organisation for Economic Co-operation and Development said today, as it cautioned a full recovery will take years. This recession has left the US with a long-term unemployment rate - a measure of those without work for more than six months - of 4.5pc, almost double that seen in the downturns of the 1980s and 1990s… Read more here.
read more...»U.S recession
The U.S. recession will probably be the longest since World War Two and could worsen without heavy government spending, according to a closely-watched survey of economists released on Saturday. Read more here…
Currencies in the News - Two Videos
Movements in the external value of currencies have direct and indirect effects on plenty of macroeconomic variables such as inflation, exports, output, profits and - ultimately - jobs. This week we have seen the Japanese central bank intervening in the foreign exchange market in an attempt to drive the value of the Yen lower. Japan is struggling to sustain a recovery after the global financial crisis and a weaker currency is seen as a vital part of the attempt to prevent another draining bout of price deflation.
And the long-running dispute between the United States and China about the alleged under-valuation of the Yuan against the US dollar continues to rumble. This BBC news video takes a swing through New Jersey to find trade unions lobbying government for more action on the exchange rate issue.
Greek brain drain
There is evidence today for the theory that an inhospitable macroeconomic climate will drive some of the more valuable labour resources out of a nation’s economy. The International Herald Tribune reports on the exodus of young graduates from Greece, in search of employment opportunities elsewhere. A number of reasons are given; a deepening recession, a job market already crippled by an entrenched culture of cronyism, a national debt which is larger than Greece’s gross domestic product suggesting that years of austerity budgets lie ahead and finally a string of political corruption scandals has left many young Greeks disillusioned about the future.
read more...»Starter Activity - Economic Cycle in Pictures
This is an exercise that I have used in the past with AS level students and I decided this year to introduce it very early on in the course, indeed just a few lessons in when we sketched out the economic cycle and were discussing the economics of a recession. The exercise is a simple one - to think about the different stages of the business cycle and then discuss where in the cycle various examples might fit. There are no unique right or wrong answers, indeed in our discussion today students were sufficiently confident to justify their choices.
read more...»Policies for long-term unemployed in Denmark
Here is an intersting clip from the New York Times website that looks at the Danish model for dealing with the unemployed.
In Denmark unemployment is at 4.2% which is well below the EU average of 9.7%. When you become unemployed you are guaranteed 70% of your income for 2 years – was 4 years before the financial crisis.
They also spend big money on education and training. How do they fund this? Income tax rates range from 42.9% – 63% and not surprisingly it is the most taxed country in the world. Click here to go to the video on the NYT site
Cost cutting: Pre-Budget Report scrapped
George Osborne will scrap the pre-Budget report this year in a break with Gordon Brown’s era and a signal of a return to more normal economic policy making. The chancellor’s decision to ditch what had become a second annual Budget will save resources at the Treasury; in its place a slimmed-down autumn statement, with new forecasts, towards the end of the year.
Macroeconomic Developments in the UK Economy - September 2010
Here is an updated version of the keynote tutor2u teacher presentation on key developments in the UK Economy…
read more...»Stephanie Flanders and Robert Peston on the government spending review
As part of the BBC’s coverage of the government spending review, Stephanie Flanders asks how has the UK economy ended up in its current state - and what impact are the cuts likely to have? This is an excellent piece to use when introducing students to the broader macroeconomic issues at the start of their course.
In a second video piece Business Editor Robert Peston considers what impact are government cuts likely to have on the business world?
Autumn leaves are falling for the global economy
The arrival of the Fall is often a time to take stock of where the global economy is heading and there have been several perceptive and fascinating blogs on this in recent days.
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Housing market and negative equity
Home owners who bought at the tail-end of the property boom face another four years of negative equity before they recover what they paid, new figures reveal today.
David Orr, chief executive of the National Housing Federation, said:
“Even though price rises look sluggish for the next few years, affordability is not improving for many low-to-middle income households as banks continue to restrict their mortgage lending and house prices remain historically expensive in relation to salaries. There’s a very real risk that an entire generation will be locked out of the housing market for the foreseeable future and people will increasingly look to buy or rent an affordable home instead.”
read more...»Raising money from taxation - a BBC guide
This new video from Declan Curry on the BBC explains in straightforward terms how the UK government raises taxation from various sources and how it attempts to finance the gap between government spending and taxation. A good resource for AS level students.
read more...»The Happy Planet Index
Statistician Nic Marks from the Centre for Economic Well-Being/ New Economics Foudnation asks why we measure a nation’s success by its productivity instead of by the happiness and well-being of its people.
read more...»UK migration data for 2009
The latest official figures for net migration in the UK have been published and are reported here on the BBC website. The scale of the number of overseas students coming into the UK on student visas took me by surprise - The number of visas issued to students also went up by 35% to 362,015 - a factor behind the increasingly competitive and difficult task of winning places at many UK universities - the admissions process is now a truly global process.
The Financial Times reports that “The number of students accepted via the Ucas system from China, the largest single source of students from outside the UK, for this year is 7,752, up from 6,845”
I might use this article as a way of encouraging students to pick out organisations / bodies with a vested interest in the migration debate - there are two or three good ones included in the BBC news article and others can be located by using some of the external news links provided.
Revisiting the economics of John Maynard Keynes
I came across this PBS documentary piece on Keynes whilst researching for the new school year. The feature was broadcast in December 2009 but is still highly relevant today and includes an interview with Professor Robert Skidelsky.
AS Macro: Extreme weather hits Russian economic growth
This BBC news article explains how extreme weather conditions in Russia this summer is hitting GDP growth.
read more...»Fears rise for a double dip over the pond
There are some very worrying signs for the United States today with the news that new home sales (for completed properties and those under construction) have dropped to to their lowest level for nearly 50 years. Dr Doom, Noruiel Roubini has tweeted that the risk of a double dip recession in advanced economies (comprising the USA, Japan, the Eurozone and the UK) has now risen to 40%.
The fall in new home sales is taken as a litmus test of weakening confidence and signs that the fiscal and monetary policy stimulus policies have started to run out of steam. Unemployment claims in the USA are up to 500K per month and a fresh descent into recession in the labouy-intensive US construction industry will give deeper deflationary pressure on the world’s largest economy. Since the start of the global financial crisis, US construction businesses have shed more than two million jobs.
In a related feature, Nouriel Roubini takes tea with the Economist and discusses some of the main systemic risks for the global economy.
The Stimulus Debate - Krugman versus Ferguson
If you are looking for an introduction to some of the key themes in the debate about how best macro policy should respond to the global financial crisis and the recession then this set of videos from Global Public Square could be pitch perfect. There are interviews with the Keynesian-leaning Paul Krugman and Niall Ferguson who buils the case for running small fiscal deficits.
Links to the videos are below
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