http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/petrol-tax-and-the-downward-sloping-demand-curve http://www.tutor2u.net/blog/index.php/economics/comments/petrol-tax-and-the-downward-sloping-demand-curve#When:22:03:05Z Nearly every country has a tax on petrol, although the amount varies widely. And given that the landed price of petrol is quite similar (see the graph below), it can be seen what effect the tax has on quantity demanded. The results are very much in line what economic theory would predict and there are also clear implications for countries that want to reduce petrol consumption. Government Intervention, Indirect Taxes, Macroeconomic Policies, Fiscal Policy, Market Failure, Externalities, Market Equilibrium and Price, Elasticity of Demand, Price Mechanism in Action, 2012-01-17T22:03:05+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-economics-of-fiscal-deficit-reduction http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-economics-of-fiscal-deficit-reduction#When:14:54:41Z How far, how fast and in what way should the UK government seek to cut the annual budget deficit and improve the state of public sector finances? These questions continue to be at the centre of a fierce debate among economists. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, UK Economy, Recession Watch, 2012-01-12T14:54:41+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-uk-bond-yields-reach-record-lows http://www.tutor2u.net/blog/index.php/economics/comments/unit-4-macro-uk-bond-yields-reach-record-lows#When:13:55:18Z The yields on UK government issued bonds has been falling steadily in recent months and, as we turned into January 2012, the yield on ten year government debt edged below 2% - when the UK government continues to borrow eye-wateringly large sums, why are bond yields so low? The yield on a bond is the income received from a fixed-interest bond, calculated as a percentage of the price paid for it. So a ten year bond bought for £10,000 and paying a fixed annual interest of £600 would offer a yield of £600 / £10,000 = 6.0% per annum. If the market price of a bond rises - for example, it rises from £10,000 to £12,000, the fixed interest remains the same (£600) but the yield will fall. £600 / £12,000 expressed as a percentage = 5%. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, Recession Watch, 2012-01-11T13:55:18+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/analysis-of-the-autumn-statement http://www.tutor2u.net/blog/index.php/economics/comments/analysis-of-the-autumn-statement#When:21:14:45Z AS level students who have studied AD, AS and macroeconomic equilibrium should be in a position to carry out an economic analysis of today’s Autumn Statement. Here is a suggested assignment, which borrows from the focus on ‘connectives’ in the Business Workshops this week to help to build a strong chain of argument. AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-11-29T21:14:45+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ten-things-about-tax http://www.tutor2u.net/blog/index.php/economics/comments/ten-things-about-tax#When:07:39:18Z Over a month ago I highlighted a resource from the guardian visualising where government spending had been allocated in the last financial year and these figures can be updated for the planned 2011-2012 spending through the HM Treasury website A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, 2011-11-23T07:39:18+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economists-interactive-guide-to-government-debt http://www.tutor2u.net/blog/index.php/economics/comments/economists-interactive-guide-to-government-debt#When:04:32:02Z Great interactive app form the Economist and very apt at time when levels of national debt are constraining economic policy choices and threatening the viability of the Eurozone Macroeconomic Policies, Fiscal Policy, 2011-11-10T04:32:02+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-analysing-government-spending-cuts http://www.tutor2u.net/blog/index.php/economics/comments/unit-2-macro-analysing-government-spending-cuts#When:07:36:53Z It is rare that a day would go by without you being able to find a news article on issues that affect the macro-economy; a good tip is to constantly think like an economist and analyse these issues as you may do in the exam. AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Macroeconomic Policies, Fiscal Policy, 2011-10-25T07:36:53+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-morality-of-taxation http://www.tutor2u.net/blog/index.php/economics/comments/the-morality-of-taxation#When:06:05:00Z Morally, does it matter how rich the rich are? Or should our real concern be how poor the poor are? There was a great edition of The Moral Maze on Radio 4 last night, with debate sparked by the growing lobby calling for the 50% rate of income tax to be cut. The programme is available on i-player here, and it is really worth spending 43 minutes to listen to it - perhaps as preparation for a classroom debate. A2 Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-09-15T06:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apple-is-richer-than-the-us-government http://www.tutor2u.net/blog/index.php/economics/comments/apple-is-richer-than-the-us-government#When:12:01:00Z Yes- it’s true! Read on to find out more about this incredible statistic. Macroeconomic Policies, Fiscal Policy, OECD Economies, US Economy, 2011-07-30T12:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/what-might-happen-on-august-2nd http://www.tutor2u.net/blog/index.php/economics/comments/what-might-happen-on-august-2nd#When:22:06:00Z Well- it’s the day the United States might go bankrupt! Read on to find out more and for links to some useful resources to aid a class discussion of this fascinating topic. AS and A2 Specifications, EdExcel Economics Unit 2, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, OECD Economies, US Economy, 2011-07-12T22:06:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-twin-deficits http://www.tutor2u.net/blog/index.php/economics/comments/a2-macro-twin-deficits#When:11:00:00Z Here is a revision note on the economics of twin deficits. Twin deficits refer to a situation where an economy is running both a fiscal deficit and also a deficit on the current account of the balance of payments. The revision note is available for download as a pdf file. Twin_Deficits.pdf AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Balance of Payments, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, OECD Economies, UK Economy, 2011-04-22T11:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-fiscal-austerity http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-fiscal-austerity#When:19:09:00Z Fiscal austerity is a term in common use in the media at the moment. It refers to decisions by a government to reduce the amount of government borrowing (i.e. cut the size of a fiscal deficit) over a period of years. Fiscal austerity normally involves a combination of measures including increases in the overall burden of taxation and cuts in either the real level or growth of government spending on state-provided goods and services. Fiscal austerity is in the news in the UK because of the Coalition Government’s plans top eliminate the structural budget deficit over the course of the current Parliament. In their Coaltion document they claim that: 1/ We will accelerate the reduction of the structural budget deficit over the course of a Parliament 2/ The main burden of the budget deficit reduction will be from reduced spending rather than increased taxes. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-04-06T19:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-fiscal-deficit http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-key-term-fiscal-deficit#When:20:26:00Z The fiscal deficit (or the budget deficit) is the amount by which government spending on state provided goods & services, transfers and capital spending exceeds income from taxation. A fiscal deficit must be financed usually by the issue of new government debt. Data for the UK’s fiscal deficit is shown in the following charts. The UK Coalition government has set an ambitious (and controversial) target to eliminate the structural element of the fiscal deficit over the course of the next four years. The first chart below tracks UK government borrowing as a share of GDP AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, 2011-04-03T20:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/discrimination-and-distribution-of-income-news-resources http://www.tutor2u.net/blog/index.php/economics/comments/discrimination-and-distribution-of-income-news-resources#When:18:46:01Z If you are nearing the end of an A2 microeconomics syllabus and looking for current resources to help with issues of distribution of income and discrimination, the BBC came up with a couple of helpful items yesterday. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Labour Market, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, 2011-03-29T18:46:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/dambisa-moyo-how-the-west-was-lost http://www.tutor2u.net/blog/index.php/economics/comments/dambisa-moyo-how-the-west-was-lost#When:15:51:00Z Dambisa Moyo’s talk at the RSA available here focuses on some of the long term structural problems facing Western Economies in general and the USA in particular.  She argues that there are three crucial ingredients in economic growth - better capital, the quantity and quality of the workforce plus improvements in productivity   AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Emerging Economies, China Economy, Cycles and Shocks, Global Economy, Macroeconomic Policies, Fiscal Policy, OECD Economies, US Economy, Teaching of Economics, 2011-03-11T15:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/timetric-income-tax-and-vat-revenues http://www.tutor2u.net/blog/index.php/economics/comments/timetric-income-tax-and-vat-revenues#When:22:46:00Z Our latest Timetric chart shows the monthly tax revenues from Income Tax and VAT. Both are highly seasonal - there is a surge in income tax receipts in January because of self assessment payments. But they key is the underlying trend in tax revenues - can you spot what has been happening during the recession (which kicked in during 2008) and in the early stages of the recovery? Our Timetric chart is always updated so it will be interesting to see what happens to the flow of tax income from these two sources as the recovery (we hope) is sustained and in the wake of the rise in the standard rate of VAT to 20%. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-03-08T22:46:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-virtuous-circle-of-recovery-paul-krugman http://www.tutor2u.net/blog/index.php/economics/comments/a-virtuous-circle-of-recovery-paul-krugman#When:09:44:00Z A hat tip to Larry Spence for flagging up this super piece from Paul Krugamn in the New York Times. His focus is on the dynamics of an economic recovery and the risks of fiscal austerity tipping the US back into recession. “As families have repaired their finances, they have increased their spending; as consumer demand has started to revive, businesses have become more willing to invest; and all this has led to an expanding economy, which further improves families’ financial situation…....... The clear and present danger to recovery, however, comes from politics — specifically, the demand from House Republicans that the government immediately slash spending on infant nutrition, disease control, clean water and more.” More here on How to Kill a Recovery AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Economic Growth, Macroeconomic Policies, Fiscal Policy, OECD Economies, US Economy, UK Economy, Recession Watch, 2011-03-06T09:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/combining-monetary-and-fiscal-policy-to-curb-inflation-in-china http://www.tutor2u.net/blog/index.php/economics/comments/combining-monetary-and-fiscal-policy-to-curb-inflation-in-china#When:06:02:00Z Inflation is rising in China, and many of the reasons are the same as those given by Mervyn King for the rise in the UK - food prices are up 10.3% and the producer price index has risen to 6.6%, giving an annual inflation rate of 4.9% in January. This is in spite of three interest rate rises in the last four months, and has brought about a further rise from 5.81% to 6.06% by the Central Bank. The growth of the property owning middle class is recognised as having a role here - the National Bureau of Statistics also announced changes in how it calculates consumer price inflation. In spite of the fact that there is still a huge proportion of the population who live on a very low income, and poor families spend up to half their incomes on food, housing has now been given a much larger share of the new consumer price index (CPI) basket, and food prices have been given less weight, it said. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Emerging Economies, China Economy, Economic Growth, Global Economy, Housing Economics, Inflation and Deflation, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Market Failure, Externalities, 2011-02-16T06:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance#When:14:48:00Z On January 4th 2011, the standard rate of value added tax (VAT) jumped from 17.5% to 20%. For the first time, the UK VAT rate is now the same as the basic rate of income tax! Prime Minister David Cameron has stated publicly that the rise in VAT is likely to be permanent rather than temporary. The UK economy will thus have to adjust to this higher rate but what are some of the possible macroeconomic consequences? AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Government Intervention, Indirect Taxes, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, Recession Watch, 2011-01-17T14:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/will-we-have-to-live-with-high-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/will-we-have-to-live-with-high-unemployment#When:10:23:00Z Will many advanced economies have to live with a new semi-permanently higher level of unemployment as a consequence of the global financial crisis, economic slump and a period of fiscal austerity?   AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, Monetary Policy, OECD Economies, US Economy, Unemployment, 2011-01-17T10:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-government-spending-cuts-affect-inflation http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-government-spending-cuts-affect-inflation#When:17:49:00Z In early July 2010 Chancellor George Osborne announced a tough government spending review designed to cut the size of the UK’s structural budget deficit and bring down managed state sector spending as a share of GDP. The UK is not alone in introducing fiscal austerity measures and they have prompted fierce debate not least among economists about the likely impact on economic performance. The spending squeeze brings to an end more than a decade of strong real terms increases in state spending. This question is really about causation and in this case we are asked to think about how the steep planned cuts in government spending may affect the annual rate of consumer price inflation in the next couple of years. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Inflation and Deflation, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-01-03T17:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/background-on-value-added-tax http://www.tutor2u.net/blog/index.php/economics/comments/background-on-value-added-tax#When:17:08:01Z On January 4th, 2011, VAT in the UK rises from 17.5% to 20.0%. This Guardian article provides some background on the history of direct and indirect taxes. According to the FT “Value added tax is an indirect consumption tax assessed on the value added to a product at each point in the cycle of production and distribution. It is a consumption tax because it is ultimately borne by the consumer, who pays a fixed percentage of the final sale price of a product. VAT is not collected in full from the final seller of the product. The seller deducts from its VAT liability the amount of tax it has paid to other VAT-registered business further up the chain. VAT is therefore collected fractionally from different businesses.” The rise in VAT will add to the record level of petrol prices - petrol has both excise duty and VAT applied to the final price. This BBC article explains the impact AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 2, AS Macro, AS Micro, Macroeconomic Policies, Fiscal Policy, Market Equilibrium and Price, Nature of Supply, UK Economy, 2010-12-31T17:08:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/euro-in-focus-fiscal-austerity-measures http://www.tutor2u.net/blog/index.php/economics/comments/euro-in-focus-fiscal-austerity-measures#When:09:50:00Z 2009 and 2010 have been hugely difficult and painful years for many of the countries inside the currency union. A dangerous combination of deep recession, rising unemployment, a severe worsening of government finances, high public sector debts and the expectation that a period of fiscal austerity will hit living standards badly have all contributed to a sense of malaise for those countries that have entered monetary union. AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, European Economy, The Euro, Macroeconomic Policies, Fiscal Policy, UK Economy, Recession Watch, 2010-12-24T09:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fix-the-budget-us-style http://www.tutor2u.net/blog/index.php/economics/comments/fix-the-budget-us-style#When:12:15:00Z A hat tip to Shani Hartley for spotting this fantastic resource from the New York Times. Readers are invited to survey a large number of policy options that might either control fiscal spending or raise extra tax revenues. Checking the boxes you prefer feeds through to deficit reduction and fiscal packages can be shared online. Here is the link. Macroeconomic Policies, Fiscal Policy, OECD Economies, US Economy, Teaching of Economics, 2010-11-15T12:15:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fiscal-reform-tax-reform http://www.tutor2u.net/blog/index.php/economics/comments/fiscal-reform-tax-reform#When:11:56:00Z An autumnal hat tip to Graham Watson for this recommendation. Here is a link to the Mirrlees Report, the biggest single review of the whole UK tax system in the past 30 years. It comes in two sections and was somewhat missed in the aftermath of the student unrest in London last week. Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-11-15T11:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-unkindest-cut-of-all http://www.tutor2u.net/blog/index.php/economics/comments/the-unkindest-cut-of-all#When:06:43:00Z Opportunity costs – can a local authority afford to spend £21,000 a year on keeping 3 public toilets open, when their budget has already been cut by £220,000 and they are expecting a further 27% cut, already announced in the spending review? My local council, Epsom and Ewell, has decided not, as they need the money in order to maintain other services, particularly personal care services to the elderly in the borough. But, in order to avoid the negative externalities that could be associated with removal of a quasi-public good like public conveniences, they are seeking some alternative provision for the ‘emergency needs’ that they were there for – they are negotiating with local businesses to allow the public use of their facilities. Now that sounds like an excellent example of improving capacity utilisation, combined with David Cameron’s Big Society! AS Macro, Macroeconomic Policies, Fiscal Policy, Market Failure, Externalities, Public Goods, 2010-11-05T06:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/krugam-attacks-the-coalitions-fiscal-policies http://www.tutor2u.net/blog/index.php/economics/comments/krugam-attacks-the-coalitions-fiscal-policies#When:22:30:00Z Paul Krugman is currently on a speaking tour and he has used his column in the New York Times to lay into the coalition government’s fiscal plans - confirmed this week with the spending review. Winner of the 2008 Nobel Prize in Economics, Krugman’s strong Keynesian foundations rarely take long to surface and this article is no exception. “The best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it. So is Britain on the road to a lost decade such as that suffered by Japan? Keep reading as many articles as you can on the stimulus v fiscal consolidation debate for it lies at the heart of so much that is important in macroeconomic policy-making at the moment. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, UK Economy, Recession Watch, 2010-10-22T22:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-million-jobs-at-risk-from-spending-cuts http://www.tutor2u.net/blog/index.php/economics/comments/a-million-jobs-at-risk-from-spending-cuts#When:19:14:00Z Stephanie Flanders looks at the possible employment effects of the government’s spending plans focusing here in government investment spending in rail - where investment programmes can have a big impact on many local economies. Several of the leading business organisations are lobbying for capital spending to be maintained because weaknesses in infrastructure might seriously hamper the sustainability of any future recovery. With long term bond interest rates at almost record lows, the rates of return required for investment to pay its way seem to be fairly low. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, Regional Economics, 2010-10-14T19:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fiscal-austerity-next-stop-pensions http://www.tutor2u.net/blog/index.php/economics/comments/fiscal-austerity-next-stop-pensions#When:17:04:00Z As the austerity measures continue, the next stop is the pensions tax relief being significantly reduced. It has been cut from £250,000 to £50,000 a year of tax-free saving (although 3 years allowances may be carried forward for a lump-sum investment). The predictaion is this will affect around 100,000 high earning pensioners only. Furthermore, there is now a maximum of £1.5 bn that can be tax-free over a lifetime. The Treasury forecasts this will raise £4 bn a year, to reduce the fiscal deficit. Although Ronnie Ludwig, a partner at Saffery Champness, said the new policy would discriminate against entrepreneurs. “Because it is based on the model of regular income and regular pension contributions, it effectively discriminates against the self-employed or small business owners whose income patterns are more uneven,” he said. More here… Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-10-14T17:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/quangos-can-go http://www.tutor2u.net/blog/index.php/economics/comments/quangos-can-go#When:16:51:01Z As the fiscal austerity measures continue, 192 quangos are to be axed, including the Film Council, the Audit Commission, Youth Justice Board for England and Wales, the Animal Welfare Advisory Committee and Cycling England.. 118 others will be merged, including the Competition Commission and the OFT. Whilst in the case of the latter, the overlap between the OFT and the commission has been arguably wasteful and confusing, so efficiency may improve, it isn’t clear where the significant savings are coming from since the OFT and the commission have a combined annual budget of well under £100m. Quangos - “quasi-autonomous non-governmental organisations” - are arm’s-length bodies funded by Whitehall departments but not run by them. They are advisory bodies, consumer watchdogs or organisations carrying out public services. Among those the list confirms will be retained are Acas, the Competition Appeals Tribunal, the Higher Education Funding Council for England, the Low Pay Commission, UK Trade International, the Charity Commission for England and Wales and the Committee on Standards in Public Life.   Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-10-14T16:51:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/what-is-fairness-a-range-of-perspectives http://www.tutor2u.net/blog/index.php/economics/comments/what-is-fairness-a-range-of-perspectives#When:11:50:01Z Fairness lies in the eye of the beholder. The coalition government’s spending review is due shortly and there will be no shortage of animated discussion about the impact of deep spending cuts on different groups and in the provision of goods and services. This attempt to make a step-change in the size of the state raises hugely important questions about efficiency and equity in allocating scarce resources among competing uses. BBC Radio 4 has been discussing the concept of fairness all this week as a prelude to the Spending Review. In this feature article, philosopher Dr Angie Hobbs explains the philosophy of fairness and the resource also contains some interesting discussions from the radio on the fairness concept (good for auditory learners). Here is a brief selection of other resources linked to the fairness agenda: Spending cuts that fail the fairness test (FT) Paddy O’Connell (BBC Radio 4) looks at inter-generational fairness Will Hutton (The Guardian) We deserve a fair society, but it won’t be created by a vendetta against the poor Fairness: The history of an idea (BBC radio 4 discussion) Angie Hobbs of Warwick University and social historian David Kynaston discuss the history of the idea   AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Cost Benefit Analysis, Government Intervention, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-10-14T11:50:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economist-public-debt-clock http://www.tutor2u.net/blog/index.php/economics/comments/economist-public-debt-clock#When:20:01:00Z One to have ticking away on your screen in the classroom? The Economist web site has launched a new interactive global debt chart - dont have nightmares Macroeconomic Policies, Fiscal Policy, Teaching of Economics, Recession Watch, 2010-10-06T20:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/imf-signs-off-on-uks-fiscal-plans http://www.tutor2u.net/blog/index.php/economics/comments/imf-signs-off-on-uks-fiscal-plans#When:21:37:00Z The IMF signed off on George Osborne’s fiscal deficit plans today. The Fund praised the government’s bold strategy to eliminate the deficit within five years. The deficit reduction plan “greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy,” the concluding statement of the mission said. It welcomed the early action on the deficit and the weight given to spending cuts rather than tax increases. More here. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Global Economy, IMF, Credit Crunch, Macroeconomic Policies, Fiscal Policy, UK Economy, Recession Watch, 2010-09-27T21:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/what-would-adam-smith-think-of-a-graduate-tax http://www.tutor2u.net/blog/index.php/economics/comments/what-would-adam-smith-think-of-a-graduate-tax#When:06:40:01Z The Institute of Directors reports that a graduate tax would be bad for the UK’s competitiveness. How well would a Graduate Tax fare when scrutinised by Adam Smith? He developed his four Canons of Taxation to determine how ‘good’ a tax will be. The four are: 1. The cost of collection must be low relative to the yield 2. The timing and amount to be paid must be certain to the payer (It should all be open and above board and clearly set out so that people know what their obligations will be.) 3. The means and timing of payment must be convenient to the payer 4. Taxes should be levied according to ability to pay However much the undergraduates of the future may dislike the idea, a direct tax which is collected with standard income tax and based on the level of income generated by those with degrees would seem to meet those pretty well. Government Intervention, Government Failure, Macroeconomic Policies, Fiscal Policy, Supply-side policies, OECD Economies, Greece Economy, UK Economy, 2010-09-22T06:40:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/evan-loves-tax http://www.tutor2u.net/blog/index.php/economics/comments/evan-loves-tax#When:19:27:01Z This is a quick plug for a 3-part series on Radio 4 this week, presented by Evan Davis and called Evan Loves Tax. The three episodes are being broadcast on Monday, Tuesday and Wednesday at 9am and 21.30 each day, and the first one yesterday was a fascinating mix of econmic history, political myopia and cigarette smuggling. Talking to three former chancellors - Nigel Lawson, Norman Lamont and Alasdair Darling - Evan looked at why, since the Second World War, public spending has just kept on rising, and why at the same time, politicians decided that paying for it by putting up income tax was unthinkable. The second episode will examine why the tax system is so complex, including the famous judgement about whether a Jaffa Cake is a cake or a biscuit, and why it matters, and also looks at tax avoidance schemes, then the third will ask how well we make decisions about tax in Britain, from the way we vote in elections to Chancellors and their Budgets. Although the progammes are available on BBC i-player, each will only be there for 7 days so you need to move quickly if you think they may be useful as you examine fiscal policy in the UK! A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, 2010-09-14T19:27:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/cost-cutting-pre-budget-report-scrapped http://www.tutor2u.net/blog/index.php/economics/comments/cost-cutting-pre-budget-report-scrapped#When:15:02:00Z George Osborne will scrap the pre-Budget report this year in a break with Gordon Brown’s era and a signal of a return to more normal economic policy making. The chancellor’s decision to ditch what had become a second annual Budget will save resources at the Treasury; in its place a slimmed-down autumn statement, with new forecasts, towards the end of the year. More here… AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Government Intervention, Macroeconomic Policies, Fiscal Policy, 2010-09-06T15:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/new-research-on-fiscal-multipliers http://www.tutor2u.net/blog/index.php/economics/comments/new-research-on-fiscal-multipliers#When:15:15:00Z The size of the fiscal multiplier may be larger in recessions than in expansions according to new research published here. A useful article to use when teaching macro policy responses at A2 level. Hat tip to Kevin Hinde for first flagging this up. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Cycles and Shocks, Aggregate Demand, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-09-05T15:15:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/macroeconomic-developments-in-the-uk-economy-september-2010 http://www.tutor2u.net/blog/index.php/economics/comments/macroeconomic-developments-in-the-uk-economy-september-2010#When:21:29:00Z Here is an updated version of the keynote tutor2u teacher presentation on key developments in the UK Economy… AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR AS Economics Unit F582, A2 Macro, AS Macro, Global Economy, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Trade Policies, OECD Economies, Teaching of Economics, UK Economy, Recession Watch, 2010-09-04T21:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/stephanie-flanders-and-robert-peston-on-the-government-spending-review http://www.tutor2u.net/blog/index.php/economics/comments/stephanie-flanders-and-robert-peston-on-the-government-spending-review#When:09:26:00Z As part of the BBC’s coverage of the government spending review, Stephanie Flanders asks how has the UK economy ended up in its current state - and what impact are the cuts likely to have? This is an excellent piece to use when introducing students to the broader macroeconomic issues at the start of their course. In a second video piece Business Editor Robert Peston considers what impact are government cuts likely to have on the business world? AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-09-04T09:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/raising-money-from-taxation-a-bbc-guide http://www.tutor2u.net/blog/index.php/economics/comments/raising-money-from-taxation-a-bbc-guide#When:07:12:00Z This new video from Declan Curry on the BBC explains in straightforward terms how the UK government raises taxation from various sources and how it attempts to finance the gap between government spending and taxation. A good resource for AS level students. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-08-31T07:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/coalition-budget-hits-poor http://www.tutor2u.net/blog/index.php/economics/comments/coalition-budget-hits-poor#When:12:55:00Z According to the Institute for Fiscal Studies, the coalition government’s first Budget of austerity has hit the poorest families hardest. It has said the measures announced in the Budget in June were regressive. The IFS said the poorest 10% of families would lose over 5% of their income as a result of the budget compared with a loss of less than 1% for non-pensioner households without children in the richest 10% of households. It added that the budget contrasted with the “progressive” plans for 2010-14 inherited from Labour, under which the richest 10% of households bore the brunt of the cuts. The analysis suggests that cuts to areas such as housing benefit and disability allowance would hit the poorest to the tune of £422 between the Budget and April 2014. The report also questioned the government’s decision to use the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI) when calculating certain benefits. More from the BBC here or the full IFS report can be found here. A summer hat tip to Stephen Lightfoot from Blue Coat School Oldham for flagging up that the IFS data on UK income distribution can be downloaded from their site. Stephen writes: “The IFS website gives access to the report but perhaps more interestingly has a link to a ZIP file which provides income distribution data for the UK since 1961. An edited version would almost certainly provide some good discussion opportunities as well as ICT based analysis.” The data can be found here AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Macroeconomic Policies, Fiscal Policy, Poverty and Inequality, Teaching of Economics, 2010-08-25T12:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/fiscal-austerity-businesses-in-the-firing-line http://www.tutor2u.net/blog/index.php/economics/comments/fiscal-austerity-businesses-in-the-firing-line#When:11:41:00Z The Guardian has this timely article offering plenty of examples of firms whose revenues & profits will be affected by public sector cuts in the months (and years) ahead. What the article does not really consider are the opportunities for businesses during this time of fiscal austerity. Firms who can supply goods and services to public sector organisations more efficiently - open source software businesses spring to mind - can tap into the need for great value for money in delivering public services. And the wider context is the threat to individuals and corporates from a higher tax burden and higher long term interest rates unless the fiscal deficit is brought under control. Once in a generation a nation needs to take a cold hard look at state spending and this time has arrived. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, 2010-08-10T11:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-budget-slideshow http://www.tutor2u.net/blog/index.php/economics/comments/uk-budget-slideshow#When:12:29:00Z Many of the charts used in the recent July 2010 Budget have been made available by the Treasury on the flickr site - here is the link for the slideshow. Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-07-05T12:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ceo-summit-focuses-on-supply-side-support http://www.tutor2u.net/blog/index.php/economics/comments/ceo-summit-focuses-on-supply-side-support#When:06:36:00Z The Times is sponsoring a ‘CEO Summit’ this week, with about a hundred Chief Executives including Sire Terry Leahy of Tesco, Sire John Rose of Rolls Royce and Steven Hester of RBS. It provided their main headlines yesterday and several pages of coverage, which contain a great deal of comment about the opinions of the delegates about the Coalition Government’s plans to cut the deficit. The summit has been attended by George Osborne, David Cameron and Vince Cable as well, providing plenty of opportunity for analysis of fiscal policy and the discussions at the G20 over the weekend. A2 Macro, AS Macro, Government Intervention, Macroeconomic Policies, Fiscal Policy, Supply-side policies, UK Economy, 2010-06-30T06:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/how-are-taxes-raised-and-spent http://www.tutor2u.net/blog/index.php/economics/comments/how-are-taxes-raised-and-spent#When:16:18:00Z This neat set of graphics from the BBC makes an ideal introductory resource when teaching government taxation and spending. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-06-08T16:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/australia-divided-on-a-mining-super-tax http://www.tutor2u.net/blog/index.php/economics/comments/australia-divided-on-a-mining-super-tax#When:10:26:00Z Windfall taxes are undeniably popular for politicians. On the pretext of “excess profits” there is always pressure for a government to tap the super-high profits of industries enjoying high profits on the back of high commodity prices and a fast growth of market demand. The Australian government plans a super tax on the profits of the Australian mining industry but it is facing huge opposition to the proposal. Are one-off taxes equitable and efficient? We have tried them before in the UK including windfall levies on north sea oil and gas companies, the banks and Gordon Brown’s infamous raid on the pension funds - but with very mixed results. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Business Economics, Commodities Markets, Macroeconomic Policies, Fiscal Policy, OECD Economies, Teaching of Economics, 2010-06-04T10:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/paul-krugman-at-the-lse http://www.tutor2u.net/blog/index.php/economics/comments/paul-krugman-at-the-lse#When:21:42:00Z This is a reprise of a blog posted last summer following Krugman’s talk at the LSE. So much of what he talked about remains relevant today especially the challenges facing macro-economic policy-makers when deflationary and debt dangers continue to lurk. ”“The central problem of depression-prevention has been solved, for all practical purposes.” Robert Lucas, 2003 In a world of depression economics many of the standard rules of economics no longer apply. The global economy remains in the grip of a sustained downturn, the duration of which might make Japan’s “lost decade” look favourable in comparison. And macro policy-makers are grappling with an infection that has proved highly resistant to the usual doses of anti-biotic. Despite a remarkable attempt at stimulating demand – through the acceptance of large fiscal deficits and the dual attack of conventional and unconventional monetary policy – things seems to getting worse albeit more slowly. This seemed to me to be gist of the core message from the first of the Lionel Robbins lectures delivered by the 2008 Nobel Prize Winner for Economics, Professor Paul Krugman of Princeton speaking at the LSE this evening. A2 Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Monetary Policy, OECD Economies, US Economy, Teaching of Economics, UK Economy, Credit Crunch, 2010-06-02T21:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/finding-new-opportunities-among-the-economic-wreckage http://www.tutor2u.net/blog/index.php/economics/comments/finding-new-opportunities-among-the-economic-wreckage#When:08:29:00Z I am reprising this blog entry from a year ago partly because Robert Frank is one of my teaching heroes. But also because his idea of a steeply progressive consumption tax continues to have such resonance today as we seek to find ways of re-balancing our economic systems away from excessive and often wasteful consumption towards saving and productive investment. Read on and you will find out about positional goods, status races and the case for taxing consumption more and saving less. A2 Macro, AS Macro, Behavioural Economics, Economic Growth, Macroeconomic Policies, Fiscal Policy, OECD Economies, US Economy, Teaching of Economics, UK Economy, Credit Crunch, 2010-06-01T08:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-selection-of-revision-notes-on-fiscal-policy http://www.tutor2u.net/blog/index.php/economics/comments/a-selection-of-revision-notes-on-fiscal-policy#When:16:14:00Z The handling of fiscal policy is one of the big macroeconomic issues of the year and one that is likely to dominate many AS and A2 macro essays in the exams this summer. Here is a selection of our recent blogs on aspects of fiscal policy during the last twelve months together with some brief revision notes on fiscal policy and its impact on the real economy. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-05-31T16:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation http://www.tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation#When:11:32:00Z This revision blog focuses on policies that can be used to control the rate of inflation. Our starting point is that inflation comes from more than one source. Rising prices are not simply the result of increasing aggregate demand but also from higher costs of production and the direct and indirect effects of changes in government policies. It is also important to note that many inflationary impulses come from outside the domestic economy - namely from external shocks in the global economic system - many of which an individual country has no control to change. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Inflation and Deflation, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, UK Economy, 2010-05-31T11:32:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/blanchflower-scathing-on-cuts http://www.tutor2u.net/blog/index.php/economics/comments/blanchflower-scathing-on-cuts#When:08:47:00Z Blanchflower here criticises Osborne’s contractionary fiscal policy at a time when growth is still anaemic, emphasising the collapse of multiplier effects from government spending, but also the negative impact on employment, both in the public and private sector, at a time when the private sector is still recovering slowly from the recession. Whilst cutting in a recession is clearly against the Keynesian ethos, Blanchflower accuses the Conservatives of also only following ideology rather than common sense, at a time when the government is one of the few entities to still be able to spend right now. He says this, and while there are reasons why the fiscal outlook for the UK is different to Greece’s, it is the financial markets that will dictate whether the government is allowed to spend right now… A2 Macro, AS Micro, Cycles and Shocks, Economic Growth, Government Intervention, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, Credit Crunch, 2010-05-25T08:47:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-cutting-begins http://www.tutor2u.net/blog/index.php/economics/comments/the-cutting-begins#When:14:14:01Z The first round of government spending cuts were announced earlier today amounting to £6.2 billion. Whilst this is not “austerity” of the sort that Greece has been talking about recently, they are genuine cuts, albeit further measures are still required to tackle the huge black hole in the public purse. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Economic Growth, Government Intervention, Indirect Taxes, Regulation, Subsidies, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Keynesian Economics, UK Economy, Regional Economics, 2010-05-24T14:14:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-data-description-revision-on-fiscal-deficits http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-data-description-revision-on-fiscal-deficits#When:18:26:00Z Here is another example of some macro-economic data that you might be asked to interpret in an A2 AQA data response exam paper “Using the extract, identify two significant features of the changes in the fiscal balance for the USA and the UK over the period shown by the data” (5 marks) AS and A2 Specifications, AQA Economics Unit 4, A2 Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, Recession Watch, 2010-05-23T18:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/irelands-gnp-and-the-debt-crisis http://www.tutor2u.net/blog/index.php/economics/comments/irelands-gnp-and-the-debt-crisis#When:14:20:00Z Despite well publicised attempts to tackle an alarmingly high fiscal deficit, Ireland still has a budget shortfall in excess of ten per cent of national income and a high accumulated national debt measured as a percentage of GDP. But the true situation may be much worse. Low corporate taxes encouraged sizeable inflows of FDI especially from North America, the result being that Ireland’s GDP is much larger than her GNP - a better measure of the national income generated by Irish-owned economic assets. Government borrowing measured against GNP is very large indeed. And Ireland along with countries such as Greece, Portugal and Spain is mired in the classic debt-growth trap - how can it achieve fiscal austerity when national output and real incomes are falling. Simon Johnson is strong on this issue today - the dangers of sovereign debt “Debt overhangs hurt growth for many reasons: business is nervous that taxes will go up in the near future, the cost of credit is high throughout society, and social turmoil looms because continued austere policies are needed to reduce the debt.” More here AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, OECD Economies, Ireland Economy, Recession Watch, Credit Crunch, 2010-05-21T14:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/skeletons-in-the-fiscal-cupboard http://www.tutor2u.net/blog/index.php/economics/comments/skeletons-in-the-fiscal-cupboard#When:16:10:00Z The incoming government has announced the creation of an Office for Budget Responsibility - a 3 person committee headed up by Sir Alan Budd and given the task of providing independent economic forecasts for the Treasury as it prepares budget statements and other public spending reviews. This is quite an important step if not perhaps on the same scale of surprise and excitement as May 1997 when Gordon Brown surged into the Treasury and made the Bank of England independent! AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, 2010-05-17T16:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-direct-and-indirect-taxation http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-direct-and-indirect-taxation#When:19:20:00Z Decisions about which types of tax to use as a way of raising revenue raise questions about the roles and relative merits of the different UK taxes. Should we move further towards relying on indirect taxes or are direct taxes the best way of generating enough revenue to fund government spending and cutting the fiscal deficit. AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, A2 Macro, Government Intervention, Macroeconomic Policies, Fiscal Policy, 2010-05-09T19:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-a2-revision-where-next-for-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/as-a2-revision-where-next-for-the-uk-economy#When:06:44:00Z Students wanting to demonstrate up-to-date understanding of the UK economy should find this streamed revision presentation really useful.  It was delivered by Geoff at our AS & A2 Economics workshops in London & Manchester.  It provides a comprehensive coverage of recent developments in the UK economy and highlights some potential downsides and upsides as the economy attempts to sustain a recovery during 2010 and 2011. Has the era of macro economic stability been replaced by a new phase of macro economic uncertainty, slower growth and a recovery constrained by debt? Or are there grounds for being more optimistic about the near-term future for the British economy? Revision Presentation on the UK Economy AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR AS Economics Unit F582, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Aggregate Supply, Economic Growth, Exchange Rates, Inflation and Deflation, International Trade, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Trade Policies, Keynesian Economics, Manufacturing Industry, Monetarism, UK Economy, Recession Watch, 2010-05-02T06:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-managing-the-economy http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-managing-the-economy#When:06:33:01Z This is a streamed version of the presentation that supported the revision session undertaken by students at our workshops last week as they examined the issue of managing the economy during these unusual times. Revision Presentation on Managing the Economy AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, OCR AS Economics Unit F582, AS Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Monetary Policy, UK Economy, 2010-05-02T06:33:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-from-budget-surplus-to-deficit http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-from-budget-surplus-to-deficit#When:15:35:00Z Here is a suggested answer to this question: “Explain why a government budget might move from surplus to deficit” (15 marks) AS and A2 Specifications, AQA Economics Unit 4, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Fiscal Policy, UK Economy, Credit Crunch, 2010-05-01T15:35:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/from-junk-to-triple-a http://www.tutor2u.net/blog/index.php/economics/comments/from-junk-to-triple-a#When:19:14:00Z Here is a useful ranking of sovereign debt ratings for many countries - updated as ratings change! Top rated: Australia AAA - STABLE Austria AAA - STABLE Canada AAA - STABLE Denmark AAA - STABLE Finland AAA - STABLE all the way down to Pakistan B- (STABLE) Ukraine B- (POSITIVE) Ecuador CCC+ (STABLE)     A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Credit Crunch, 2010-04-28T19:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/contagion-spreads http://www.tutor2u.net/blog/index.php/economics/comments/contagion-spreads#When:17:00:01Z After Greek’s junk status downgrade yesterday, as well as Portugal’s downgrade; S&P today downgraded one of the other PIIGS, Spain as the contagion effect takes hold… Last night’s (Wednesday)  Newsnight discussed the potential contagion ( from 27 minutes). With Spain’s economy making up 8.5% of the EU GDP, this downgrade has bigger consequences than Greece’s. Could the UK be next? AS and A2 Specifications, EdExcel Economics Unit 4, A2 Macro, AS Macro, Cycles and Shocks, Economic Growth, European Economy, The Euro, Exchange Rates, Financial Markets, Global Economy, IMF, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, 2010-04-28T17:00:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/greek-junk-status-timeline http://www.tutor2u.net/blog/index.php/economics/comments/greek-junk-status-timeline#When:08:20:00Z This informative interactive graphic from the FT shows the rapid rise in Greek government yields over the past year, resulting in yesterday’s downgrade to junk status. When S&P warns holders of Greek debt that they only had an “average chance” of between 30% and 50% of getting their money back in the event of a debt restructuring or default, its going to have consequences… One result of going junk (or sub-investment grade…) is that many financial institutions (including pension funds) are not allowed to hold such investment instruments, which will lead to a big sell-off of these, causing the yields to rise further. As the fears of contagion spread, Portugal was also downgraded and the Vix index, a measure of “fear” in the US stock market, rose by more than 30 per cent, its biggest one-day jump since the height of the financial crisis in October 2008. The moves highlighted the potential that the Greek crisis – the result of too large a debt load and expectations that it may default or have to restructure that debt – could spread and have knock-on effects on the global economy. In this month’s edition of Economax, there is an in-depth article on Greece’s fiscal crisis. A2 Macro, AS Macro, Cycles and Shocks, Economic Growth, European Economy, Single Market, The Euro, Exchange Rates, Financial Markets, Macroeconomic Policies, Fiscal Policy, Credit Crunch, 2010-04-28T08:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/detail-of-the-deepest-spending-cuts-since-the-1970s http://www.tutor2u.net/blog/index.php/economics/comments/detail-of-the-deepest-spending-cuts-since-the-1970s#When:05:51:00Z Following on from Geoff’s blog below about recent IFS reports, their latest research released yesterday looks at the scant detail that the three main political parties have given of their plans for spending cuts and tax rises, if elected. This could be introduced with this video of writer Will Self, who reckons the parties are in denial about the real challenges which face them after the election, and the IFS report adds the numbers to this suggestion. Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-04-28T05:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/links-to-recent-ifs-research http://www.tutor2u.net/blog/index.php/economics/comments/links-to-recent-ifs-research#When:17:36:00Z The Institute for Fiscal Studies occupies a lofty place in any coverage of the fiscal crisis facing the British economy. Their independent research is frequently quoted and the fiscal plans of the three main parties are scrutinised in the context of the dispassionate analysis that the IFS brings to bear. Some seriously good economists have cut their teeth at the IFS before moving onto other things. Here is the link to the recent research publications from the IFS. Among the various election and budget reports there are some good documents on what has happened to productivity during the recession and an analysis of what has happened to poverty during the 13 years of the Labour government. Macroeconomic Policies, Fiscal Policy, Supply-side policies, Poverty and Inequality, Teaching of Economics, UK Economy, 2010-04-27T17:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/issues-and-prospects-for-the-uk-economy-in-2010 http://www.tutor2u.net/blog/index.php/economics/comments/issues-and-prospects-for-the-uk-economy-in-2010#When:11:18:00Z Here are some notes from a presentation on some current issues affecting the UK economy - suitable I hope for AS and A2 macroeconomics courses and students preparing for their June 2010 papers. We will make the full presentation available late and this blog post links to many of our other recent blogs on UK and global macroeconomic issues. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Teaching of Economics, UK Economy, Recession Watch, Unemployment, Credit Crunch, 2010-04-25T11:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/bonds http://www.tutor2u.net/blog/index.php/economics/comments/bonds#When:17:51:01Z Both companies and governments can issue bonds when they need to borrow money. The issue of new government debt is done by the central bank and involves selling debt to capital markets. The bond market is also the place where companies may seek to raise funds by issuing new tranches of debt. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, OCR AS Economics Unit F582, A2 Macro, AS Macro, European Economy, The Euro, Global Economy, IMF, Credit Crunch, Macroeconomic Policies, Fiscal Policy, OECD Economies, Greece Economy, Teaching of Economics, UK Economy, 2010-04-24T17:51:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/cep-analysis-of-the-uk-economy http://www.tutor2u.net/blog/index.php/economics/comments/cep-analysis-of-the-uk-economy#When:16:02:00Z On the day that weak economic growth data was released by the Statistics Commission, a hat tip to Romesh Vaitilingam for sending through details of the new CEP election analysis briefing. The latest CEP Election Analysis describes where we are now in terms of macroeconomic performance and the impact on the public finances – and the policy options, focusing on debt reduction and economic recovery, and comparing the parties’ positions. It can be downloaded here. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, OECD Economies, Teaching of Economics, UK Economy, Credit Crunch, 2010-04-23T16:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/piigs http://www.tutor2u.net/blog/index.php/economics/comments/piigs#When:09:52:00Z Excellent interactive graphic from The Economist on the vital statistics of the PIIGS economies. A2 Macro, Economic Growth, European Economy, The Euro, Macroeconomic Policies, Fiscal Policy, 2010-04-22T09:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/super-fast-broadband-slows-down-again http://www.tutor2u.net/blog/index.php/economics/comments/super-fast-broadband-slows-down-again#When:07:31:00Z Figures comparing growth in UK productivity consistently show us falling behind our major competitors. As Geoff highlighted in this recent blog, there are many underlying factors on the supply-side of the economy and one of them is infrastructure bottlenecks caused by, among other things, slow broadband speeds. AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, AS Micro, Business Economics, Economic Growth, Economics of Technology, Government Intervention, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Market Failure, Merit & De-Merit Goods, UK Economy, Regional Economics, 2010-04-08T07:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/stephen-king-on-connections-between-monetary-and-fiscal-policy http://www.tutor2u.net/blog/index.php/economics/comments/stephen-king-on-connections-between-monetary-and-fiscal-policy#When:11:24:01Z Monetary and fiscal policy may be two separate topics in the published AS and A2 economic syllabus but any smart student knows that there are many connections between the two. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, OCR A2 Economics Unit F585, A2 Macro, AS Macro, Cycles and Shocks, Economic History, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-04-07T11:24:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/50-top-rate-tax-comes-into-force http://www.tutor2u.net/blog/index.php/economics/comments/50-top-rate-tax-comes-into-force#When:07:48:00Z The start of the new financial year heralds the launch of a new top rate of income tax of 50% for people with taxable incomes in excess of £150,000. This makes the income tax system more progressive at the top end but the move has attracted criticism from some business groups who claim that it will stifle enterprise and risk-taking in the economy and rise a brain drain effect. Will it lead to higher tax revenues or perhaps encourage greater tax avoidance and evasion? Here are some links on the issue: *BBC: New top-rate tax rate of 50% comes into force *The Times: Millions prepare to count the cost of new tax regime *Daily Mail: 50p tax increase could hit UK sporting events *Joe Lynam provides this BBC news video report AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, AS Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, 2010-04-06T07:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ask-the-chancellors-debate http://www.tutor2u.net/blog/index.php/economics/comments/ask-the-chancellors-debate#When:08:50:00Z If you missed the live election debate between the Chancellors, you can watch it here on Channel4OD; or read a review of it at the FT here. A2 Macro, AS Macro, Government Intervention, Regulation, Macroeconomic Policies, Fiscal Policy, Supply-side policies, Keynesian Economics, UK Economy, 2010-03-30T08:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-graphics-from-the-budget http://www.tutor2u.net/blog/index.php/economics/comments/economics-graphics-from-the-budget#When:08:49:00Z A hat tip to Mark Seccombe for sending through this snappy selection of macroeconomics graphics linked to last week’s budget 1/ A good graphic to show how the government intend to reduce the debt (Guardian Data Blog) 2/ An interactive breakdown of government revenues and expenditure 3/ BBC editors’ comment (including comments from Stephanie Flanders) 4/ Times analysis - not only the measures introduced but also a bit of comment about some of them A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-03-28T08:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uk-economy-in-2010-essential-revision-presentation http://www.tutor2u.net/blog/index.php/economics/comments/uk-economy-in-2010-essential-revision-presentation#When:11:42:00Z Many thanks to Geoff for producing this superb 51-slide analysis and evaluation of the prospects for the UK Economy in 2010.  Updated to 25 March 2010 with the latest available data. AS and A2 Specifications, Economics Presentations, A2 Macro, AS Macro, Cycles and Shocks, Inflation and Deflation, Labour Market, Macroeconomic Policies, Fiscal Policy, Monetary Policy, UK Economy, Recession Watch, Unemployment, 2010-03-26T11:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/erotic-economics http://www.tutor2u.net/blog/index.php/economics/comments/erotic-economics#When:16:14:00Z We’ve seen various attempts at tax avoidance before, with the likes of the big debate about whether Jaffa cakes are truly biscuits or cakes , but today another “interesting” example appeared in the news here. The Erotic Cinema in Belgium claimed it should benefit from the reduced 6% rate of VAT (instead of the normal 21%) paid by cinema owners, who get a discount under law to promote cultural activities. Perhaps unsurprisingly, it was rejected by the ECJ! Introductory Economics, Macroeconomic Policies, Fiscal Policy, Quirky Trivia, 2010-03-18T16:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/presentation-on-fiscal-deficits http://www.tutor2u.net/blog/index.php/economics/comments/presentation-on-fiscal-deficits#When:19:31:00Z (Presentation attached this time!) Given the Budget 2010 scheduled for next week, and given the importance of the budget deficit to the election campaign, here are some useful resources on the current fiscal situation in the UK: - Following on from the economists’ letter last month, today, the EU also called for a quicker tightening of the UK’s fiscal position - A video discussion here between Stephen Timms and Ken Clarke on how Labour and Conservatives would tackle the UK’s deficit - and how there is no clear message from any party on how they would actually achieve it!! - And finally a PDF document here (which has been compiled by us at Merchant Taylors’ - thanks to Andrew Ellams and Harriet Thompson for their assistance on this!) which may be of use: FISCAL_POLICY_09-10_MTS.pdf AS Macro, AS Micro, Exchange Rates, Financial Markets, Government Intervention, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, 2010-03-16T19:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tax-revenue-goes-up-in-smoke http://www.tutor2u.net/blog/index.php/economics/comments/tax-revenue-goes-up-in-smoke#When:22:55:00Z One of the disadvantages of indirect taxes, particularly the so-called ‘sin taxes’ levied on tobacco and alcohol, is that they can give rise to a black market in the goods in order to avoid the tax, and this is a source of government failure. An article in The Times highlights this in the market for cigarettes. To quote the article “According to estimates by HM Revenue & Customs, up to 54 per cent of handrolling tobacco and 17 per cent of cigarettes consumed in the UK are smuggled, costing the Treasury £3 billion in lost tax revenue in 2007-08 alone.”  