http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2009 2009-11-07T12:42:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/great-examples-of-near-pure-monopolies/ http://www.tutor2u.net/blog/index.php/economics/comments/great-examples-of-near-pure-monopolies/#When:12:42:00Z A big hat tip to one of my students Arno Albici for spotting a superb article in the Economist about a cluster of mid-sized Japanese manufacturers who continue to enjoy near pure-monopoly power in highly specific, high value-added businesses. decades of industry expertise and reinvesting profit to fund high levels of research and innovation continue to give these companies a remarkable competitive strength in the market. The barriers to entry for rival manufacturers are very high and this helps to explain the limited contestability in the global marketplace. For example: Shimano earns around $1.5 billion a year by supplying 60-70% of the world’s bicycle gears and brakes YKK makes around half the world’s zip fasteners by value, 75% of motors for hard-disk drives in computers come from a firm called Nidec 90% of the micro-motors used to adjust the rear-view mirror in every car are made by Mabuchi “Many technology products have become commodities, but certain components have not, since they require continual innovation. So entry barriers to the business of making them remain high, and although the margins on the final goods have deteriorated, the margins on specialised, high-end components are still juicy.: Much more here A2 Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, Manufacturing Industry, Teaching of Economics 2009-11-07T12:42:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/us-jobless-figure-climbs-above-10-per-cent/ http://www.tutor2u.net/blog/index.php/economics/comments/us-jobless-figure-climbs-above-10-per-cent/#When:17:53:00Z It perhaps has a political significance greater than its marginal economic impact - but when one worker in ten is out of work, an economy truly is on the verge of mass unemployment. The US economy is showing signs of a rebound in demand and production but the labour market data continues to show the depth of the preceding slump. Over eight million Americans have now lost their job since the start of the recession in December 2007, with more than 15m Americans now out of work. Here are some links to coverage of this news. Guardian: US jobless rate hits 10% Independent: Sharp rise in US unemployment figures A2 Macro, AS Macro, Credit Crunch, Unemployment, US Economy 2009-11-06T17:53:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/cash-is-the-enemy-of-creativity/ http://www.tutor2u.net/blog/index.php/economics/comments/cash-is-the-enemy-of-creativity/#When:09:24:00Z The Founder and CEO of King of Shaves, Will King gave an engaging and dynamic presentation to a large audience of economics and business students at our Entrepreneurship Society last night. The UK sales figures for the new Azor razors are quite remarkable and are testimony to the impact that this challenger brand is having on a monopolistic/duopolistic market. In the past four weeks in the UK KoS has sold 107,000+ Azor system razor handles and 602,000+ Azor Endurium cartridges. Conventional MBA theory would suggest that the barriers to entry are just too high for a new firm to dislocate and disrupt the cosy market power of Gillette and Wilkinson Sword. The razor remains of the most patent protected products in the world and the billions of blades sold each year (at profit margin of over 90 per cent) represent an enormous cash cow for the US shaving giants. But easy cash can often stifle genuine creativity. The momentum of passionate and persistent challenger brands who truly understand the web and who talk to customers in a different way can make a big difference. The big Mo is with King of Shaves and it is easy to see why! Will reports on his visit here Our next meeting (Thursday 12th November) focuses on global economics and is with Paul Donovan, Chief Economist of UBS. Business Economics, Teaching of Economics 2009-11-06T09:24:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/caffeinated-stimulus-to-demand/ http://www.tutor2u.net/blog/index.php/economics/comments/caffeinated-stimulus-to-demand/#When:09:03:00Z Coffee shops seem - by and large - to be surviving the recession and, in many cases thriving. The number of independent coffee stores has grown by more than 7% in the last year. Across the country hundreds of new stores have opened. This doesn’t make coffee an inferior good - whose demand rises as real income falls. Instead there are stronger forces at work, for example the rise of the nomadic entrepreneur who prefers to work away from expensive offices. Hugh Pym provides an overview of the strength of retail coffee demand in this piece from BBC news. London has the highest concentration of coffee stores in the UK followed by Edinburgh. Not every brand is enjoying the same performance. Costa Coffe which has 974 stores in the UK has reported like-for-like sales growth yesterday of 2.5 per cent in the six months to the end of August. Caffè Nero, which has almost 400 UK outlets, is believed to be trading at a similar level to Costa, although Starbucks has like-for-like sales down by an estimated 4.5 per cent to 5 per cent in recent months. Brand fatigue in action. A2 Micro, AS Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action 2009-11-06T09:03:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/tim-harford-at-the-keynes-society/ http://www.tutor2u.net/blog/index.php/economics/comments/tim-harford-at-the-keynes-society/#When:17:34:01Z We are delighted to have the Undercover Economist Tim Harford returning to the Keynes Society on Thursday 19th November at 8-45pm in Upper School. Hot on the heels of his hugely successful books The Undercover Economist and The Logic of Life, Tim has made a timely and swift return to the top of the book charts with Dear Undercover Economist: The Very Best Letters from the “Dear Economist” Column: The Undercover Economist Solves Life’s Everyday Mysteries and Problems. Tim’s ability to connect with his audience and make Economics appealing, relevant and thought provoking is well established - it should be another super evening. A warm welcome is extended to teaching colleagues. We are likely to be pretty full for this meeting so if you are coming and plan to bring some students.  Teaching of Economics 2009-11-05T17:34:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/paul-donovan-at-the-keynes-society/ http://www.tutor2u.net/blog/index.php/economics/comments/paul-donovan-at-the-keynes-society/#When:17:29:00Z On Thursday 12th September we are delighted to welcome Paul Donovan, Chief Economist of UBS to speak at the Keynes (Economics) Society. Paul is a very highly rated city economist and a tremendous speaker. It should be a terrific opportunity to take the pulse of where the global economy is at this crucial stage of the cycle and just fifteen months after the meltdown in financial markets. A warm welcome is extended to teaching colleagues for this meeting. Please if you would like to come and if you plan to bring some students along. The meeting starts at 8-45pm in the Egerton Room, Eton and lasts one hour. Teaching of Economics 2009-11-05T17:29:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/sub-prime-carbon-government-failure/ http://www.tutor2u.net/blog/index.php/economics/comments/sub-prime-carbon-government-failure/#When:11:02:00Z This will be a teaching topic I return to in the spring, but Radio 4 today carried an excellent report by Roger Harrabin from the BBC on criticisms of the EU’s carbon trading scheme. The report focuses on new research from Friends of the Earth that is highly critical of the emissions trading scheme. “FoE says most trades are done not by polluting industries, but by speculative traders packaging carbon credits into complex financial products similar to those which triggered the sub-prime mortgage crash.” More here from Friends of the Earth which included a link to their report (in pdf format). Here is the link to the Radio 4 discussion - CEO of the European Climate Exchange Patrick Birley and the author of the FOTE report, Sarah Jane Clifton, discuss the rise in the carbon trading market.  A2 Micro, AS Micro, Cost Benefit Analysis, Environmental Economics, European Economy, Government Intervention, Government Failure, Teaching of Economics 2009-11-05T11:02:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/judging-the-impact-of-qe/ http://www.tutor2u.net/blog/index.php/economics/comments/judging-the-impact-of-qe/#When:10:32:01Z The BBC carries this interesting video discussion with De Anne Julius about the impact of the Bank’s Quantitative Easing programme designed to support demand and lending in the UK economy. She emphasises the importance of gradually withdrawing the QE programme and she argues that the main effect of QE so far has been to hold down the interest rate on government debt (gilts) but that there is little evidence so far that QE has enabled a rise in lending to consumers and small businesses. The Indy’s Big Question looks at QE in their edition today. A2 Macro, AS Macro, Credit Crunch, Cycles and Shocks, Monetary Policy, Recession Watch!, UK Economy 2009-11-05T10:32:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/job-vacancy-economics-teacher-at-tonbridge-school/ http://www.tutor2u.net/blog/index.php/economics/comments/job-vacancy-economics-teacher-at-tonbridge-school/#When:10:02:00Z Thanks to Dr John Richards for letting us know about a new job vacancy for an Economics Teacher to join the successful department at Tonbridge School.  Details have just been put on the Tonbridge website here. Again, please don’t forget to mention that you heard about the job from tutor2u - it helps Tonbridge identify the source of applications. 2009-11-05T10:02:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/stimulating-times/ http://www.tutor2u.net/blog/index.php/economics/comments/stimulating-times/#When:18:19:00Z I was drawn to this very interesting graphic from the latest IMF report on the state of government (fiscal) finances in countries around the world.  A2 Macro, AS Macro, Credit Crunch, Cycles and Shocks, Fiscal Policy, Keynesian Economics, Teaching of Economics, UK Economy 2009-11-04T18:19:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-economists-new-clothes/ http://www.tutor2u.net/blog/index.php/economics/comments/the-economists-new-clothes/#When:16:04:00Z This superb article from Stephanie Flanders provides a great discussion in her Stephanomics blog on the discipline of Economics from the view of some big hitters including Scholes (of Black-Schole options fame); Charlie Bean (of Bank of England fame); Lord Skidelsky (of Keynes fame); and Thaler (of Nudge fame). 