Economics CPD Courses

Economics CPD Courses Coming up this Term!- Book Your Places Now!

WOW! Economics 2015   |   Quantitative Methods (New Spec)

Economics Resources Popular resources on the {my channel} blogPopular resources on the {my channel} blog Economics revision quizzes Resource tags for the blog RSS Feed for the blog Twitter feed for this blog Teacher Email Resource Newsletter Category listing for this blog Economics Blog home page Economics Blog Home Page

Trade deficits and currency depreciations

Saturday, July 05, 2008

The Economist has a very relevant feature this week on the connection between countries running sizeable current account deficits on their balance of payments and movements in their exchange rate. The carry trade has been a factor in recent years acting to prevent exchange rate depreciations from helping some countries to adjust their current account deficits downwards but now some of the biggest deficit countries including the UK are experiencing notable exchange rate weakness.

“Current-account imbalances are once again exerting a powerful influence over currencies. The chart shows that the weakest currencies this year have been in countries with deficits, from Britain to South Africa.”

This is not to say that exchange rate depreciations on their own are sufficient to make much of a dent in the UK trade deficit for the root causes are supply-side in nature. But it will be interesting to see how much of an improvement we see in the UK trade figures over the next year or so as the combined effects of a sharp consumer slowdown and a weaker currency start to make an impact.

The Economist article is here


Red wine as a merit good

The red wine provided by Leith’s of London at the Business Studies conference yesterday went down very well at the end of a long week. And travelling home on the train I enjoyed reading this piece in the Economist on the health benefits of a couple of glasses of a decent red! Perhaps we should add red wine to the list of perceived merit goods! Part of the pleasure and benefit comes from anticipating the consumption of a good bottle. And behavioural economists would no doubt tell us that the private benefit is increased simply by thinking the red wine is expensive even if it isn’t! (The power of the placebo applied to wine lovers!).

The American Association of Wine Economists might have something interesting to say about this!  And there is a series of articles on wine economics in the latest version of the Economics Journal.


Statuesque in Edinburgh

The long overdue statue of Adam Smith was unveiled in Edinburgh yesterday. Here is the report from the BBC together with an appreciation from Dr Eamonn Butler, director of the Adam Smith Institute and the instigator of the project. The Scotsman also reports on the unveiling. I will take a closer look at the monument when I visit the Edinburgh Festival Fringe next month.

Defining a recession

Larry Elliott offers a timely short piece on differences in the definition of a recession. Whilst Brooke Masters and Norma Cohen in the FT look at the economic tea leaves after a week when so many of our bell-weather businesses such as Marks and Spencer, John Lewis, Taylor Wimpey and Bradford & Bingley.reported bad news.


Discretionary income takes a battering

Ernst and Young have published a survey of household discretionary income for the UK over recent years. Their definition of this measure of income is the income available for spending after tax contributions and essential monthly household bills and they have found that the average household is now 15 percent worse off than it was five years ago.  It is interesting that we see so many different surveys and alternatives measures of living costs and guides to living standards these days as confidence in the official data such as the CPI have lost credibility and support.

read more...»

Dictionary Corner!

Thursday, July 03, 2008

The Oxford English Dictionary has released the latest set of new words for June 2008 and the turbulence in global financial markets has made an impact! Business is also well represented in our ever-changing lexicon.

read more...»

Denmark the first to enter recession - form an orderly queue please

Denmark has become the first European nation to go into recession on July 1—economic output officially shrank for two quarters in a row. Known for its high taxes and expensive cost of living, Denmark was not alone in enjoying a property bubble over the last decade, but the boom is well and truly over and a combination of falling wealth, and real incomes eroded by the spiralling cost of living has contributed to the economy moving into recession territory.

Spain, Ireland and the UK dont look to be too far behind!

Here is a short report from the Guardian

Cartoonists and Climate Change

Some stunningly good cartoons here in the Independent.

A View from China’s Middle Kingdom

Tom White has been in China in the last few days and I recommend his post over at the Business Studies blog. Here is the link.

Sinking economy - but how deep?

The Economist features the ‘sinking’ British economy on their front cover this week. Over at the Telegraph, Edmund Conway writes about a risotto recession whilst in the Independent, the sage Hamish McRae reflects that most people who are harking back to the stagflation of the 1970s are not actually old enough to remember what it was like! And he argues that the world is better placed to withstand the current oil price shock than thirty years ago.

