Macroeconomic Arguments

IB Economics Revision Workbook

This revision workbook will help students preparing for the upcoming IB Economics exams ensure they are clear about the key theory they need in preparation for their exam. Read on to find out how to download your own copy.

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Stephanomics

A brief heads up for a new series on BBC Radio 4 tomorrow- Stephanomics. BBC economics editor Stephanie Flanders takes her popular blog to radio form. In the first episode tomorrow at 3pm she discusses the current global financial crisis with a range of experts from the field. Should be worth a listen.

Does Democracy Stifle Economic Growth?

To spice up the possibly mundane lesson on Production Possibility Frontier’s I made use of this fantastic TED talk by Yasheng Huang.

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Whisky IA?

IB students should always be on the lookout for suitable articles to complete their internal assessment. This alcohol related piece from the BBC website is ideal.

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The Economic Benefits of the Rugby World Cup

The Rugby World Cup kicked off this morning with an impressive victory for the hosts but what are the economic benefits of hosting such an event?

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The New IB Economics Course (4)- Macroeconomics

The major changes to the macroeconomics course are as follows…

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The Multiplier

A very common topic in the short answer paper, at Higher Level, is the multiplier. If you have learnt a working example this is a question you should aim for full marks in. Make sure you understand why different values for the multiplier result in different changes to national income. I have attached a worksheet that includes a variety of past exam questions.

Multiplier_Revision_Worksheet.doc

Sweden and Singapore overtake US in competitiveness rankings

Sweden and Singapore have overtaken the United States in the latest rankings on international competitiveness published by the World Economic Forum. This BBC news interview gives the WEF’s senior economist an opportunity to outline some of the reasons.

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Development in Ethiopia

A great TED talk here on development economics in Ethiopia:
Economist Eleni Gabre-Madhin outlines her ambitious vision to found the first commodities market in Ethiopia. Her plan would create wealth, minimize risk for farmers and turn the world’s largest recipient of food aid into a regional food basket.

USA Update

The pace and resilience of the US economic recovery has been called into question with the release of weaker than expected economic figures. There has been an increase in unemployment benefit claims for the first time in five weeks. Maybe consumer confidence is taking a battering again in the USA or is this just a blip?

Keep in mind that the labour market for all economies is a closely watched macroeconomic indicator. Poor figures on unemployment and new jobs created is a sign that the recovery in demand remains fragile. Or perhaps that the USA may be experiencing a jobless recovery - with businesses reluctant to take on extra workers for the moment.

According to the Daily Telegraph (UK)

“In the US there was a surprise 25,000 increase in jobless claims to 471,000 in the week ending May 15. The deterioration in the employment picture, coming hard on the heels of Wednesday’s drop in inflation, underlined worries that the US is exposed to a possible global double-dip recession”

Read the article here

Radio 4 Tonight - Two Development Programmes

There are two excellent programs on BBC Radio 4 this evening that are likely to be full of development and macro economics.

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World Bank throws open it’s development data!

An important moment and a great boon for teachers and students of development economics. The World Bank has made the 2010 Human Development Data available to all - here World Bank President Robert B. Zoellick speaks about the Bank’s new open data initiative. And here is the link to the development data and all of the macro data contained in the global economic monitor. A remarkable and generous gesture from the World Bank.

Rising Australian Inflation

Businessweek features an article on the state of inflation in the Australian economy. Rising inflation looks set to see the Central Bank react for the 5th time in 6 months with a rise in the rate of interest.

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The Age of Instability

David Smith, economics editor of The Sunday Times and author of Free Lunch has just had his latest offering published- The Age of Instability.

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BBC Budget Summary

A nice video summary of today’s budget by the BBC’s big three- Nick Robinson, Stephanie Flanders and Robert Peston.

The Final Countdown

The pressure is really on now with the final IB Economics papers only a matter of weeks away. During the coming weeks I will be posting daily revision blogs for both Higher and Standard level candidates. These will be a mixture of quizzes, presentations and revision sheets to aid your preparation. I will also be linking current economic news stories to the IB syllabus, remember that your examiners will be looking for your economic theory to be backed up by lots of real world examples. Do get in touch with any topics you would especially like covered, I will endeavour though to cover theory from all sections of the course.