2009-11-04T16:04:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/investment-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/investment-teacher-presentation/#When:08:34:01Z This revision presentation is ideal for AS Macro students who wish to build their knowledge and understanding of the important topic of investment and its role in driving macroeconomic performance. The presentation stays clear of AD-AS or PPF diagrams as we cover this analysis next - I will post a second presentation on applying investment to the AD-AS framework sometime next week. Launch interactive presentation on the economics of investment Download printable pdf (slides) AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, UK Economy 2009-11-04T08:34:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/unemployment-the-uk-labour-market-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/unemployment-the-uk-labour-market-teacher-presentation/#When:08:21:00Z This updated revision presentation examines the key issues involved with rising unemployment in the UK labour market.  It looks at new data on the causes and consequences of UK unemployment and also touches on the regional, gender and other differences in the experience of unemployment - there is a set of right up to date charts on these aspects. Launch interactive presentation on UK unemployment Download printable pdf version of the slides A2 Macro, AS Macro, Labour Economics, UK Economy, Unemployment 2009-11-04T08:21:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/job-vacancy-head-of-economics-at-oundle/ http://www.tutor2u.net/blog/index.php/economics/comments/job-vacancy-head-of-economics-at-oundle/#When:22:06:00Z We are always happy to support requests from colleagues to highlight relevant job vacancies - and here is a cracker.  There is a vacancy for Head of Economics at Oundle School… 2009-11-03T22:06:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/glaxosmithkline-and-pfizer-choose-to-collaborate-on-hiv-drugs/ http://www.tutor2u.net/blog/index.php/economics/comments/glaxosmithkline-and-pfizer-choose-to-collaborate-on-hiv-drugs/#When:20:34:00Z Here is an excellent highly relevant article on cooperative behaviour between oligopolistic giants. Two of the world’s biggest drugs companies GlaxoSmithKline and Pfizer have announced a plan to merge their HIV treatments in a joint venture. ViiV Healthcare is an attempt for both companies to limit the risks of costly races to find new profitable treatments for HIV/aids and give them an opportunity to counter the loss of the revenues as these companies lose patent protection and are open to competition from generic drug makers. It is a strong reminder of the very high fixed costs of research into new drugs; the long lead times between new drug development, testing and finally getting it to the market. And also the impact of the entry of generic drugs into markets once patent protection runs out. The new company has a 19% share of the global drugs market, in comparison to the Californian company Gilead’s 31%. Drug firms’ collaboration pools HIV treatments (Independent) IPO of HIV business is ‘up to shareholders’ (Telegraph) A2 Micro, Business Economics, Oligopoly, Teaching of Economics 2009-11-03T20:34:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/newsmap/ http://www.tutor2u.net/blog/index.php/economics/comments/newsmap/#When:18:06:00Z For those of you who are “visual learners” or have a predilection for seeing things visually rather than in a long list of text hyperlinks, (or indeed don’t have time or the inclination to spend time sifting through the plethora of news articles in any given day) this neat website offers a different way of catching up on the hot stories of the day. You can tweak the settings to focus on Business news from your particular country Quirky Trivia 2009-11-03T18:06:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/rbs-lloyds-sell-off/ http://www.tutor2u.net/blog/index.php/economics/comments/rbs-lloyds-sell-off/#When:17:51:00Z The UK market has fewer bank brands than most other countries and choice has fallen in recent years after the Spanish bank, Santander bought up Abbey, Alliance & Leicester and Bradford & Bingley, and Lloyds has taken over all of HBOS’s brands. However, as per a ruling from the European Commission, RBS will sell 318 branches while Lloyds will dispose of more than 600 branches over the next four years.  A2 Micro, Business Economics, Competitive Markets, Oligopoly, Government Intervention, Regulation 2009-11-03T17:51:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-revision-workshops-december-2009-fulham-birmingham-manchester/ http://www.tutor2u.net/blog/index.php/economics/comments/economics-revision-workshops-december-2009-fulham-birmingham-manchester/#When:11:46:00Z The session titles for the popular AS & A2 Economics revision workshops in December 2009 are outlined below.  Each one-day workshop has a distinctive micro flavour (focusing on Unit 1 / Unit 3) of the three main Econ exam boards.  Bookings are still being taken, though I think we’re pretty much full for AS in London already - so please send your details in as soon as possible. Bookings can be made here AS Economics Workshop Session 1. Essential market mechanism Session 2. Core business economics Session 3. Market failure basics Session 4. Market failure extras Session 5. Government intervention Session 6. Success in AS Economics with great exam technique A2 Economics Workshop Session 1. Growth and objectives of firms Session 2. Economies & diseconomies of scale Session 3. Monopoly and oligopoly Session 4. Barriers to entry & contestable markets Session 5. Regulating markets Session 6. Mastering examination technique at A2 2009-11-03T11:46:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/johannes-huth-at-the-management-society/ http://www.tutor2u.net/blog/index.php/economics/comments/johannes-huth-at-the-management-society/#When:07:51:00Z Johannes Huth, Manager of KKR’s Operations in Europe will be speaking at our Management Society this Wednesday at 8-45pm in Upper School. His topic is “Mergers and Acquisitions”. A warm welcome is extended to all teaching colleagues who might want to come to the meeting. Teaching of Economics 2009-11-03T07:51:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/will-king-at-the-entrepreneurship-society/ http://www.tutor2u.net/blog/index.php/economics/comments/will-king-at-the-entrepreneurship-society/#When:07:49:00Z The Founder of King of Shaves Will King speaks at our Entrepreneurship Society this coming Thursday at 8-45pm in the Egerton Room. All student places have been taken but a warm welcome is extended to any teaching colleagues who might want to come to the meeting. Teaching of Economics 2009-11-03T07:49:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/john-eatwell-at-the-keynes-society/ http://www.tutor2u.net/blog/index.php/economics/comments/john-eatwell-at-the-keynes-society/#When:07:46:00Z Cambriddge economist Lord Eatwell is speaking at our Keynes Society this Thursday evening at 8-45pm in Upper School. Teaching colleagues who are in the vicinity and who might like to come are extended a warm welcome. Teaching of Economics 2009-11-03T07:46:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/flexible-taxation/ http://www.tutor2u.net/blog/index.php/economics/comments/flexible-taxation/#When:05:48:00Z A report in Monday’s Times examines the way in which local councils are trying to avoid increases in council tax bills over the next year. Focusing on London councils, it is expected that on average council tax bills will be frozen, with a number of councils actually reducing local tax bills for residents. This is due in part to low inflation, but also to the local elections in London which will take place next May acting as an incentive for councillors to reduce the burden on their electors.  A2 Macro, Fiscal Policy, Government Intervention, Standard of Living, UK Economy, Regional Economics 2009-11-03T05:48:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/perfect-competition-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/perfect-competition-teacher-presentation/#When:18:10:00Z This revised PowerPoint presentation will help take students through the model of perfect competition. Links within the presentation encourage students to explore further by accessing relevant blog posts and video resources. Launch interactive version of Perfect Competition presentation Download printable pdf version (slides) A2 Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Teaching of Economics 2009-11-02T18:10:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/super-cruisers-and-the-law-of-increased-dimensions/ http://www.tutor2u.net/blog/index.php/economics/comments/super-cruisers-and-the-law-of-increased-dimensions/#When:13:02:00Z Graphically illustrated in this short piece from the Telegraph! A2 Micro, AS Micro, Business Economics, Economies of Scale 2009-11-02T13:02:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/hot-wiring-the-brain-to-pay-off-more-debt/ http://www.tutor2u.net/blog/index.php/economics/comments/hot-wiring-the-brain-to-pay-off-more-debt/#When:11:01:01Z This report for Radio 4’s Money Box programme is a superb example of behavioural economics in action and in particular the anchoring effect. Researchers have found that by putting a small minimum required payment at the bottom of credit card statements, people’s brains are wired to pay less back than if no such minimum was posted. The result is that debt takes many years more to repay and the accumulated interest to the lender is naturally much higher. Offering low minimum repayments each month seems seems intuitively to benefit the borrower - making the servicing of debt appear more manageable on a month-by-month basis. But the anchoring effect in fact lifts the profits of finance houses. Anchoring describes the human tendency to rely to heavily or ANCHOR on a trait or piece of information in particular. Natural human nature is to rely to heavily on certain pieces of information and then adjust to that piece of information to account for other elements of the circumstance. When a price anchor is established for a product, it serves as a reference price for all similar products and substitutes. For example, when bread-makers were first introduced to consumers in the USA at a retail price of $275, consumers were not prepared to buy them. However, when a similar product was priced at $400, consumers flocked to buy the $275 bread-maker because they perceived it to be available at a bargain price. This was because their price anchor had shifted from $275 per bread-maker to $400. Anchoring a price for a good or service at a higher level helps to attract consumers to products priced below the level of the anchor. A2 Macro, A2 Micro, Behavioural Economics, Teaching of Economics 2009-11-02T11:01:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/ofwat-plans-to-turn-the-tap-on-water-company-prices/ http://www.tutor2u.net/blog/index.php/economics/comments/ofwat-plans-to-turn-the-tap-on-water-company-prices/#When:06:28:01Z The Times today has an interesting article on the power battle between the water industry regulator OFWAT and the regional monopoly providers such as Thames Water. It appears that a much tougher pricing regime is planned for the utilities leading to cuts in the real price of water supplies for consumers. “Every five years, Ofwat sets limits on prices that water companies in England and Wales can charge. For 2010-15, it has proposed that, before taking inflation into account, bills should be reduced for many customers, bringing the average annual water and sewerage bill down by 4 per cent from £344 to £330 by 2015. The water companies had wanted a £28 rise to fund their business plans.” OFWAT wants the utilities to invest more in in improving drinking water quality, cutting leakage levels and raise the number of metered households from 36 per cent to 50 per cent (in a bid to control water usage). But will imposing real price cuts help achieve this objective? The aim is to have a pricing regime that forces the utilities to raise productivity and cut out as many inefficiencies as possible. Water is a good example of where a strong regulator is needed because of the absence of competition - after all consumers can’t switch supplier if they are given a poor service. A2 Micro, Business Economics, Monopoly, Government Intervention, Regulation 2009-11-02T06:28:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-in-the-news-quiz-2-november-2009/ http://www.tutor2u.net/blog/index.php/economics/comments/economics-in-the-news-quiz-2-november-2009/#When:20:57:00Z The first weekly Economics quiz after half-term.  