With the current fiscal deficit, the treasury needs that revenue! AS Micro, Government Intervention, Government Failure, Indirect Taxes, Macroeconomic Policies, Fiscal Policy, Market Failure, De-Merit Goods, 2010-03-15T22:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/india-ramps-up-infrastructure-spending-to-sustain-growth http://www.tutor2u.net/blog/index.php/economics/comments/india-ramps-up-infrastructure-spending-to-sustain-growth#When:11:00:00Z Rapid growth has put India’s creaking infrastructure under tremendous pressure. The Indian government has sharply increased investment spending on infrastructure with ambitious projects such as adding 20km of new roads each day! Can the spending projects deliver? This BBC India Business Report looks at the rise in investment spending. A2 Macro, AS Macro, Emerging Economies, Indian economy, Cycles and Shocks, Aggregate Demand, Capital Investment, Economic Growth, Global Economy, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-03-14T11:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/rethinking-the-size-of-the-state http://www.tutor2u.net/blog/index.php/economics/comments/rethinking-the-size-of-the-state#When:09:50:00Z Hamish McRae is on superb form in his piece in the Independent on Sunday today. His article centres on the idea that the British government has never managed to raise the tax burden to anything over 38 per cent of GDP. This in effect provides a ceiling for the pot of tax revenue available for a government to spend but with state spending commitments perennially over 42 per cent of national income (or much higher as at present), hard choices will have to be made about the range and funding of public services in the future. “you have to question the whole structure of the public sector. Goods and services that could be supplied by the marketplace have already been shed in the great wave of privatisations, starting in the late 1970s: oil companies, airlines, telecoms, motor manufacturers, power utilities and, more controversially, railways. But these were goods and services that people pay for. They are not funded in the main by the tax system. People expect to have free schools, but they never expected free flights or free phone calls. The core problem now is that we as a society want to spend a greater proportion of our income on services that are, to a greater or lesser extent, provided by the state: health care, welfare for the elderly and education. But we are not prepared to provide the finances in the form of taxation to fund this. That leads to two conclusions. One is that we have to improve the efficiency of the public sector; the other is that we have to get people in some way or other to pay more of their own (ie, taxed) income to buy these other services, either from the state or elsewhere” More here A2 Macro, AS Macro, Government Intervention, Macroeconomic Policies, Fiscal Policy, Market Failure, Public Goods, Teaching of Economics, UK Economy, 2010-03-14T09:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/dispatches http://www.tutor2u.net/blog/index.php/economics/comments/dispatches#When:17:39:00Z An excellent Channel 4 Dispatches documentary last night on Cameron’s government. Lots of good stuff here for both Politics and Economics students, for example discussing the proposed “Office for Budget Responsibility” to introduce more independence into Treasury forecasts. There’s been lots of talk about fiscal tightening in recent months, but this program asks where exactly do the Tories want to start fiscal tightening - and the non-committal answers will have you laughing/crying*, with no Shadow Minister agreeing to a cut in their department; and the Conservative party not wanting to admit to future tax rises just before the election. It also discusses the issue of the Conservatives and their stance on Europe. *delete as appropriate. A2 Macro, AS Macro, European Economy, Government Intervention, Regulation, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Keynesian Economics, UK Economy, 2010-03-09T17:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/sovereign-debt-hot-spots http://www.tutor2u.net/blog/index.php/economics/comments/sovereign-debt-hot-spots#When:19:12:01Z An interesting summary of the sovereign debt worries of a cluster of countries courtesy of the Wall Street Journal Financial Markets, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, 2010-03-08T19:12:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/teaching-fiscal-deficits-the-debt-bombshell http://www.tutor2u.net/blog/index.php/economics/comments/teaching-fiscal-deficits-the-debt-bombshell#When:21:12:01Z This might be worth having ticking away on a whiteboard when you are teaching the economics of fiscal deficits and the national debt! Macroeconomic Policies, Fiscal Policy, Teaching of Economics, 2010-03-07T21:12:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/update-on-the-greek-tragedy http://www.tutor2u.net/blog/index.php/economics/comments/update-on-the-greek-tragedy#When:17:49:00Z A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Financial Markets, Global Economy, IMF, Credit Crunch, Macroeconomic Policies, Fiscal Policy, 2010-03-04T17:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/men-of-letters-at-the-lse http://www.tutor2u.net/blog/index.php/economics/comments/men-of-letters-at-the-lse#When:06:45:00Z A debate between signatories of two of the recent letters to the press about what should be done about the UK fiscal deficit is taking place at the LSE next Thursday 4th March. These letters have become part of a heated political discussion ahead of the election. The speakers are Tim Besley (Kuwait professor of economics and political science at the London School of Economics, and former member of the MPC) and Alan Manning (head of the department of economics and professor of economics at the London School of Economics).  The debate “...aims to explore the scope for common ground in this debate in an effort to spread light not heat.” It takes place in the LSE’s Sheikh Zayed Theatre from 6.30 - 8pm, and is free and open to all with no ticket required. Entry is on a first come, first served basis. For those who cannot get there, the LSE aim to make all events available as a podcast subject to receiving permission from the speaker/s to do this, and subject to no technical problems with the recording of the event. Podcasts are normally available 1-2 working days after the event. Here is the link to the LSE events information. Macroeconomic Policies, Fiscal Policy, 2010-02-26T06:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/an-appetising-deficit http://www.tutor2u.net/blog/index.php/economics/comments/an-appetising-deficit#When:06:20:00Z We have been focusing on fiscal policy in A2 macroeconomics for the last couple of weeks, and one of my students came up with a lovely phrase, in which he described a number of factors which had “...mixed together to create a huge deficit soup, and no one is hungry for it.” Which gives rise to the following question: Which ingredients have gone into the UK’s fiscal Deficit Soup, and what would you use to create a Recovery Risotto? A2 Macro, Macroeconomic Policies, Fiscal Policy, Quirky Trivia, 2010-02-26T06:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/withdrawing-the-drugs http://www.tutor2u.net/blog/index.php/economics/comments/withdrawing-the-drugs#When:17:58:00Z An excellent article in last week’s Economist magazine, which focuses on the difficult task of weaning the world economy off its fiscal and monetary stimulus. In recent years, Interest rates have plummeted, and budget deficits soared; whilst quantitative easing has come out the woodwork; but last week’s announcement that the Fed raised the discount rate in its first step of contractionary policy in quite some time as well as our own general election around the corner, where fiscal prudence is high on the agenda and it seems that the beginning of the next phase in economic policy has begun. A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Economic Growth, Government Intervention, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Supply-side policies, Keynesian Economics, 2010-02-23T17:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a-long-view-on-national-debt http://www.tutor2u.net/blog/index.php/economics/comments/a-long-view-on-national-debt#When:16:01:01Z A hat tip to Nick Fawcett for spotting this superb half hour discussion on Radio about issues relating to the UK national debt - the programme features (among others) Niall Ferguson, Stephanie Flanders and Will Hutton. The long view of national debt, from Waterloo to today’s financial crisis - available on the iPlayer for another week. Official Long Run View Site A2 Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-02-23T16:01:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-laffer-curve-comes-to-life-50-of-nothing-is-nothing http://www.tutor2u.net/blog/index.php/economics/comments/the-laffer-curve-comes-to-life-50-of-nothing-is-nothing#When:21:54:00Z Three linked articles in The Times today looks at the efforts HMRC is putting into chasing down top earners and ensuring that they pay the full amount of tax that they owe. The issue revolves around the definition of residency – those who are classified as non-resident and not ordinarily resident – and the way in which earnings both in the UK and worldwide are treated for tax reasons as a result. There is a team at the Revenue of about 500 staff who each investigate about ten wealthy individuals, and whose work apparently yielded £373m in tax revenues last year. Those who are being investigated can expect that their offshore trusts and companies in particular will be under scrutiny, using new computer systems and a budget of £1bn to carry out the enquiries. This appears to have been a successful initiative which has generated a far higher revenue from those higher earners – but the suggestion is that this close scrutiny will drive those individuals away from the UK so that their earnings are no longer eligible for UK tax. A number of comments within the article focus on accusations that the Revenue keeps changing their rules, which makes it impossible for wealthy UK individuals and foreign nationals coming to the UK to undertake ‘legitimate’ tax planning and comply with the rules. A2 Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Supply-side policies, UK Economy, 2010-02-18T21:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/lively-articles-on-the-fiscal-stimulus-debate http://www.tutor2u.net/blog/index.php/economics/comments/lively-articles-on-the-fiscal-stimulus-debate#When:11:37:00Z “Around the world over the last century, the typical financial crisis caused the jobless rate to rise for almost five years, according to work by the economists Carmen Reinhart and Kenneth Rogoff.” David Leonhardt - writing in the New York Times - praises the employment effects of the Obama stimulus programme in a super piece. Judging Stimulus by Job Data Reveals Success And over at the Financial Times, the ever-readable Martin Wolf considers the thickness of the fiscal tightrope facing the US government and other leading economies. “The argument is, rather, that the benefits of the higher output today exceed the costs of debt service tomorrow ....high-income countries face huge fiscal challenges. And yes, the crisis-hit countries start from grossly unsustainable fiscal positions. But the US is not Greece. Moreover, a massive fiscal