China - Inflationary Pressures and the Exchange Rate

This BBC news video provides an interesting window on the pressures for wages to rise in the booming city of Shanghai. The impressive rebound in Chinese economic growth is driven by the strength of the underlying growth forces in the economy together with the impact of the huge fiscal stimulus. But for many young professionals growth is causing the cost of living to surge - food and property prices are the main concerns.

Inflation is a genuine risk for the Chinese economy - what might the Chinese authorities do about this?

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The ECB

I have just finished a Higher Level Economics lesson with my U6th where we have been discussing the role of the ECB. Whilst putting together material for the lesson I discovered some superb video clips from the ECB website that provide an excellent insight into the history of the bank, its current role, policy tools, remit and future direction.

The About the ECB clip always provides some excellent material to spark a discussion on the arguments in favour of the single currency.

We finished the lesson in a light hearted way by watching the price stability cartoon. My students were especially amused by the inflation and deflation monsters!

United States sees rebound in output but few new jobs created

 

Here is a topical teacher presentation that provides a snapshot of, and commentary on key economic data from the US as the world’s largest economy starts to pick up from the depths of the recession. Many questions remain not least the durability of a recovery and the extent to which the US experiences a jobless recovery.

Launch streamed, interactive version - US Economy Rebounds

Download PowerPoint (ppt) version:

Mark Mardell reports on the latest US economic data in this BBC news video. Hamish McRae also reports on the state of health of the US economy in this piece from the Independent.

IB Higher Economics - Improving your Exam Skills

Here is a streamed version of the presentation I gave to the Hong Kong CPD day, focusing on how IB Economics students can improve their evaluation skills:

Improving Evaluation Skills

Paul Mason on the Wall Street Crash

Paul Mason - BBC Newsnight’s Economics Editor - is running a series of reports this week to mark the 80th anniversary of the Wall Street Crash. They are likely to be superb and a great resource for students and teachers. Here are the links to Paul’s output.

What caused the Wall Street Crash? (11 mins)

How the crash changed everything (13 mins)

Lessons of 1929

Surge in Chinese growth as domestic demand takes priority

China’s leaders have set ambitious targets for economic growth - with an aim of reaching 8% growth of real GDP in 2009, a year in which world trade has shrunk and much of the developed world has been mired in recession.  An enormous stimulus programme seems to be having an effect with the latest data showing a pick up in output and annualised growth of GDP climbing above 8.5%. Exports remain weak and many Chinese manufacturers are finding that the prices they are able to get from advanced economy importers continues to fall - the terms of trade have moved against them. Lifting domestic demand has become a key macroeconomic objective for the Chinese government. China has poured £354billion into spending on infrastructure in order to boost its domestic economy as exports have suffered.

This BBC news video reports on the latest Chinese growth figures.

The importance of capital spending to the Chinese economy is shown by the latest GDP figures. Investment contributed 7.3 percentage points to headline growth of 7.7 percent, and consumption accounted for 4.0 percentage points. Net exports subtracted 3.6 percentage points reflecting the weakness of external demand for China’s manufactured products.

See also

BBC: China economic growth accelerates

The Times: The dragon roars again after new figures put China’s output on a growth hat-trick

Paul Romer on economic growth

BBC Radio’s Global Business this week sees Peter Day in conversation with Professor Paul Romer from Stanford University, Paul Romer is an expert in the causes of long run run growth and his current focus is on the economics of new cities in developed and developing countries. It is a programme well worth listening to, Romer is tremendously optimistic about the opportunities created by faster economic growth - especially growth built around innovation and appropriate rules systems.

Long run growth is closely asscociated with the discovery / implementation of new ideas

1/ technologies

2/ rules that govern how people interact and how the economy works

The two are closely inter-connected - Social rules often hold back the potential in new technology

Is growth good?

New technologies are potentially harmful if not accompanied by rules that make growth sustainable e.g. that limit pollution and over-fishing. Rules that put the right price on fuel and on carbon. Rules that set minimum standards for water quality and sanitation. Rules (or general principles on what types of transport are allowed and the size and pattern of properties).

Devices are getting smaller and using less energy per unit of output - this kind of growth that has a huge human value does not necessarily destroy the natural environment.