Were you keeping up-to-date? Launch interactive version of Economics in the News 2 November 2009 Download printable pdf handout version Download SCORM-VLE import file Economics in News Quiz 2009-11-01T20:57:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/monopoly-and-entry-barriers-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/monopoly-and-entry-barriers-teacher-presentation/#When:18:41:00Z This updated presentation provides an overview of the role of barriers to entry in protecting the position of a monopolist. Launch interactive version of presentation Download pdf slide handouts A2 Micro, Business Economics, Competitive Markets, Monopoly 2009-11-01T18:41:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-saving-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-saving-teacher-presentation/#When:12:09:00Z This revision presentation examines recent data on the extent of saving in the UK economy. Launch interactive presentation on the Economics of Saving Download printable pdf of slides A2 Macro, Credit Crunch, Cycles and Shocks, Aggregate Demand, Saving, Monetary Policy, UK Economy 2009-11-01T12:09:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-recession-and-business-capacity-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/uk-recession-and-business-capacity-teacher-presentation/#When:11:38:00Z This streamed presentation provides a snapshot of the latest economic data on UK business capacity. The slump in output in the British economy has left many businesses and industries with a huge amount of spare capacity and the negative output gap is expected to grow beyond 6% of GDP in 2010 according to the OECD. A high level of spare capacity (or productive slack) has important consequences for jobs, inflationary pressures, planned investment and business profits. Launch interactive presentation on Recession & Capacity Download printable slides A2 Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Labour Economics, Recession Watch!, Teaching of Economics, UK Economy 2009-11-01T11:38:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/guardians-world-economic-cycle-guide/ http://www.tutor2u.net/blog/index.php/economics/comments/guardians-world-economic-cycle-guide/#When:19:48:00Z This is a fascinating time for keeping up to speed with where regions and countries are in their business cycles. The UK seems to be one of the laggards - Stephanie Flanders explores some of the reasons here - whereas the USA is tentatively starting a recovery. And demand and output in many emerging market economies remains strong. Click here for the Guardian’s interactive guide to the world economic cycle. A2 Macro, AS Macro, Credit Crunch, Cycles and Shocks, Global Economy, Recession Watch!, UK Economy 2009-10-30T19:48:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-us-economy-rebounds-teacher-presentation/ http://www.tutor2u.net/blog/index.php/economics/comments/the-us-economy-rebounds-teacher-presentation/#When:13:58:00Z Here is a topical teacher presentation that provides a snapshot of, and commentary on key economic data from the US as the world’s largest economy starts to pick up from the depths of the recession. Many questions remain not least the durability of a recovery and the extent to which the US experiences a jobless recovery. Launch streamed, interactive version - US Economy Rebounds Download PowerPoint (ppt) version: Mark Mardell reports on the latest US economic data in this BBC news video. Hamish McRae also reports on the state of health of the US economy in this piece from the Independent. A2 Macro, AS Macro, Credit Crunch, Cycles and Shocks, Global Economy, Recession Watch!, US Economy 2009-10-30T13:58:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/ib-economics-improving-evaluation-skills/ http://www.tutor2u.net/blog/index.php/economics/comments/ib-economics-improving-evaluation-skills/#When:12:28:00Z Here is a streamed version of the presentation I gave to the Hong Kong CPD day, focusing on how IB Economics students can improve their evaluation skills: Improving Evaluation Skills A2 Macro, A2 Micro, Teaching of Economics 2009-10-30T12:28:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/tutor2u-in-hong-kong/ http://www.tutor2u.net/blog/index.php/economics/comments/tutor2u-in-hong-kong/#When:11:13:01Z Eye weary and groggy from some fine Cathay Pacific house red, I have just landed hot foot from Hong Kong where I was the guest of Sha Tin College and a meeting of the Economics and Business Teaching Group from the English Schools Federation in Hong Kong. The whistlestop tour was great fun and I must thank everyone there for their warm welcome and superb organisation, not least Paul Hoang and his colleagues who put on the two day student conference and CPD event at their fine school. I will be posting some of the materials used in the Economics and IB blogs in the coming days....once the red leaves my system. Teaching of Economics 2009-10-30T11:13:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/youth-unemployment-and-the-recession/ http://www.tutor2u.net/blog/index.php/economics/comments/youth-unemployment-and-the-recession/#When:14:35:00Z This is a video of the presentation by Danny Blanchflower at the RSA this week.  Labour Economics, Recession Watch!, UK Economy, Unemployment 2009-10-29T14:35:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/230-million-unemployed-worldwide-the-economic-and-social-fallout/ http://www.tutor2u.net/blog/index.php/economics/comments/230-million-unemployed-worldwide-the-economic-and-social-fallout/#When:14:27:00Z I was listening to BBC Business World today and came across this revealing and thoughtful interview on the global impact of the huge rise in joblessness. According to the UN’s International Labour Organisation, there are upwards of 230 million unemployed people on this planet, around seven per cent of the workforce. This is a figure set to rise sharply despite an upturn in the global economic cycle - for as we know, unemployment is a lagging indicator. It tends to turn around with a delay after demand and production has started to rise again. A2 Macro, AS Macro, Cycles and Shocks, Global Economy, Labour Economics, Unemployment 2009-10-29T14:27:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/development-economics-sharp-practices-in-international-trade/ http://www.tutor2u.net/blog/index.php/economics/comments/development-economics-sharp-practices-in-international-trade/#When:07:44:00Z A new interactive resource from OXFAM provides a thought-provoking introduction into some of the issues facing developing economies. Development Economics, International Trade 2009-10-29T07:44:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-teachers-on-twitter-join-the-twibe/ http://www.tutor2u.net/blog/index.php/economics/comments/economics-teachers-on-twitter-join-the-twibe/#When:07:15:00Z Twitter is taking off as a means for keeping in touch with Economics - and now there is a dedicated Twitter Group for Economics Teachers.  If you are on Twitter, come along to the EconomicsTeacher Twibe and join your colleagues. Your Twitter feed is automatically added to the Twibe Page.  Teaching of Economics 2009-10-29T07:15:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/paul-mason-on-the-wall-street-crash/ http://www.tutor2u.net/blog/index.php/economics/comments/paul-mason-on-the-wall-street-crash/#When:23:31:00Z Paul Mason - BBC Newsnight’s Economics Editor - is running a series of reports this week to mark the 80th anniversary of the Wall Street Crash. They are likely to be superb and a great resource for students and teachers. Here are the links to Paul’s output. What caused the Wall Street Crash? (11 mins) How the crash changed everything (13 mins) Lessons of 1929 A2 Macro, AS Macro, Cycles and Shocks, Economic History, Global Economy, Keynesian Economics, Teaching of Economics, Pre-U Economics 2009-10-28T23:31:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/soros-launches-new-economic-think-tank/ http://www.tutor2u.net/blog/index.php/economics/comments/soros-launches-new-economic-think-tank/#When:17:59:00Z For many years the billionaire George Soros has been a trenchant critic of neo-liberal free market fundamentalism. He has developed his own theory of reflexivity - a variant on behavioural economics thinking - which stresses the importance of perceptions in markets and powerful feedback effects. The FT describes his theory as one where ‘ financial markets tend to influence perceptions of reality, which in turn feed back into markets.’ Now Soros has announced that he is putting $50m into a new think tank - the Institute for New Economic Thinking (INET) - one of the aims is a moving away from the dominance of high level mathematics in university courses (a seriously good move in my opinion) towards giving students stronger insights in behavioural traits and the importance of politics and history in driving how people operate in real markets. According to Soros “The (economic) dogma has lost touch with reality.” NET’s founding Advisory Board members include Nobel laureates George Akerlof (famous for his work on the market for lemons and asymmetric information) and Sir James Mirrlees, Michael Spence and Joseph Stiglitz, Willem Buiter (from the LSE) Ian Goldin (seen here giving a talk at TED) Charles Goodhart (creator of Goodhart’s law) Anatole Kaletsky (arch-contrarian from the Times) John Kay (from the FT) global economics experts Ken Rogoff and Jeffrey Sachs. Quite a powerful list of people - all of whom are never happy to accept the conventional wisdom. This is an economics think tank worth keeping a weather eye on. A2 Macro, AS Macro, Credit Crunch, Teaching of Economics 2009-10-28T17:59:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/new-series-of-bbc-earth-report-deforestation-and-externalities/ http://www.tutor2u.net/blog/index.php/economics/comments/new-series-of-bbc-earth-report-deforestation-and-externalities/#When:20:38:00Z BBC World’s Earth Report has just started a new series of reports and the first edition is a powerful programme on deforestation in Indonesia and the impact that this has on carbon emissions.  