tightening today would be a grave error.” More here And here is the link to last week’s feature in the Independent on the views of economist Joseph Stiglitz: The Money Man: Super-economist Joseph Stiglitz on how to fix the recession All three of these articles will stretch and challenge A2 economists wanting to understand more about the big fiscal issues facing governments at the moment. A2 Macro, AS Macro, Cycles and Shocks, Global Economy, Credit Crunch, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, OECD Economies, US Economy, Teaching of Economics, UK Economy, Recession Watch, 2010-02-17T11:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economists-call-for-a-fiscal-tightening http://www.tutor2u.net/blog/index.php/economics/comments/economists-call-for-a-fiscal-tightening#When:15:10:00Z A group of leading economists has written to the Sunday Times stressing the need for a credible and timely start to reducing the UK government’s fiscal deficit. The letter can be found here.. Among the letter’s signatories are Kenneth Rogoff, a former chief economist at the International Monetary Fund; Howard Davies, director of the London School of Economics and former head of the Financial Services Authority; and Roger Bootle, former chief economist at HSBC There is plenty of interest and significance here for A2 students “The bulk of this fiscal consolidation should be borne by reductions in government spending, but that process should be mindful of its impact on society’s more vulnerable groups. Tax increases should be broad-based and minimise damaging increases in marginal tax rates on employment and investment” 1/ What is a structural budget deficit? 2/ Why do the economists favour cuts in government spending over higher taxes? 3/ Can you think of broadly-based tax increases that might be introduced? 4/ Why are the economists concerned about the impact of higher marginal tax rates on employment and investment? More here from the BBC: Economists urge swift action to reduce budget deficit   A2 Macro, Cycles and Shocks, Aggregate Demand, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-02-14T15:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/stimulating-times-as-and-a2-macroeconomics http://www.tutor2u.net/blog/index.php/economics/comments/stimulating-times-as-and-a2-macroeconomics#When:16:54:00Z A chance to cover a lesson for a colleague meant that I could bring together an AS and an A2 macro group this afternoon and I chose the issue of the Fiscal Stimulus as the basis for the lesson. One of the aims was to see the extent to which A2 students might be prompted to show a deeper understanding of the many issues related to the extraordinary attempts around the world to use fiscal policy as a tool for stabilising confidence, demand, output, investment and jobs during the crisis.  A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, Recession Watch, 2010-02-13T16:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/greek-fiscal-issues-newsnight http://www.tutor2u.net/blog/index.php/economics/comments/greek-fiscal-issues-newsnight#When:20:11:00Z This week’s Newsnight editions on Tuesday (first article) and Wednesday (from 13mins 35secs, Stiglitz vs Hendry) provide excellent discussions of the recent run on the Euro, given Greece’s severe fiscal problems and associated fiscal austerity measures. They provide excellent summaries of the main issues surrounding the problems and solutions, including the hedge funds who are taking a stance against Greece as well as the social unrest from the government’s austerity policies. It can also be used to discuss why the Eurozone is not an optimal currency area focusing on why the UK should not join; the issues of Eurozone enlargement; and how the fiscal limits on countries are too flimsy to be credible (a la Stability and Growth Pact). A2 Macro, AS Macro, Cycles and Shocks, Exchange Rates, Financial Markets, Macroeconomic Policies, Fiscal Policy, 2010-02-11T20:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/explaining-the-national-debt-in-3-minutes http://www.tutor2u.net/blog/index.php/economics/comments/explaining-the-national-debt-in-3-minutes#When:06:49:00Z Superb for teaching fiscal deficits! A 3 minute BBC Politics Show piece. A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2010-02-05T06:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/uh-oh-sp-frowns-again-at-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/uh-oh-sp-frowns-again-at-the-uk#When:21:47:00Z The news that the biggest credit ratings agency, Standard & Poor’s, announced yesterday that they “no longer classify the United Kingdom among the most stable and low-risk banking systems globally” sent sterling down, and does not bode well given Greece’s recent experience. A2 Macro, AS Macro, Cycles and Shocks, Economic Growth, Exchange Rates, Financial Markets, Macroeconomic Policies, Fiscal Policy, UK Economy, 2010-01-28T21:47:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unearthing-the-ratings-agencies http://www.tutor2u.net/blog/index.php/economics/comments/unearthing-the-ratings-agencies#When:20:26:00Z I used this video piece by Newsnight’s Paul Mason in my A2 macro class today. It was a useful follow up to a presentation last night by Jon Moulton who was decidedly pessimistic about the risks facing the UK economy from the mountainous corporate, household and public sector debt. Paul Mason meets a couple of the people working for the ratings agencies who may decide sometime this year to downgrade the UKs triple A rating on sovereign debt. But the head of securities risk at HSBC claims that the markets have mis-priced the risk of the UK government defaulting on its new debt. The UK has never missed a coupon payment and there is a strong underlying demand for new bond issues. We covered the bond market in a recent Google wave. A2 Macro, AS Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, Credit Crunch, 2010-01-23T20:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/first-dubai-now-greece-whos-next http://www.tutor2u.net/blog/index.php/economics/comments/first-dubai-now-greece-whos-next#When:00:01:00Z First Dubai… Now Greece… Who’s next? Greece saw its credit ratings downgraded to the lowest level in the eurozone on Tuesday as fears mounted over its deteriorating public finances. A2 Macro, AS Macro, Balance of Payments, Cycles and Shocks, Economic Growth, European Economy, Exchange Rates, Financial Markets, Macroeconomic Policies, Fiscal Policy, Credit Crunch, 2009-12-09T00:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/aggregate-demand-teacher-revision-presentation http://www.tutor2u.net/blog/index.php/economics/comments/aggregate-demand-teacher-revision-presentation#When:15:20:00Z Many thanks to Geoff for updating his popular revision presentation for AS students on Aggregate Demand Launch interactive version Download slides handout AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Consumer Spending, Saving, Macroeconomic Policies, Fiscal Policy, Monetary Policy, Keynesian Economics, UK Economy, 2009-12-06T15:20:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-economics-of-a-hung-parliament http://www.tutor2u.net/blog/index.php/economics/comments/the-economics-of-a-hung-parliament#When:13:25:00Z Week in Westminster today featured a fascinating discussion about the impact of a hung parliament - the outcome of an indecisive election which results in no clear majority for any party. There is a view that this may be the outcome of the General Election which is due by June next year, and asking around my A2 students, is something which they see as a real possibility, as they struggle to evaluate the policies of the three main parties. It is well worth listening to and analysing with students who are in the midst of examining the macroeconomic indicators and fiscal policy, and perhaps asking them to suggest what they would do, if elected as Chancellor early next summer, in order to deal with the aftermath of the enormous fiscal stimulus injected to the economy over the last year and the probable fragile recovery from the UK’s longest recession. The link to the BBC i-player is here - listen to Lord David Steel and Roy Hattersley discussing how best to deal with the lack of a majority, then move forward to 15 minutes into the programme to hear the statements of each of the party leaders on fiscal stimulus, deficit and economic policy followed by analysis from columnists Larry Elliott of The Guardian and Liam Halligan of The Sunday Telegraph. A2 Macro, Cycles and Shocks, Government Intervention, UK Economy, Credit Crunch, Fiscal Policy, Monetary Policy, 2009-11-28T13:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-great-fiscal-policy-debate-this-one-will-run-and-run http://www.tutor2u.net/blog/index.php/economics/comments/the-great-fiscal-policy-debate-this-one-will-run-and-run#When:21:44:00Z Stephanie Flanders, the BBC Economics Editor, is assessing what might happen to fiscal policy after the election next year. She has produced reports for the BBC news which can be accessed from her Stephanomics blog, and produced a discussion piece which draws upon current opinion as well as historical evidence to predict the likely differences and similarities between the political parties. As she says, both parties would expect to announce tough budget plans if elected - and both would tend to delay most of the pain until 2011 or 2012, when the economy is more firmly on the mend. There is a nice historical piece about Geoffrey Howe’s tax raising budget in 1981, and a reference to the pro’s and con’s of Vince Cable’s proposal to raise revenue by a “mansion tax” on houses worth more than £1m - one problem being that there are rather fewer of those houses now than there were a few months ago. Many A level students will be voting for the first time in this most important of elections, in which fiscal policy is surely going to be one of the hottest topics, and I would love to give them some of the elements of this discussion to evaluate as they prepare to be some of the better informed new generation of the electorate. A2 Macro, UK Economy, Fiscal Policy, Supply-side policies, 2009-11-17T21:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/politics-pen-palatable-taxes http://www.tutor2u.net/blog/index.php/economics/comments/politics-pen-palatable-taxes#When:20:26:00Z A great idea from Newsnight - invite Newsnight viewers to think about ideas for raising tax revenue to help curb the budget deficit and get them to pitch them to a panel of experts including Matthew Taylor and Sir Digby Jones. It raises issues about the canons of taxation - what makes a good tax? Here is the link to the video. A2 Macro, AS Macro, Teaching of Economics, UK Economy, Fiscal Policy, 2009-11-11T20:26:00+00:00