Cities 2.0

Romer’s current project is about building brand new cities - the entry of new cities that can be designed with very different sets of rules about transport patterns, density patterns and use of carbon.

In the developing world there are many new cities that will have to be built - this is an enormous opportunity. Successful cities are hubs of creative activity and chaotic innovation. But the framework of rules for new cities becomes even more important - government sets the framework of rules, the private sector operates within these rules. Rules can be enforced by law or by social custom.

The internet will ultimately speed up innovation in physical technologies and this leads Romer to be optimistic on sustainable growth. We will always face trade-offs, compromises and limits to consume less energy per unit of income. We face resource constraints and these will become ever more apparent as global living standards rise - but this will not stop progress. Indeed the price mechanism may accelerate experimentation, innovation and progress in finding some solutions to environmental crises.

Economic growth is ok if you have the right rules - more value, higher quality of life, more time with the kids, better investment in the things we care about.

Brazil taxes hot money to control her currency

Carl Mortished’s excellent world business briefing in the Times today covers developments in the Brazilian economy. Huge inflows of foreign direct investment have helped to drive their currency higher and the Brazilian Finance Ministry has responded with a 2 per cent capital tax on foreign ‘hot money’ inflows into stocks and bonds.  The article suggests that Brazil might be better off in the long run by cutting import tariffs on capital goods thus reducing the price of imports of hi-tech machinery that will give her economy a major supply-side boost. In contrast to China, Brazil exports a relatively low percentage of her national output and it is largely self sufficient. The country has enjoyed a significant improvement in her terms of trade with strong world prices for many of her key exported commodites such as iron ore, coffee and orange juice. The boom in commodity exports has helped to increase the real purchasing power of millions of Brazil’s poorest people but a huge amount remains to be done and income and wealth inequalities are vast.

“Brazil is not China; it does not trade that much. Where China’s motor is manufacturing exports, Brazil is largely a self-sufficient economy, more like the United States, with a vast hinterland of eager, albeit poor, consumers.”

Here is his article

Cheltenham Saturday 10th October

Last night I was looking through the brochure for this year’s Cheltenham Literature Festival. Aside from it having a cracking range of speakers it is also my home town so I always look to go back for a day. This year Saturday 10th October looks a great shout.

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Interactive Resource

Also on The Guardian website is a fantastic interactive resource that plots how financial chaos spread across the globe last year. You may choose to use this when helping your students gain a greater understanding of the global credit crunch.

Keynes vs Friedman

As a follow up to yesterday’s blog on Keynes, today’s extract in The Telegraph from Edmund Conway’s new book looks at Milton Friedman and Monetarism.

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Keynes and the Multiplier

One of the first higher level topics encountered by students in section 3- macroeconomics is the multiplier.

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Book of the Week

I am currently sat at my kitchen table trying to start thinking about the term ahead. Slow progress so far, especially as I have just been distracted by Radio 4’s book of the week.

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Skildelsky and Conway

The Telegraph today has two pieces today by economists who have just had their new books published, books that Geoff has already flagged up in his Economics blog.

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Saxophone Recession

A nice little piece on the BBC website today looking at the different ways to describe the type of recession an economy may be experiencing. Traditional letters that have been used to mirror a recession have been U, W and L. The bath tub and saxophone are two of the more unusual ways of describing the shape of a recession.

Doug McWilliams, Chief Executive of the Centre for Economics and Business Research, has a more melodic interpretation of current events - comparing it to a saxophone.

“The line describing the progress of gross domestic product goes up, then sharply down, then comes back up sharply initially before levelling off, describing the rough profile of a saxophone,” he wrote.

Worth a read and may be useful during the first few weeks of term when looking at fluctuations in GDP with your students.

Summer Reading

I have just read a light hearted piece in The Telegraph about ‘summer reading’.

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Botox Tax

I have just read on the front of The Telegraph that American’s wishing to have cosmetic surgery could be hit with a tax to help part fund Obama’s $1trillion reform of the US health system.

 

 

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Holiday Dilemma

There was a fantastic edition of The Moral Maze last night on Radio 4. If you get the time it is well worth a listen. Having just returned from a break in rainy Devon I felt rather smug!

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Economy on the Edge

Analysis on Radio 4 this evening at 9.30pm may well be worth a listen (or via iplayer over the next 7 days).