Across south east asia peat swamp forest is being drained to make way for oil palm or pulpwood trees. The destruction of tropical forests causes about 20 percent of global greenhouse gas emissions – more than the world’s entire transport sector – making tropical forest countries such as Indonesia, some of the biggest emitters of greenhouse gases in the world. Which incentives will be most effective in limiting the permanent damage of huge rates of deforestation and the costs of damaging burning trees? A2 Macro, AS Micro, Emerging Economies, Development Economics, Environmental Economics, Global Economy, Government Intervention, Government Failure, Market Failure, Externalities 2009-10-27T20:38:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/interactive-guide-to-selected-eu-economic-data/ http://www.tutor2u.net/blog/index.php/economics/comments/interactive-guide-to-selected-eu-economic-data/#When:10:56:00Z The Telegraph website has a useful interactive guide to a selection of data on member countries inside the European Union. Our chart shows indices for GDP and there is also information the allocation of EU spending by country, population size and density. European Economy, Single Market, Teaching of Economics, Pre-U Economics 2009-10-27T10:56:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/warning-businesses-at-risk-from-economic-recovery/ http://www.tutor2u.net/blog/index.php/economics/comments/warning-businesses-at-risk-from-economic-recovery/#When:19:26:00Z An excellent recent article in the ACCA magazine examines an interesting phenomenon - more businesses collapse at the beginning of a recovery than during the depths of a recession. Its all to do with working capital… A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Recession Watch!, UK Economy 2009-10-26T19:26:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/global-food-prices-and-the-terms-of-trade/ http://www.tutor2u.net/blog/index.php/economics/comments/global-food-prices-and-the-terms-of-trade/#When:11:55:00Z Agflation refers to a sustained increase in the general price of foodstuffs and in recent years we have become accustomed to seeing the prices of many basic staple products rising. The era of cheap food looks to be over for now on the back of significant demand-side factors, not least rising population levels, higher per capita incomes and speculative demand for foods as prices have become more volatile. Supply-side factors are also important in explaining strong inflation in food prices. Both sides of the market are discussed by Ambrose Evans-Pritchard in his column in the Telegraph today “Food will never be so cheap again” - plenty of applied microeconomics here in addition to the huge number of macroeconomic issues that the trend rise in food prices has caused. One of the big changes in a switch in the terms of trade away from food importers towards food exporters. But do higher food prices necessarily cause agricultural supply to expand? A2 Macro, AS Micro, Emerging Economies, Commodities Markets, Cycles and Shocks, Aggregate Supply, Demography, Development Economics, Global Economy, International Trade, Standard of Living 2009-10-26T11:55:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-dying-celtic-tiger/ http://www.tutor2u.net/blog/index.php/economics/comments/the-dying-celtic-tiger/#When:07:58:00Z The Irish Economy was a model highly regarded and eagerly sought by global leaders. The Irish government believed in the late 1990’s that they had found the model that was going to give sustainable economic growth and increased prosperity for all. This was all true until the gloabl economic crisis occured. The Irish Times featured an article on 7 Reasons Why Ireland Will Be Left Behind Post-Recession. This is a good read to start a debate about post recession economic consequences on different economies. A2 Macro 2009-10-26T07:58:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/13-fall-in-household-wealth-will-shape-any-2010-rebound/ http://www.tutor2u.net/blog/index.php/economics/comments/13-fall-in-household-wealth-will-shape-any-2010-rebound/#When:16:09:00Z One key reason to expect a more subdued recovery from the downturn is that the household sector in the UK has suffered a huge negative wealth effect over the last couple of years. Asset values have fallen but outstanding debts have not and it is this imbalance that will shape the nature of any rebound in consumer demand for goods and services even though the cost of borrowing is at unusually low levels. The National Institute has done some research on the negative shift in personal sector wealth and it is reported in this article in the Telegraph.  A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Recession Watch!, UK Economy 2009-10-25T16:09:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/peak-oil-theory-and-economic-implications/ http://www.tutor2u.net/blog/index.php/economics/comments/peak-oil-theory-and-economic-implications/#When:16:00:00Z There is a highly relevant article on the depletion of global oil reserves and how this might affect UK energy policy in the Telegraph. The article links to concepts such as the marginal cost of extraction of different oil fields and the viability of exploring for oil at different prices. “The timing of the global peak remains uncertain but the window is rapidly narrowing. Since 1993, the world has produced half as much oil as was produced in the preceding century and now uses as much oil as the UK has ever produced in only 10 months. On current estimates, we have used between 28pc and 56pc of recoverable conventional oil – with much of what remains being located in smaller fields in less accessible locations, or requiring “enhanced recovery” techniques to extract.” The rest of the article can be found here A2 Macro, Commodities Markets, Cycles and Shocks, Environmental Economics, Oil and Gas, Market Equilibrium and Price, Nature of Supply, UK Economy 2009-10-25T16:00:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/lessons-from-an-ad-man-superb-microeconomics/ http://www.tutor2u.net/blog/index.php/economics/comments/lessons-from-an-ad-man-superb-microeconomics/#When:11:58:00Z The wonderful Rory Sutherland wows the audience at the TED conference in Oxford with a superb sixteen minute talk on advertising and aspects of behavioural economics. It is an immensely watchable video that will allow you to discuss with your students concepts such as perceived value, symbolic value,intangible value, hedonic opportunity cost and some ideas for nudging personal behaviour in socially beneficial ways. We learn of the extraordinary value of placebos, the rebranding of the potato in Prussian Germany. That all value is subjective and that persuasion is better than compulsion. Some super examples too of Veblen Goods, price discrimination and how the framing of the Italian penalty points system for drivers in Italy has a different impact than for motorists in the UK. A2 Micro, AS Micro, Behavioural Economics, Business Economics, Teaching of Economics 2009-10-25T11:58:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/navigating-our-global-future-ian-goldin-at-ted/ http://www.tutor2u.net/blog/index.php/economics/comments/navigating-our-global-future-ian-goldin-at-ted/#When:10:04:00Z Ian Goldin speaking at the TED conference in Oxford in 2009. A short but deeply interesting talk about globalisation and some of the systemic risks and systemic shocks that are likely to become more virulent. A2 Macro, AS Macro, Economic Growth, Economics of Technology, Global Economy, Teaching of Economics, Pre-U Economics 2009-10-25T10:04:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/soaring-cocoa-prices-as-supply-fails-to-keep-pace-with-demand/ http://www.tutor2u.net/blog/index.php/economics/comments/soaring-cocoa-prices-as-supply-fails-to-keep-pace-with-demand/#When:07:45:00Z There is an excellent article in the Times today about the surge in the world price of cocoa. Cocoa prices have hit a 30-year high as poor weather threatens to drive the price of chocolate up again for Western consumers. Cocoa has reached $3,412 a tonne in New York as concerns deepened about demand outstripping supply for the first time since 1968. This is a really good article to use to consolidate students’ understanding of how shifts in supply and demand can lead to price volatility. And also the importance of price elasticity of demand and supply in shaping price changes. “The surge in price also indicates that cocoa is increasingly being used for financial investment rather than merely sold to industry” * What factors are limiting cocoa supply? * Why is demand from western economies rising - even though many are still in recession? * Will cocoa farmersd necessarily gain from higher world prices? AS Micro, Emerging Economies, Commodities Markets, Development Economics, GCSE Economics, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Price Volatility 2009-10-25T07:45:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/new-edition-of-etonomics-sept-09/ http://www.tutor2u.net/blog/index.php/economics/comments/new-edition-of-etonomics-sept-09/#When:05:16:00Z The latest edition of our school economics magazine Etonomics has just been published. There are articles on digital economics, the national lottery and behavioural economics, game theory and climate change, the future for world aviation, microfinance and the inevitability (or otherwise) of economic recessions.  A download can be requested here: A2 Macro, AS Macro, Teaching of Economics, Pre-U Economics 2009-10-25T05:16:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/chinas-growth-starts-to-climb-back-above-the-8-target/ http://www.tutor2u.net/blog/index.php/economics/comments/chinas-growth-starts-to-climb-back-above-the-8-target/#When:15:51:00Z China’s leaders have set ambitious targets for economic growth - with an aim of reaching 8% growth of real GDP in 2009, a year in which world trade has shrunk and much of the developed world has been mired in recession.  An enormous stimulus programme seems to be having an effect with the latest data showing a pick up in output and annualised growth of GDP climbing above 8.5%. Exports remain weak and many Chinese manufacturers are finding that the prices they are able to get from advanced economy importers continues to fall - the terms of trade have moved against them. Lifting domestic demand has become a key macroeconomic objective for the Chinese government. China has poured £354billion into spending on infrastructure in order to boost its domestic economy as exports have suffered. This BBC news video reports on the latest Chinese growth figures. See also BBC: China economic growth accelerates The Times: The dragon roars again after new figures put China’s output on a growth hat-trick A2 Macro, AS Macro, Emerging Economies, China Economy, Credit Crunch, Cycles and Shocks, Development Economics, Fiscal Policy, Global Economy, Recession Watch! 