Starbucks and AMT

York Station this morning ...... and I just had enough time before jumping on a train bound for London KX to grab a coffee and a bar of chocolate from AMT coffee - the first national coffee chain in the UK to be 100% fairtrade. It was a great coffee at a fraction of the price I would have paid on the train itself or at Starbucks. AMT will become my default choice on future train and airline journeys. I recommend AMT to you all.

Today’s Big Question in the Independent is about the fading charm of Starbucks and one of the sections alerts us to the mystery of the short cappuccino which Tim Harford and others have written about in the past. There is a really good graphic that could be used in a classworksheet on competition in the retail coffee industry.

Purchasing data hints that a recession is near

A double batch of new data on confidence among purchasing managers in manufacturing and services suggests that economic conditions in the UK are deteriorating quickly increasing the risks of a recession in the next twelve months. The Purchasing Managers survey’s headline index of overall conditions in the economy’s most crucial industries slumped to just 47.1 for last month. On a scale where any reading under 50 indicates contraction, this was the second month in a row that the numbers came in well below 50 and the downward slide is clearly apparent in our chart. Indeed this was the weakest reading on sentiment among buyers of raw mateials and components since the Autumn of 2001 and the immediate aftermath of the 9-11 attacks. Purchasing Managers data is often regarded as a lead indicator of turning points in the economic cycle.

Oil dependency and market failure

Chancellor Alastair Darling offered us these brave words

““If we we don’t reduce our dependence on oil ... we will continue to expose ourselves to the uncertainty of the oil market…..It is important that we reduce our dependency far more quickly than perhaps people thought was necessary.”

It is a shame that the government has wasted over eleven years in producing a credible and coherent energy policy. I was chatting to a guy on the train down to London this morning. He had over twenty-five years experience in the energy industry, much of the latter part of his career was within the nuclear sector working as a senior engineer. He made a rather pertinent point that, once we realise that moving decisively to nuclear is inevitable, we will run into major shortages of the skilled personnel needed to construct the new nuclear power stations. Most of those required have long since retired from the industry and we will be dependent on nuclear engineers from the USA and far east Asia.

Anatole Kaletsky was on good form in the Times today writing about three market failures in the oil industry

1/ The huge gap between the marginal cost of producing oil and the marginal cost of supplying oil substitutes
2/ Monopoly power in the oil business - controlling the supply of oil - “there is nothing efficient about the level of prices set by the market”
3/ The ramping up of oil prices by institutional investors and the incentives to invest in oil exploration rather than much needed investment in non-oil new technologies

The rest of Anatole’s article can be found here

Recession fears - signals from the real economy

This eleven minute report from the Today programme is fasincating ... looking at real signals from construction, retailing and advertising. James Naughtie interviews M&S Chairman Sir Stuart Rose, Nick Edwards, of Construction News, and businessman Sir Martin Sorrell. All recessions are different but they all have a proximate cause… a tipping point when expectations change and both businesses and consumers change their behaviour and simply stop spending and producing as much as they had become accustomed to.

Starbucks on the slide

Here is a really interesting story for business economics students to follow in the weeks and months going forward. Starbucks has announced that it plans to close one store in 20 across its US branch network - meaning the loss of around 600 stores.

read more...»

Staying local

Wednesday, July 02, 2008

Another example of how consumers are starting to respond quite significantly to the surge in fuel costs. Experian has produced figures showing that the number of people visiting out-of-town retailers in June fell 5.8pc against the same period last year, compared with a 1.5pc fall in town centres. Average spend per head tends to be much larger for out-of-town shopping visits so the impact on like-for-like sales is going to hit retailers with a strong out-of-town presence pretty hard. But this is good news for the future of local high streets even though the chain supermarkets have been muscling in on this space with their convenience store formats. Great news too for online retailers?

“Experian said there were 282 non-food retail bankruptcies in the three months ended May, up almost 25 percent on the year and suggesting a “dramatic acceleration” in business failures.”

Commodity prices and vertical integration

“Suddenly, it is not the customer who matters; it is the supplier. The stuff that arrives at the factory loading bay is now expensive; shortages and logistical logjams are playing havoc and the company that sells you a vital commodity is digging in its heels, refusing to renew a long-term contract without a big price increase. It is time to start thinking about vertical integration. Owning every segment of the production process from metal mine to packaging plant is an unfashionable idea, but in some industries it is coming back with a vengeance.”

A really good piece here from Carl Mortished on the increasing importance to companies of having a great degree of control over their supply chains through vertical integration. There is another feature here in Forbes magazine about the shift towards vertical integration in the steel industry, and one here about Google and vertical integration.