In 2008 one of the world’s most respected economic observers, Martin Wolf, the chief economic commentator of the Financial Times, forecast that the global downturn could be even worse than most experts realised. A year on, he returns to examine the current state of the global financial markets and talks to a range of financial experts to analyse what the future may hold.

 

Ireland: Boom to Bust

A head’s up to a Radio 4 program that is on today at 11am, that may be of interest. Ireland:Boom to Bust.

Synopsis: Olivia O’Leary tells the story of the biggest economic crisis Ireland has ever known and its search for a post-crash identity.

For the last 20 years the Irish economy was the pride of Europe. If the rush to riches was very un-Irish, Olivia tries to find out if her country is now reverting to a more familiar state of penance. William Butler Yeats described the indigenous character trait as an abiding sense of tragedy that sustained people through temporary periods of joy.

For many younger people, who were told that they had more money and more freedom than any previous generation, the maudlin emigration songs with their tales of yearning and aching loneliness felt like stories from a distant era. Suddenly, though, they no longer feel so remote. As the shutters are pulled down on job opportunities at home, the harsh prospect of having to find work abroad is all too real for thousands of young people.

Olivia finds that Ireland’s economic crisis is far from over and finds out how the country is re-imagining itself anew.

There is also an article to accompany the program on the BBC website.

The program will also be avaliable for seven days on BBC iplayer.

Ghost Airport

An extreme example of wasteful government spending coupled with poor economic conditions in this video clip fro the BBC. Yangyang Airport in South Korea cost $400m to build and yet has not seen a single passenger in the last six months. The country is suffering from airport over capacity- 11 of the countries 14 airports are operating below capacity. Two new airports currently being built (one at 80% completion) have now been postponed.

Quick Quiz (5)

A quick quiz on macroeconomics from section 3 to aid your evening revision.

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Fred-sizing the economy

There is an interesting video clip in the magazine section of the BBC website that puts the UK economy’s current position into scalable context. The UK economy becomes Fred! Worth a watch.

A River for Unused Ships

An interesting piece on the BBC website this morning examining how the fall in global trade has forced many ship owners to take their ships off the sea an mothball them at ports.

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Felixstowe Barometer of the Economy?

Another cracking video clip from the BBC this time a report from the port of Felixstowe. In previous recessions trade into and of the port has grown (although at times slowly) but with the current global crisis there has been a 20% drop in the amount of traffic into and out of the port. A pretty serious sign as to the magnitude of the current downturn. The report also looks at the regional multiplier effects of reduced activity at the container port.

Eastern European economies under pressure

Here is a link to a revision presentation on some of the current macroeconomic challenges facing eastern European countries who have joined the EU single market over the last five years.

Adam Smith and the Credit Crunch

Adam Smith is often considered the ‘the father of capitalism’ but what would he have thought of the current credit crunch?

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New Zealand

Just over two weeks ago one of my best friends flew out to New Zealand for six months to play in their domestic rugby season. He is intending to supplement his income from rugby by getting a part time job. A report on the BBC website this morning indicates that this may be harder than he first thought.

The New Zealand economy shrank at its fastest rate in 17 years in the last three months of 2008. Its GDP fell by 0.9%, the most since 1992. The decline is being led by a stuttering manufacturing sectot. The IMF expects a 2% decline in GDP in 2009. New Zealand was last in recession in 1998.

The UK Banking Crisis in 76 Seconds

An excellent 76 second video clip of the UK banking crisis from the Daily Politics Show website. A good lesson opener to a review of the credit crunch. Remember IB examiners love to see the use of real world economic examples.

Economics of the Yangtze River Delta

Whilst reading The Telegraph online this morning I came across an excellent series of articles on the economics of the Yangtze River Delta.

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Wallace and Gromit’s Cheesy Exports

The Yorkshire cheese Wensleydale, the favourite snack of the animated characters Wallace and Gromit has helped fuel a surge in UK food exports.

 

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The Swiss Economic Outlook

The Swiss economy will shrink by 2.2% this year, a much deeper recession than first forecast by its government.

 

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Macro Diagram Quiz

A macro diagram quiz that I used with one of my classes this morning.

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IB Economics Week 7

The week 7 revision ticklist for U6th IB economists and teachers.

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