2009-10-24T15:51:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-development/ http://www.tutor2u.net/blog/index.php/economics/comments/broadband-and-economic-development/#When:13:51:01Z Access to and the speed and reliability of broadband infrastructure is one of the key institutional factors that impact on economic development. The lack of an affordable and cost-effective broadband network can be a huge barrier to economic growth especially in an age where companies in many rich countries are looking to outsource their back office and call centre services to countries where operating costs are lowest. The 2009 UNCTAD Information Economy Report provides a wealth of background information on the global digital divide. According to the latest report, businesses and consumers are 200 times more likely to have access to broadband in developed countries than in the poorest Least Developed Countries (LDCs). And the monthly cost of broadband access varies to an incredible degree - from over $1,300 a month in Burkina Faso, the Central African Republic to less than $13 in Egypt. A2 Macro, Emerging Economies, Business Economics, Economies of Scale, Cycles and Shocks, Aggregate Supply, Development Economics, Economic Growth, Economics of Technology, Global Economy, International Trade, Standard of Living, Teaching of Economics 2009-10-24T13:51:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/rwanda-invests-in-connecting-the-young/ http://www.tutor2u.net/blog/index.php/economics/comments/rwanda-invests-in-connecting-the-young/#When:13:14:00Z A deeply encouraging and inspiring report from Rory Cellan Jones on the One Laptop per Child policy being rolled out in Rwanda - a policy that aims to equip 100,000 students with access to the internet. Are there more important priorities than building an IT infrastructure such as meeting people’s basic needs and wants? Or can technology transform the economy just fifteen years after the genocide?  A2 Macro, Development Economics, Economic Growth, Global Economy, Standard of Living, Supply-side policies, Teaching of Economics 2009-10-24T13:14:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/human-development-index-for-2009/ http://www.tutor2u.net/blog/index.php/economics/comments/human-development-index-for-2009/#When:10:45:00Z The Economist chose the release of new data on the Human Development Index as the subject of its chart of the day - available here together with a short commentary. It would make an excellent chart to use as part of a teaching handout. “Mozambique has improved the most, scoring almost 50% higher in the 2007 index than it did in 1990. Many other African countries have also seen increases in their quality of life” More here from the United Nations Development Programme A2 Macro, AS Macro, Emerging Economies, Development Economics, Global Economy, Standard of Living, Teaching of Economics 2009-10-24T10:45:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/size-of-uk-gdp-overtaken-by-italy/ http://www.tutor2u.net/blog/index.php/economics/comments/size-of-uk-gdp-overtaken-by-italy/#When:10:39:00Z Edmund Conway reports in the Telegraph that the impact of the recession and the depreciation of sterling against the Euro has caused Italy to overtake the UK in terms of size of economy. The BBC web site has a useful short article on GDP and its measurement A2 Macro, AS Macro, Recession Watch!, UK Economy 2009-10-24T10:39:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/paul-romer-on-growth-and-cities/ http://www.tutor2u.net/blog/index.php/economics/comments/paul-romer-on-growth-and-cities/#When:06:39:01Z BBC Radio’s Global Business this week sees Peter Day in conversation with Professor Paul Romer from Stanford University, Paul Romer is an expert in the causes of long run run growth and his current focus is on the economics of new cities in developed and developing countries. It is a programme well worth listening to, Romer is tremendously optimistic about the opportunities created by faster economic growth - especially growth built around innovation and appropriate rules systems. A2 Macro, AS Macro, Emerging Economies, Cycles and Shocks, Aggregate Supply, Development Economics, Economic Growth, Environmental Economics, Global Economy, Government Intervention, Standard of Living, Teaching of Economics 2009-10-24T06:39:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/experimenting-with-forums/ http://www.tutor2u.net/blog/index.php/economics/comments/experimenting-with-forums/#When:21:47:00Z One of my aims this term is to experiment with the use of forums as a way of encouraging students to write about economics and reflect on what they have read, seen, heard or discussed. It is still early days, but the Moodle VLE offers several different types of forums each of which can be used in a variety of ways. Teaching of Economics 2009-10-23T21:47:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-importance-of-invention/ http://www.tutor2u.net/blog/index.php/economics/comments/the-importance-of-invention/#When:14:39:00Z Luke Johnson’s address to the RSA is now available to view on the RSA website. Teaching of Economics 2009-10-23T14:39:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-recession-continues/ http://www.tutor2u.net/blog/index.php/economics/comments/the-recession-continues/#When:12:47:00Z As the FT’s Chris Giles discusses, the UK economy shrank by 0.4 per cent in the third quarter, indicating that the deepest recession in a generation is not yet over. The recession has now lasted for six quarters, the longest downturn since WWII and on a par with that of 1979-81. A2 Macro, AS Macro, Credit Crunch, Cycles and Shocks, Aggregate Demand, Economic Growth, Exchange Rates, Recession Watch!, UK Economy 2009-10-23T12:47:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/sugar-prices-and-production-and-investment-incentives/ http://www.tutor2u.net/blog/index.php/economics/comments/sugar-prices-and-production-and-investment-incentives/#When:12:11:00Z World sugar prices are close to a 30 year high with values on the Chicago mercantile exchange hovering just under $30c per pound. For countries whose sugar exports account for a large proportion of their export earnings, the steep increase in world prices has brought about an improvement in their terms of trade and - because demand for many foodstuffs is price inelastic, a favourable change in their balance of trade. A good example of this is the African country of Mozambique, a nation almost destroyed by a long running civil war that eventually ended in the early 1990s but which has also been hit in recent years by severes drought hit many central and southern parts of the country, including previously flood-stricken areas. And where half of the population must survive on less than $1 a day.  A2 Macro, AS Micro, Agriculture, Balance of Payments, Development Economics, Economic Growth, European Economy, Single Market, Global Economy, International Trade, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Volatility, Standard of Living 2009-10-23T12:11:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/walmart-and-amazon-price-war-hyper-efficiency-and-the-consumer/ http://www.tutor2u.net/blog/index.php/economics/comments/walmart-and-amazon-price-war-hyper-efficiency-and-the-consumer/#When:10:15:00Z A well publicised price war has broken out in the United States between Walmart and Amazon. Wal-Mart’s $10 promotion applies to the top 10 books coming out in November but the company is also selling 200 best-sellers for 50% of their list price. In a move that has sent shock-waves through the book industry, Wal-Mart has announced it will be selling 10 forthcoming books for just $10 each including Sarah Palin’s autobiography. As is often the case when an aggressive price war breaks out in an oligopolistic market, online bookseller Amazon matched the price cut within hours causing Wal-Mart to cut again to $9. Amazon returned the favour and Walmart has sinced shaved one cent to $8.99! The FT reports that Walmart’s website, the second busiest in the US after Amazon, has also cut prices by 50 per cent on 200 best-sellers. The battle comes at a time when both Walmart and Amazon are under pressure from Google who are rolling out an online site capable of delivering e-books to any device with a Web browser, with an initial library of about half a million titles. How long the price war will last is open to question. The October-December season is a hugely important time for all booksellers - the festive period is the peak time for sales and the intense battle for market share comes at a time of great change in the industry - not least the rapid growth of e-readers and online libraries. Some book publishers fear a price anchoring effect on their industry - namely that Walmart slashing prices and rivals following suit will lead book-buyers to expect new titles to cost $10, a low prices that would force the publishing industry to re-scale its entire business, including the advances paid to writers and ultimately affect the range of titles on offer. For the giants of the book retailing industry, the economies of scale and drive for hyper efficiency in getting products to the market are simply a way of reinforcing their market dominance. But what about the impact on smaller independent booksellers most of whom can never hope to compete on price but who provide light and shade in the book selling industry. It is a reminder that there are different types of efficiency. Allocative, productive, dynamic and social. The latter two may be damaged if the price war escalates and many smaller booksellers go under. This BBC world service news interview focuses on some of the cultural issues of the rise of the giant retailers. Chris Doeblin from the independent Book Culture shop in New York City accepts that supermarkets will bring the price of books down - as they have with food prices - but at a (social) cost to many of us. Guardian: US bookshops urge regulator to investigate online price war A2 Micro, AS Micro, Business Economics, Economies of Scale, Oligopoly, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, US Economy 2009-10-23T10:15:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/speculators-and-exceptions-to-the-law-of-demand/ http://www.tutor2u.net/blog/index.php/economics/comments/speculators-and-exceptions-to-the-law-of-demand/#When:10:01:00Z To what extent are speculators responsible for the increasing volatility of commodity prices? Expectations of price movements for globally traded commodities can have a huge impact on demand in the markets and the bets that speculators make on the forward prices of commodities such as oil can lead to rapid price hikes. We saw this with food and oil in 2008 - with enormous consequences for consumers and producers in developed and developing countries - and perhaps we are seeing this again as 2009 draws to a close. The world price of crude oil is already heading north again towardsa $90 a barrel. This BBC world service audio report is a good resource on the impact of speculation and its possible links to exceptions to the law of demand where a rise in actual or expected prices can bring about an expansion of market demand. “The International Food Policy Research Institute in Washington has studied price movements and concluded that they couldn’t all be explained by the fundamentals. And, perhaps most damning of all, a big-time speculator is now identifying speculation as one of the causes in the movement of the price of oil.” More here A2 Macro, AS Micro, Agriculture, Emerging Economies, Commodities Markets, Global Economy, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Price Volatility, Teaching of Economics 2009-10-23T10:01:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/emmanuel-college-presentation-22-october-2009/ http://www.tutor2u.net/blog/index.php/economics/comments/emmanuel-college-presentation-22-october-2009/#When:20:30:00Z I was delighted to visit Emmanuel College in Gateshead today to participate in a session with a large number of enthusiastic and talented young economists… Teaching of Economics 2009-10-22T20:30:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/taxing-hot-money-is-brazil-getting-it-wrong/ http://www.tutor2u.net/blog/index.php/economics/comments/taxing-hot-money-is-brazil-getting-it-wrong/#When:20:28:00Z Carl Mortished’s excellent world business briefing in the Times today covers developments in the Brazilian economy. Huge inflows of foreign direct investment have helped to drive their currency higher and the Brazilian Finance Ministry has responded with a 2 per cent capital tax on foreign ‘hot money’ inflows into stocks and bonds.  