Oil prices and demand for scooters - cross elasticity

High gasoline prices is having a classic cross-price elasticity of demand effect. Sales of bicycles, scooters and motorcycles are up. Sales of sport-utility vehicles are down as consumers respond to the changing real cost of getting about town using a motorcar.

Market demand for scooters is said to be soaring in many parts of the USA - here is a link to an article in the Dallas News. Pure economics and a certain nostalgia seem to be two driving forces behind the shift in the pattern of demand. And as sales of scooters rises, so too does the demand for complementary services such as motorcycle-safety courses and scooter riding equipment such as helmets, gloves and motorcycle jackets,

Meeting basic needs and wants

According to a fresh report from the Joseph Rowntree Foundation “According to members of the public, a single person in Britain today needs to earn at least £13,400 a year before tax to afford a basic but acceptable standard of living. The minimum income is above the official “poverty line” of 60% median income, for nearly all household groups. This shows that almost everybody classified as being in poverty has income too low to pay for a standard of living regarded as “adequate” by all members of the public who took part in this research.”

This research will be terrific to use in the classroom when teaching about living standards, positive and normative statements, and disagreements between people about what constitutes a modest but adequate income required to meet our daily needs and wants. Crucially it tries to identify how we should define a minimum income standard.

“A minimum standard of living in Britain today includes, but is more than just, food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society. The minimum seeks to exclude items that may be regarded as ‘aspirational’ – it is about fulfilling needs and not wants.”

The full copy of the research is available here in pdf format


Expectations and oil prices

The debate rages about who is responsible for the 100% increase in the price of a barrel of crude oil over the last year - speculators? fundamental supply and demand factors? Or a combination of influences on the market. Martin Feldstein’s article in the Wall Street Journal today is excellent in linking price volatility to the low price elasticity of demand and supply in the market in the short run.

read more...»

Reverse de-coupling may save the USA’s bacon

Tuesday, July 01, 2008

Fred Bergsten, director of the Peterson Institute for International Economics writes about the de-coupling hypothesis in today’s Financial Times and how it is now working to improve the US trade position and reduce the risk of recession.

read more...»

EU Tells Airlines to Pay for Emissions

Monday, June 30, 2008

An important announcement yesterday in the contining battle between the EU and the airline industry over curbing CO2 emissions.

read more...»

Businesses hold the key to the next stage of the cycle

These are turbluent times for the economy - but the macroeconomic numbers of output, investment, jobs and pay are simply the aggegate of many thousands of decisions taken by individual businesses across the length nd breadth of the economy. How the UK economy emerges in the current downturn will depend crucially on the strategies adopted by the busines sector. It is a huge challenge - to make money and protect margins in a time when cost pressures are enormous, when demand might be slipping away and productivity growth is slowing down as capacity utilisation drops.

read more...»

The here and now on inflation

There will be many references to the stagflation of the 1970s as we head into dangerous times for inflation over the next year or so ... will inflation expectations take off and create havoc for the Bank of England as it seeks to bring inflatyion back into target range? Hw much of the renewed burst of inflation we are seeing at present is home-made and how much is coming from external forces over which we have little or no influence?
Three articles on the inflation issue were published today all of which are worth browsing:

read more...»

Stern warns that cost of tackling climate change has doubled

Nick Stern - perhaps the most famous economist alive in the world today? His talk at the RES Annual Lecture in November 2007 was one of the highlights of my year and no doubt his diary is full for the enxt couple of years at least! Lord Stern of Brentford is quoted as saying that the cost of tackling climate change has increased significantly since the publication of the Stern Report in October 2006. Speaking at the launch of the Carbon Ratings Agency he is quoted in the Guardian as saying that said evidence that climate change was happening faster than had been previously thought meant that emissions needed to be reduced even more sharply. The rest of the Guardian article is here.

Confidence slumps - a tipping point?

Consumer confidence in the UK has slumped to its lowest level in 18 years. The latest consumer confidence barometer from GfK/NOP shows overall confidence in prospects for the economy dropped five points to -34 in June, only one point above the record low of -35 reported in March 1990. Plenty of reports on this today - here is the link to the Guardian’s coverage and also to the Times.

We should remember the usual caveats about this being a survey subject to sample error and that people’s expectations of where the economy is heading does not always correlate with their own experiences. The hard numbers on jobs, real take-home pay, housing repossessions and mortgage costs will have a heavier bearing on spending decisions in the near term. But these confidence numbers are truly dire and seem to suggest to me that 2009 will be a very difficult year for the UK economy.

