Inflation - Measurement (Teacher Presentation)
This updated and extended revision presentation looks at the main measures of inflation - and some of the challenges and problems of measurement
Launch interactive presentation on Measuring of Inflation
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Inflation - Causes and Effects (Teacher Presentation)
This updated revision presentation takes a detailed look at the causes and effects of inflation. It explains the theory behind demand pull and cost push inflation, and examines recent trends in data on average earnings, commodity prices and the output gap. There are also some new weblinks to great interactive resources on inflation.
Launch interactive presentation on Inflation: Causes & Effects
Download printable pdf handout of presentation slides
Reasons to expect a Nike Swoosh recovery
A failure of trust in global financial markets lies at the heart not just of the current recession but prospects for a sustained recovery in spending and jobs. Whilst journalists play the game of alphabet soup to describe the likely shape of the economic cycle, we might be better off thinking in terms of a Nike Swoosh. World growth is responding to an unprecedented policy stimulus but there is a real danger that the rebound inactivity will be constrained by a set of negative forces pushing down on growth. This was the message from Paul Donovan, Managing Director of Global Economics for UBS in his presentation to the Eton College Keynes Society last night.
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Peak Gold
If world supply of gold is now past its peak, the bull run for gold on world bullion markets may have some distance to travel, This is the interpretation of this article in the Telegraph which reports that global gold output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run. This BBC video report looks at the decision of India’s government to purchase of 200 tonnes from the International Monetary Fund - the single biggest gold purchase by a central bank in the past 30 years. The government is exchanging US dollars for their gold equivalent - a hedge against rising world inflation and a weakening dollar.
The power of words…
Some say that “words have meaning and names have power”. Well when Mervyn King speaks, markets listen. And sell the pound too.
Rated: (5/5), based on 2 reviews
OFWAT plans to turn the tap on water company prices
The Times today has an interesting article on the power battle between the water industry regulator OFWAT and the regional monopoly providers such as Thames Water. It appears that a much tougher pricing regime is planned for the utilities leading to cuts in the real price of water supplies for consumers.
“Every five years, Ofwat sets limits on prices that water companies in England and Wales can charge. For 2010-15, it has proposed that, before taking inflation into account, bills should be reduced for many customers, bringing the average annual water and sewerage bill down by 4 per cent from £344 to £330 by 2015. The water companies had wanted a £28 rise to fund their business plans.”
OFWAT wants the utilities to invest more in in improving drinking water quality, cutting leakage levels and raise the number of metered households from 36 per cent to 50 per cent (in a bid to control water usage). But will imposing real price cuts help achieve this objective? The aim is to have a pricing regime that forces the utilities to raise productivity and cut out as many inefficiencies as possible.
Water is a good example of where a strong regulator is needed because of the absence of competition - after all consumers can’t switch supplier if they are given a poor service.
Global food prices and the terms of trade
Agflation refers to a sustained increase in the general price of foodstuffs and in recent years we have become accustomed to seeing the prices of many basic staple products rising. The era of cheap food looks to be over for now on the back of significant demand-side factors, not least rising population levels, higher per capita incomes and speculative demand for foods as prices have become more volatile. Supply-side factors are also important in explaining strong inflation in food prices. Both sides of the market are discussed by Ambrose Evans-Pritchard in his column in the Telegraph today “Food will never be so cheap again” - plenty of applied microeconomics here in addition to the huge number of macroeconomic issues that the trend rise in food prices has caused. One of the big changes in a switch in the terms of trade away from food importers towards food exporters. But do higher food prices necessarily cause agricultural supply to expand?
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EU warns that UK’s Black Hole is unsustainable
The European Commission has just published its latest Sustainability Report that looks at the state of the government finances of member nations. And the warning is pretty clear - without strong corrective action the UK runs the risk of public sector debt becoming unsustainable
read more...»Gloomy summary
Here is a summary of four reports posted on the Business and Economics sections of the BBC News website over the last few days. Be warned - none of them are particularly hopeful, the green shoots of summer giving way to autumn mists.
Are the Japanese the latest victims of a strengthening currency?
The Japanese Yen has hit an eight month high vs the US Dollar according to BBC news BBC News Article. This has prompted a lot of hand wringing from the Japanese ruling party and has sent share prices in Tokyo tumbling. But why should having a strong currency against the greenback equate to economic turmoil?
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