The article suggests that Brazil might be better off in the long run by cutting import tariffs on capital goods thus reducing the price of imports of hi-tech machinery that will give her economy a major supply-side boost. In contrast to China, Brazil exports a relatively low percentage of her national output and it is largely self sufficient. The country has enjoyed a significant improvement in her terms of trade with strong world prices for many of her key exported commodites such as iron ore, coffee and orange juice. The boom in commodity exports has helped to increase the real purchasing power of millions of Brazil’s poorest people but a huge amount remains to be done and income and wealth inequalities are vast. “Brazil is not China; it does not trade that much. Where China’s motor is manufacturing exports, Brazil is largely a self-sufficient economy, more like the United States, with a vast hinterland of eager, albeit poor, consumers.” Here is his article A2 Macro, AS Macro, Emerging Economies, Brazil Economy, Development Economics, Economic Growth, Global Economy, International Trade 2009-10-22T20:28:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-fiscal-crisis-borrow-long-if-you-can/ http://www.tutor2u.net/blog/index.php/economics/comments/the-fiscal-crisis-borrow-long-if-you-can/#When:05:21:00Z This is a related post to my recent blog on the scale of government borrowing and debt. The Debt Management Office is responsible for finding buyers for the new debt issued by the UK government and they have their hands full this year with the challenge of selling over £220bn worth of new securities. Edmund Conway has a fascinating blog piece here about the term structure of this debt and what is means for the cost of making the interest payments. This week the UK government issued new bonds that will not be due for repayment until 2060 when most of us will be long gone! A fifty year bond is perhaps the longest bond (gilt) to have been issued for many years. And it turns out that the average date to maturity for UK public sector debt is significantly higher than for most advanced economies. “The UK’s debt market is peculiar. In the US, average length of the existing Treasury bonds was, at recent count, 4.7 years and falling. Because this is such a short maturity, it means the debt has to be rolled over far more often, and at every point the government runs the risk of setting in stone any changes in interest rates. In France, the average maturity is 7.1 years, in Italy 6.9 years, in Germany 6.35 and in Japan 5.7 years. In Britain, the weighted average maturity of government bonds is a whopping 14.2 years. Admittedly, as the IMF points out this is slightly lower in the wake of the crisis, but it is still significantly longer than any other major economy.” More here A2 Macro, AS Macro, Fiscal Policy, Recession Watch!, UK Economy 2009-10-22T05:21:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/monopsony-power-supermarket-bullies/ http://www.tutor2u.net/blog/index.php/economics/comments/monopsony-power-supermarket-bullies/#When:05:14:00Z Many thanks to Janis Thompson at Bristol GS for suggesting this terrific 3-minute video on the battle between supermarkets and their hard-pressed suppliers.  A great range of business and economics topics in here, including an obvious starting point for discussing the ethical issues raised in the clip Launch BBC video Download student worksheet (including video link) A2 Micro, AS Micro, Business Economics, Monopoly, Market Failure 2009-10-22T05:14:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/public-debt-and-intergenerational-equity/ http://www.tutor2u.net/blog/index.php/economics/comments/public-debt-and-intergenerational-equity/#When:04:52:00Z With government borrowing set to rise above £175bn this year and total public sector debt already approaching 60% of GDP and set to surge much higher in the coming years, attention is now focusing on who will pay for this almost total collapse of fiscal discipline. There truly is no such thing as a free lunch - next year the costs of servicing the national debt will be over £60m a day. The latest National Institute report makes for somber reading. They project that an economic recovery built around exports may do little to reduce the size of government borrowing and escalating debt and that a structural budget deficit in excess of 6% of GDP is likely to persist. Ray Barrell’s quote in this article in the Times is a classic example of the problem of inter-generational equity: A2 Macro, AS Macro, Credit Crunch, Fiscal Policy, Recession Watch!, Teaching of Economics, UK Economy 2009-10-22T04:52:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/gdp-per-capita-a-cool-way-to-show-the-data/ http://www.tutor2u.net/blog/index.php/economics/comments/gdp-per-capita-a-cool-way-to-show-the-data/#When:21:18:00Z I came across a cool interactive resource on GDP data whilst doing some research tonight on the BRICS.  AS Macro, Emerging Economies, Brazil Economy, China Economy, Indian economy, Russia Economy, Development Economics, Economic Growth, Global Economy 2009-10-21T21:18:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/interactive-guide-the-gold-price-timeline/ http://www.tutor2u.net/blog/index.php/economics/comments/interactive-guide-the-gold-price-timeline/#When:21:00:00Z A superb interactive resource from the FT is well worth looking at.  It charts the timeline of the significant events that have moved gold prices over the last century. Take a look here Commodities Markets, Market Equilibrium and Price, Price Mechanism in Action, Price Volatility 2009-10-21T21:00:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/norway-your-guys-take-a-lot-of-beating/ http://www.tutor2u.net/blog/index.php/economics/comments/norway-your-guys-take-a-lot-of-beating/#When:19:19:00Z Roy Hattersley makes a rare appearance in the economics blog today. He has an interesting piece in The Times on the relative prosperity of Norway - a country that lies outside the European Union but which has negotiated access to the EU single market. With very low unemployment (of less than 3% of the labour force, super high per capita incomes, a sovereign wealth fund worth more than £250bn and continued strong revenues from oil exports, Norway is unlikely to test the waters of EU membership anytime soon. A good piece for students of economic integration in the EU.  A2 Macro, European Economy, Single Market, The Euro, Introductory Economics 2009-10-21T19:19:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/market-concentration-illustrated-banking-brands-after-the-crunch/ http://www.tutor2u.net/blog/index.php/economics/comments/market-concentration-illustrated-banking-brands-after-the-crunch/#When:19:14:00Z A terrific illustration here of how the global banking market has changed in terms of its market shares and concentration ratio recently. A2 Micro, Business Economics, Competitive Markets, Credit Crunch, Global Economy 2009-10-21T19:14:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/will-japan-go-bankrupt/ http://www.tutor2u.net/blog/index.php/economics/comments/will-japan-go-bankrupt/#When:18:56:00Z Ambrose Evans-Pritchard has a provocative piece in the Telegraph today on the demographic timebomb ticking underneath many Asian economies. The Japanese government has borrowed enormous sums in a bid to sustain aggregate demand and keep the economy afloat and avoid yet another deflationary slump. But the ratio of government debt to GDP is now - according to the author - perilously high. “Japan is about to go bankrupt. It is on the cusp of a fiscal crisis that will change perceptions of Asia dramatically. The IMF says gross public debt will reach 218pc of GDP this year. This is compounding very fast. It will be 246pc in 2014...But I am absolutely certain that pundits consigning the dollar to its death have missed an even more dramatic currency and debt story in Japan.” The rest of the article can be found here A2 Macro, Demography, Fiscal Policy, Japan Economy, Recession Watch! 2009-10-21T18:56:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/kindling-a-desire-for-e-books/ http://www.tutor2u.net/blog/index.php/economics/comments/kindling-a-desire-for-e-books/#When:18:29:00Z I am eagerly awaiting the arrival of a Kindle - it may have to wait for my return to Hong Kong where I am spending some of the half term delivering some presentations to students and teachers (more on this when I get there). Rory Cellan Jones from the BBC has been road-testing the Kindle and is very enthusiastic. Diane Coyle can see some of the benefits but is more sceptical and like many of us doesn’t want to be surrounded by empty bookshelves. I will be taking two hard backs with me on the flight. Roger Bootle’s new book The Trouble with Markets and the much-hyped SuperFreakonomics by Steve Levitt and Stephen Dubner reviewed here by Tim Harford.  A2 Macro, AS Macro, Economic Growth, Economics of Technology, Teaching of Economics 2009-10-21T18:29:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/your-suggestions-please-for-speakers-at-the-etnc-2010/ http://www.tutor2u.net/blog/index.php/economics/comments/your-suggestions-please-for-speakers-at-the-etnc-2010/#When:18:30:00Z Early days of course, but we’re really keen to put a stellar speaker line-up together for the Economics Teacher National Conference on Thursday 17 June 2010.  Regular ETNC-goers will know the format - a chance to spend a day away from the classroom with over 150 fellow Economics teachers, in a stunning setting, and to hear from some speakers who reallyhelp us bring our fabulous subject alive. For 2010 we thought we’d turn part of the programme over to you guys!  