Fairtrade drives forward - Harriet Lamb

Sunday, June 29, 2008


Harriet Lamb, Director of the Fairtrade Foundation, was on sparkling form at the Economics Teacher National Conference last Friday.  Her presentation outined the business case for fairtrade and Harriet was pretty convincing the face of some tough and insightful questioning from the audience.  You can download the handouts from her presentation here…

read more...»

At the mouth of the Tyne

I am on Tyneside for a couple of days revisiting some old haunts and finding some new ones - including the delightful eighth century parish church at Warkworth. I spotted this feature on BBC online about the renaissance of the Port of Tyne (a not for profit organisation) which has been named international port of the year and which reflects the increasing diversification of the North East economy. This is a really good article for economic geographers.

A world when oil is $200 a barrel

I filled up my car with diesel for the first time since early April today and finally got a taste of the dramatic rise in the price of fuel on UK forecourts. Where crude oil prices will be in a few weeks or months time is pretty hard to forecast in a world where prices move by several dollars every day. But how would our world change if crude oil climbed to $200 and (more importantly) stayed there for a decent length of time? Martin Zimmerman has this interesting piece in the Los Angeles Times which covers issues such as the impact on global shipping prices, the number of people choosing to take early retirement or work at home to avoid the commute; rising demand for services available in close proximity and an increase in energy-related crime.

“Envisioning a world of $200-a-barrel oil - As forecasters take that possibility more seriously, they describe fundamental shifts in the way we work, where we live and how we spend our free time.”

Here is the full article

Weigh less - pay less

More than one student has asked me in the past why airlines so not link some of the cost of a ticket to the actual weight of the customer? After heavier passengers might be expected to have a detrimental effect on fuel economy and perhaps on the volume of carbon emissions?

read more...»

Tim Harford on behavioural studies

Tim Harford was on great form yesterday at our London conference drawing on some themes in his new book The Logic of Life. Bizarrely I was the only one in the audience prepared to admit that that I have been on a speed date, but no matter, Tim gave me some great advice on who I should take with me to dramatically improve my chances next time around! Here in Slate Magazine, Tim mentions some of the work of Dan Ariely (Predictably Irrational) and Richard Thaler (Nudge). I am hoping to finish Nudge whilst walking in the Northumberland hills over the next couple of days.

Here is another interesting feature on the economics of happiness

Hedonic Man by Alan Wolfe (New republic) and a review of Dan Ariely
The new economics and the pursuit of happiness

Collapse in savings points to a very rough ride

Saturday, June 28, 2008

Karen Ward from HSBC flagged this quite startling new figure for the UK savings ratio in her excellent talk on the UK economy at the London Conference on Friday. According to the Guardian, “Consumers are running down their savings to maintain spending, with the household saving ratio more than halving from 3% to 1.1%, the lowest since 1959.”

read more...»

Whisky in demand but supply is inelastic!

The Times carried a good story today related to elasticity of supply in the Scottish whisky industry…

read more...»

Infrastructure and Growth

Two recent stories published by the Economist are useful in understanding the significance of investment in critical infrastructure and sustaining long run economics growth

read more...»

My Domain?

Friday, June 27, 2008

The BBC’s technology correspondent Rory Cellan-Jones reports here on proposed changes to the internet domain registration system that are likely to swpan a new generation of popular internet addresses. This video clip could be a good resource when teaching students about the role of property rights in a market economy. If the reforms go through we might see another stampede of so-called cyber-squatters rushing to register some of the really popular domain names followed by a backlash as established online and bricks and mortar businesses look to protect their trademarked names by claiming that these domain names actually belong to them!

Information failure down the market

Wednesday, June 25, 2008

A neat story here of possible information failure for consumers who frequent the ever-growing number of farmers markets around the country. Some of the farmers markets I have been dragged to in the past have resembled nothing more than glorified car boot sales - presumably the same rules of thumb apply for anyone risking buying what purports to be ‘locally grown food’ at premium prices!

My Primark Answer, and More Questions

I’ve just finished reading Tom’s excellent The Primark Question over on the Business Studies blog and it has inspired me to write an entry on the so-called “sweatshop economics”.

read more...»

The Squeeze is on!

Tuesday, June 24, 2008

Higher oil prices; declining property valuations; more expensive mortgages, the threat of a super-spike in energy bills this winter, sharp rises in food prices, fears of rising unemployment - little wonder that consumer confidence has fallen so sharply over the last three months. The BBC web site offers this very visual resource on the dark forces facing British consumers. Excellent for AS macro.