If you were putting your ideal programme together, who would you really like to hear from? Your suggestions can be made using this form. We’ll do our best to invite and hopefully secure an acceptance from the most popular suggestions. Suggest speakers for the Economics Teacher National Conference 2010 Download a booking form for the 2010 Economics Teacher National Conference Submit a provisional booking for the event online 2009-10-20T18:30:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/classroom-activity-economic-cycle-in-pictures/ http://www.tutor2u.net/blog/index.php/economics/comments/classroom-activity-economic-cycle-in-pictures/#When:13:49:01Z Here is a great starter activity that gets students thinking about what can happen at each stage of the economic cycle. The idea was created by Ruth Tarrant who will be presenting at our November conference at the Moller Centre Cambridge University and I have developed it a little further with some additional images. There are twenty six - an A to Z of images associated with different stages of the business cycle. AS Macro, Cycles and Shocks, Teaching of Economics, UK Economy 2009-10-20T13:49:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/some-good-resources-especially-for-development-economics/ http://www.tutor2u.net/blog/index.php/economics/comments/some-good-resources-especially-for-development-economics/#When:09:56:00Z Many teachers will have found TED which is an excellent site for videos on a wide variety of subjects. From TED we were led to Gapminder world which has loads of data for teaching Development Economics. 2009-10-20T09:56:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-broadband-in-the-slow-lane/ http://www.tutor2u.net/blog/index.php/economics/comments/uk-broadband-in-the-slow-lane/#When:09:25:00Z The relatively slow speed of the average broadband connections for most UK businesses and households will act as a contsraint on future competitiveness and growth. This report from BBC news finds that a study of the global state of broadband has put the UK 25th out of 66 countries in terms of the quality and reach of its networks. Rory Cellan Jones follows up the report with his own observations “Britain has done well in the first broadband wave, using a pretty efficient copper network and DSL technology to get homes across most of the country connected. But other countries are moving forward more rapidly to build next generation networks using cable and fibre-optics.” Investment in broadband can have significant demand and supply-side effects - the real consequences of under-investment will become more painful and obvious as time goes on - but who should pay for the extra capital spending needed? Will the new broadband tax make any noticeable difference? A2 Macro, AS Macro, Business Economics, Economic Growth, Economics of Technology, Government Intervention, Indirect Taxes, International Trade, Supply-side policies, UK Economy 2009-10-20T09:25:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/paul-mason-on-the-future-for-the-dollar/ http://www.tutor2u.net/blog/index.php/economics/comments/paul-mason-on-the-future-for-the-dollar/#When:09:19:00Z Paul Mason’s excellent short video report appeared on Newsnight last Friday and it considers whether the US dollar (currently weak in global currency markets) will continue to ebb away as the reserve currency of choice for international transactions? The Yen and the Euro are making strides and there is pressure from the Chinese for a new currency to emerge perhaps as a development of the special drawing rights organised by the IMF. The BBC video links to a follow up discussion featuring Irwin Steltzer and Linda Yueh from Oxford University. A good discussion-starter for A2 macroeconomists. Watch Are dollar’s days as world currency numbered? A2 Macro, Emerging Economies, Exchange Rates, Global Economy, International Trade, Teaching of Economics, US Economy 2009-10-20T09:19:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/data-research-resources/ http://www.tutor2u.net/blog/index.php/economics/comments/data-research-resources/#When:05:24:00Z To add to the list of resources for research into the UK economy that Geoff posted last week, I have just discovered this list of Datasets by Subject from the Guardian - a list of datasets covering Guardian articles on everything from Arts Funding and Bank of England to Quantitative Easing and Zimbabwe - with one heading giving advice about Choosing a Degree as well. Worth browsing for pretty well every part of the Economics syllabus. Teaching of Economics, UK Economy 2009-10-19T05:24:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/power-nodes-using-economics-to-make-profit/ http://www.tutor2u.net/blog/index.php/economics/comments/power-nodes-using-economics-to-make-profit/#When:23:03:00Z Here is a fascinating article in the Times with Philip Thornton from Clarity Economics interviewing Mia de Kuijper an economist who can help companies to master the dynamics that govern their chances of success. Would be excellent for A2 students wanting some fresh ideas on management in an age of rapid technological change and a world of near perfect information. Her new book Profit Power Economics is due for imminent release. A2 Micro, Business Economics, Management Issues, Teaching of Economics, Pre-U Economics 2009-10-15T23:03:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/eu-warns-that-uks-black-hole-is-unsustainable/ http://www.tutor2u.net/blog/index.php/economics/comments/eu-warns-that-uks-black-hole-is-unsustainable/#When:13:13:00Z The European Commission has just published its latest Sustainability Report that looks at the state of the government finances of member nations. And the warning is pretty clear - without strong corrective action the UK runs the risk of public sector debt becoming unsustainable A2 Macro, AS Macro, Credit Crunch, Fiscal Policy, Recession Watch!, UK Economy 2009-10-15T13:13:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-case-study-in-labour-mobility-50-jobs-in-50-weeks/ http://www.tutor2u.net/blog/index.php/economics/comments/a-case-study-in-labour-mobility-50-jobs-in-50-weeks/#When:13:04:00Z Perhaps we should expect nothing less from an unemployed Economics graduate, heavily in debt who had become desperate in search of a fulfilling job. Californian Dan Seddiqui went from being homeless and unemployed to getting 50 different jobs in 50 different US states in just 50 weeks and his story is featured in today’s Daily Telegraph “In just 50 weeks Dan tried everything from being a lobster catcher, a jazz conductor, a TV weatherman and even a Las Vegas wedding planner.” Naturally a book is on the way! This article is perfect as a starter teaching resource when discussing occupational and geographical mobility of labour and the natural and structural barriers that prevent others doing something similar in their search for worthwhile work. A2 Macro, AS Macro, Labour Economics, Market Failure, Factor Immobility, Teaching of Economics, Unemployment, US Economy, Quirky Trivia 2009-10-15T13:04:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/running-an-entrepreneurship-society/ http://www.tutor2u.net/blog/index.php/economics/comments/running-an-entrepreneurship-society/#When:21:23:00Z Several colleagues have asked me to provide a brief overview of how our school Entrepreneurship Society is run. We don’t offer any formal examined courses in business and management at our school although we do have quite active Young Enterprise groups in Year 11. Around 40-45% of our year group opt for AS Economics in Year 12, 20% also take AS Politics. Teaching of Economics 2009-10-14T21:23:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/human-and-social-capital-and-pathways-to-prosperity/ http://www.tutor2u.net/blog/index.php/economics/comments/human-and-social-capital-and-pathways-to-prosperity/#When:20:17:00Z Tom Aedy picks an article by Michael Milken in the FT and focuses on the importance of human capital in a competitive global economy - Milken calls this the world’s most valuable asset. A2 Macro, AS Macro, Emerging Economies, Cycles and Shocks, Aggregate Supply, Economic Growth, International Trade, Supply-side policies, Teaching of Economics 2009-10-14T20:17:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/market-failure-in-city-gender-inequality/ http://www.tutor2u.net/blog/index.php/economics/comments/market-failure-in-city-gender-inequality/#When:19:42:01Z Study of the labour market includes market failures and gender inequality. It seems to me that, ever since the start of the financial crisis that led to the recession, there has been a series of reports suggesting that if there were more women in positions of power in the city institutions that lost control of their lending, this would never have happened. This is now confirmed by a committee of MP’s (which includes only one woman) which is currently studying the role of women in the City and has been told by a (male) professor from the London School of Economics that a more cautious approach, rather than an “alpha male” one, would be beneficial. Professor Charles Goodhart explained that the more cautious and long-term outlook of women could prove to be a more positive trait than the more aggressive risk-taking stance of men. However, another LSE professor told the committee of MPs that there is a need for a change of culture in the City before this can happen. It seems that women are well-represented on the boards of the FTSE top 250 companies, but very under-represented on the boards of the FTSE 100. In Norway there is a quota system; 40% of board members must be female. Clare Dobie, of the City Women’s Network told the committee that recruiters could do much to help the problem which her organisation sees as an issue of too little demand rather than a shortage of supply of women who are good enough for the job. A report last month from the Equality and Human Rights Commission found that women working in the city are paid on average 39% less than men doing the same job. Women start on a lower salary and never make up the difference. They also earn bonuses which are up to five times smaller than those earned by their male colleagues - on average, women get bonuses of £2,875 compared with £14,554 for men. However the gender pay gap should be addressed there does remain a practical difficulty though: John Cridland, deputy director general of business group the CBI, said “As in many other areas of business, women applying for the top jobs need more flexibility with hours and childcare responsibilities” .  How long will it remain the case that it is the women who need this flexibility, and not the men? AS Micro, Labour Economics, Market Failure, Poverty and Inequality 2009-10-14T19:42:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/croatia-and-iceland-look-to-be-in-front-line-for-eu-entry/ http://www.tutor2u.net/blog/index.php/economics/comments/croatia-and-iceland-look-to-be-in-front-line-for-eu-entry/#When:18:10:00Z Croatian fans will be crying into their beers tonight with the news that they have failed to qualify for South Africa 2010. But their politicians seem to be making decent progress along the road to joining the European family of nations. The latest report on the progress made by countries seeking membership of the European Union suggests that Iceland and Croatia will be next in line to enter the EU single market. There is a report here from the Financial Times. And this article from the BBC reports the EU Enlargement Commissioner as saying that Croatia should complete entry talks next year. Here are some links to previous blogs on EU enlargement European Economy, EU Enlargement, Single Market 2009-10-14T18:10:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/gathering-data-about-the-uk-economy/ http://www.tutor2u.net/blog/index.php/economics/comments/gathering-data-about-the-uk-economy/#When:05:52:00Z For students preparing assignments on the current performance of the UK economy here is a brief selection of useful web resources A2 Macro, AS Macro, Teaching of Economics, AQA Economics, Pre-U Economics, UK Economy 2009-10-14T05:52:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/an-economics-outing-to-the-theatre1/ http://www.tutor2u.net/blog/index.php/economics/comments/an-economics-outing-to-the-theatre1/#When:20:58:00Z Why not – ‘The Power of Yes’ at the National Theatre investigates the cause of the credit crunch and global financial collapse, through the idea that “a dramatist seeks to understand the financial crisis”. It’s a series of neatly organised interviews by The Author as central linking character, with some 20 people: bankers, journalists, academics, even George Soros. It offers some explanations – the character of Howard Davies who retired as chairman of the Financial Services Authority in 2003 and is now Director of the LSE defines Quantitative Easing as “…dropping money out of helicopters onto corpses” and some of the causes given for the whole series of events are listed in The Times review as inertia, arrogance, the failure to balance greed with fear of failure, “light touch” regulation, the pressure on every money-man to prove himself the biggest whizz on the block, and a complacent Gordon Brown.  A2 students who have spent the last year witnessing the deepening crisis found it illuminating and enjoyable. AS Economists who are just starting to get to grips with the theory of AD/AS analysis found it a bit less easy, but still enjoyed it, and as tickets for schools are a bargain at £12 each for some performances, it was generally agreed to be a rewarding and novel way of extending learning in the subject. Next outing? In January ‘Enron’, a musical play which “transforms America’s worst corporate scandal into a vivid case-study of greed, folly and deception” and which opened at the Chichester theatre festival in the summer then sold out at the Royal Court moves to the Noel Coward theatre in London. Recession Watch!, Teaching of Economics, UK Economy 2009-10-13T20:58:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/gloomy-summary/ http://www.tutor2u.net/blog/index.php/economics/comments/gloomy-summary/#When:20:02:00Z Here is a summary of four reports posted on the Business and Economics sections of the BBC News website over the last few days. Be warned - none of them are particularly hopeful, the green shoots of summer giving way to autumn mists.  A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Aggregate Supply, Exchange Rates, Inflation, Monetary Policy, UK Economy 2009-10-13T20:02:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/fair-trade-given-new-push-by-government-grant/ http://www.tutor2u.net/blog/index.php/economics/comments/fair-trade-given-new-push-by-government-grant/#When:19:49:00Z Harriet Lamb the inspirational head of the Fair Trade Foundation is featured in this BBC news video that reports on a £12m grant to the organisation to help promote an expansion of the range of products that fall under the Fair Trade orbit. Welcome news indeed - Harriet spoke at our Economics Conference in June 2008 and listening to her and watching films like Black Gold convinced me never to buy another bag of non Fair Trade tea or coffee ever again if I could help it.  A2 Micro, AS Micro, Emerging Economies, Commodities Markets, Development Economics, International Trade, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics 2009-10-13T19:49:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/ft-graphic-currency-fluctuations/ http://www.tutor2u.net/blog/index.php/economics/comments/ft-graphic-currency-fluctuations/#When:16:20:00Z An excellent interactive graphic at FT.com can be found here, on the major trends in the currency markets.  A2 Macro, AS Macro, Commodities Markets, European Economy, The Euro, Exchange Rates 2009-10-13T16:20:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/return-of-the-freakonomists/ http://www.tutor2u.net/blog/index.php/economics/comments/return-of-the-freakonomists/#When:05:28:00Z This week marks the publication of the second edition of Freakonomics by Steven Levitt and Stephen Dubner. SuperFreaknomics poses yet more questions and offers the usual challenging answers. But have the freakonomists overreached themselves? This review in the Independent suggests that there are limits to the usefulness of the Levitt approach. I will add more reviews to this blog post in the days and weeks ahead. But at least we now know that a prostitute is more likely to have sex with a police officer than to get officially arrested by one...ground-breaking economics. Teaching of Economics 2009-10-13T05:28:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/wall-street-partnerships-and-principal-agent-problem/ http://www.tutor2u.net/blog/index.php/economics/comments/wall-street-partnerships-and-principal-agent-problem/#When:19:50:01Z John Gapper has a super blog over at the FT in which he discusses the benefits that might flow from reforming bankers’ pay and restoring the partnership approach to renumeration “Mr Thain correctly pointed out during the session that the old partnership structure of Wall Street firms, under which partners’ capital was at risk until they retired, produced better incentives in terms of risk management than bonuses based on short-term performance...This is not a bad idea but it might be extended. Why not truly replicate the partnership structure by applying those conditions to everyone who reached “partner” level - senior managing director or the equivalent at a large investment bank?” This ties in with the idea of changing the behaviour of senior management so that they give great weight to the risks of particular investment and lending strategies and tries to avoid the myopic decision making that has proved so costly before the financial crisis. The partnership model has applied particularly successfully in the UK with the continued success of the John Lewis Partnership.  In March 2009 despite the effects of the retail recession, John Lewis announced that The company it would pay out total bonuses of £125.5m. That is the equivalent to about 13% of salary, or seven weeks’ pay. A2 Micro, Business Economics, Management Issues, Teaching of Economics 2009-10-12T19:50:01-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/nobel-prize-in-economics-a-different-take-on-the-tragedy-of-the-commons/ http://www.tutor2u.net/blog/index.php/economics/comments/nobel-prize-in-economics-a-different-take-on-the-tragedy-of-the-commons/#When:15:06:00Z Elinor Ostrom and Oliver Williamson shared the 2009 Nobel prize for economics (and the accompanying $1.4m) on Monday for their work on how economic transactions operate outside markets in common spaces and within companies.  Business Economics, Management Issues, Environmental Economics, Government Intervention, Regulation, Market Failure, Externalities 2009-10-12T15:06:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/heres-one-way-to-reduce-9-of-our-budget-deficit-or-2-of-the-national-debt/ http://www.tutor2u.net/blog/index.php/economics/comments/heres-one-way-to-reduce-9-of-our-budget-deficit-or-2-of-the-national-debt/#When:09:39:00Z Here’s one way to reduce 9% of our budget deficit… or 2% of the national debt. As the UK budget deficit balloons from over £100 billion last year to close to £200 billion this year; compounding the UK national debt to 56% of GDP; how to cut it is a key political theme in the run-up to a national election due by June next year. A2 Macro, AS Macro, Fiscal Policy, UK Economy 2009-10-12T09:39:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-in-the-news-quiz-12-october-2009/ http://www.tutor2u.net/blog/index.php/economics/comments/economics-in-the-news-quiz-12-october-2009/#When:07:19:00Z The latest edition of our weekly quiz for Economics students is now available: Launch the interactive version Download printable pdf version (answers at the back) Download SCORM-compliant VLE Import Version Economics in News Quiz 2009-10-12T07:19:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/escaping-from-the-poverty-trap/ http://www.tutor2u.net/blog/index.php/economics/comments/escaping-from-the-poverty-trap/#When:19:39:00Z There is a timely article on the existence of the poverty trap here in the Financial Times. The article draws on some of the recent research by the Centre for Social Justice which has looked at the disincentives facing people who want to earn extra income either by leaving the unemployment register or by taking a second job or working some extra hours. There are hundreds of thousands of people whose ’effective marginal tax rate‘ is well in excess of sixty per cent. As this article in the Times makes clear “Marginal tax rates actually refer to the extra tax you pay in proportion to every extra pound you earn as your income rises.: And for others, the net gains from earning higher gross incomes are even smaller.  The poverty trap comes about because for every £10 of higher incomes many lower-income families 1: A loss of income from tax and national insurance 2: The withdrawal of means-tested social security (welfare) benefits Add in the financial costs of child care, traveling to and from work and the deterrent to finding a job or accepting some extra hours can be tough to overcome. Disincentives matter hugely in the labour market and benefit reforms are likely to figure prominently in the manifesto of the Conservative Party at the next general election. It seems at the moment that they are taking a lead in developing a more radical approach to labour market reform. The Centre for Social Justice appears to be influential in reshaping their strategies to get people off benefits and into work. A2 Macro, AS Macro, Government Intervention, Government Failure, Labour Economics, Poverty and Inequality, Standard of Living, Unemployment 2009-10-11T19:39:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/score-draw-and-soccernomics/ http://www.tutor2u.net/blog/index.php/economics/comments/score-draw-and-soccernomics/#When:15:16:00Z Arjun Bali looks at the surprisingly low number of draws in Premiership Football and suggests that the Reds might have challenged more strongly for the title last year had Benitez been more of an economist! A2 Micro, AS Micro, Behavioural Economics 2009-10-11T15:16:00-06:00 http://www.tutor2u.net/blog/index.php/economics/comments/racing-in-the-recession-the-going-is-heavy/ http://www.tutor2u.net/blog/index.php/economics/comments/racing-in-the-recession-the-going-is-heavy/#When:14:42:01Z In the week of the Tattersalls October Yearling Sale, Tom Thomson-Jones looks at how the recession is affecting the horse-racing industry in the UK and finds that the downturn is showing through in falling prices for horse prices at the yearling sales. Declining prices have affected demand at slaughter houses and change the cost of inputs for glue factories - a good example of the inter-relationships between markets. The UK has sixty one tracks - how many will survive the recession?  AS Micro, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Recession Watch! 2009-10-11T14:42:01-06:00