Social viagra?

Could this be a possible new merit good?

“Scientists in the US found that oxytocin, a natural hormone that assists childbirth and helps mothers bond with newborn babies, helps reduce anxiety and calm phobias. There are also signs it may help people with autism.”

More here from the Telegraph and also from the Times

It would be nice to have a bottle of the stuff handy to spray over people at boring committee meetings and in classrooms where students are by default passive sponges despite our best efforts!



Oxbridge E&M - Management Blogs

Students wanting to keep right up to date and strengthen their application for degrees such as economics and management have plenty of online resources available to help them. My advice to sixth formers is to stay well clear of management textbooks and the sort of “Ten favourite bedtime habits of successful entrepreneurs” that litter airport book shelves! Here are a few suggestions.

read more...»

Changing vehicles - a quick thought experiment

Taken from Dan Ariely’s excellent site - here is a question to pose to your students!

read more...»

Labour shake out

Monday, June 23, 2008

Take your pick of forecasts about just how severe the jobs squeeze will be as the British economy enters slowdown mode. Two reports today estimate that between 330,000 and 440,000 workers could lose their jobs in a labour shake-out. On the surface these are pretty big numbers, but we need to consider what has happened to employment in total over the last fifteen years to get a better perspective.

read more...»

Michigan’s Minimum Wage

A good story here courtesy of Mark Perry’s blog from across the pond concerning fears that a fresh hike in the Michigan minimum wage from $7.15 to $7.40 per hour will create higher unemployment in a state where the jobless rate is already relatively high

read more...»

Book signings

Our London Economics Conference is just four days away and I am really looking forward to meeting up with loads of old friends and making some new acquaintances at the British Library on Friday. The pre-lunch talks and Q&A from Tim Harford and Harriet Lamb look set to be lively and entertaining and I am pleased that we are able to make available some copies of their new books at a very attractive price for delegates there on the day. Both Tim and Harriet will be happy to sign copies as we enjoy a lunch from Leith’s of London! Conference details are here. Still room for a few more people!

Economist on the Endowment Affect

An important aspect of behavioural economics heading into increasing prominence is the endowment effect. Put simply, people place a high value on the things that they own even if this ownership has been distributed randomly across different people or groups.

“The endowment effect was controversial for years. The idea that a squishy, irrational bit of human behaviour could affect the cold, clean and rational world of markets was a challenge to neoclassical economists. Their assumption had always been that individuals act to maximise their welfare (the defining characteristic of economic man, or Homo economicus). The value someone puts on something should not, therefore, depend on whether he actually owns it. But the endowment effect has been seen in hundreds of experiments…....”

Excellent stuff, read the rest of the article here

Mark Easton on ‘nudging’

Mark Easton from Newsnight writes about nudging and public policy Giving greater emphasis to positive role models and playing soothing music at rail and tube stations are two of my own suggestions.

Price anchoring

Sunday, June 22, 2008

There is a really good article on price anchoring and the iPhone in the Washington Post today. 

read more...»

Will your grand-children fly?

This questions was one of many posed in the documentary film “A Crude Awakening”  which I showed to my Year 13 students last week as part of our post-AS stupor! It is a well made film - winner of a prize at the Zurich Film Festival - which focuses on the peak oil theory and whether technology can come to the rescue of countries that remain fixed on crude oil and its by-products.

read more...»

New A Level Specifications for Economics - Have Your Say

Economics departments around the UK and overseas have been making their choices about which new A Level Economics specification to use from September 2008.  How has the process been for you and your colleagues?  What have you decided to do?  Has the intensive marketing of new specifications by the main exam boards helped make the choice?  If you have decided to change exam board, what were the key reasons?

Here is your chance to have your say on the new Economics specifications. Latte magazine is publishing a special feature on this topic, based on your responses to an online survey.  Click on read more to complete the survey for your school or college…

read more...»

Inflation - the silent thief

Saturday, June 21, 2008

Many of the effects and costs of inflation on individuals and families depend on whether people can take steps to protect themselves from the impact of rising prices.

read more...»

Page 125 of 137 pages ‹ First  < 123 124 125 126 127 >  Last ›

Enter your Email

WOW! Economics 2015

Dates and Locations announced for WOW! Economics 2015

AS, A2 & IB Economics Revision Notes

Latest resources

Resource categories Blog RSS feed Blog RSS Feed
© Copyright Tutor2u Limited 2013 All Rights Reserved