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Impact of Chinese stock market crash

In recent months, the Chinese stock market has been very volatile, with sharp drops in prices since last July. On August 24th, share prices fell 9% – one of the biggest single day falls. People fear this is the bursting of the Chinese stock market bubble which could have serious effects on the global economy. Possible effects of a Chinese stock market crash include 1. Reduced exports In recent years, China has seen a rise in consumer spending. Consumer spending has been growing at 10% a year. This is an important source…

What effect do interest rates have on wages

What effect do interest rates have on wages

Readers Question: What effect do interest rates (either a rise, fall or steadying) have on both monetary and real wages? I think I’ve got my head round it, but I’m looking for a nicely explain summary (understanding that there are probably a million of contributing factors that can lead to a million outcomes!) You are right, there is no direct link between interest rates and wages (either nominal or real), and there are thousands of possible combinations, which make it difficult to create simplistic answers. But, interest rates can have…

ocr-revision-guide

New OCR economics revision guide

I have spent past few weeks working on the new OCR A Level in economics revision guide. (H460) First teaching from Sept 2015. First A level exam Summer 2017. On the positive side, the syllabus is very detailed. OCR are very clear on what you need to cover. After doing AQA and Edexcel revision guides, I thought (perhaps hoped!) that OCR would be quite quick. It wasn’t. The OCR syllabus did seem to go on for a long time! Part of this is…

TIPP – UK / US trade deal

TIPP – UK / US trade deal

TIPP (Transatlantic Trade and Investment Partnership) is a potential trade deal between the EU and US. It is currently being negotiated by the European Commission and the US. The aim of the agreement is Encouraging trade and investment between the EU and the US. Extend principles of European Single Market to include the US, enabling lower prices for consumers, greater trade and prosperity. However, critics of the agreement fear that the proposal will lead to lower environmental standards, job losses, privatisation of public services, and overall…

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How does the stock market affect the economy?

Movements in the stock market can have a profound economic impact on the economy and everyday people. A collapse in share prices has the potential to cause widespread economic disruption. Most famously, the stock market crash of 1929 was a key factor in causing the great depression of the 1930s. Yet, daily movements in the stock market can also have less impact on the economy than we might imagine. During the great recession of 2009-13, the stock market performed quite strongly. This rise in share prices was…

uk-national-debt

What has borrowing ever done for me?

A reader on twitter asked – How has government borrowing helped me recently? I’m tempted to paraphrase as – What has borrowing ever done for me? – just so that I can make a reference to Monty Python and the Life of Brian? – And what have the Romans ever done for us? – apart from education, sewers, wine, roads, peace, law and order  … (youtube) I’ve answered this question several times before: Why does the government borrow? Should government’s borrow But, I frequently get asked…

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Is it so bad to leave the Euro?

Leaving the Euro is supposed to be irreversible. If a country did threaten to leave the Euro – it was argued it would lead to bank runs, loss of confidence, high unemployment and a serious recession. But, what if you already have all of these components? The Greek economy is in dire state. Furthermore, their main creditors are behaving with tremendous short-sightedness, ignorance or either vindictiveness. This is trying to put it politely. Given how disastrously unsuitable the Greek economy has been in the Eurozone straight-jacket, now is the opportunity to take back…

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A short note on Greece

Just a short note on Greece because at the moment I’m concentrating on writing revision guides. For several years I have felt that Greece would be better off to leave the Eurozone. This is partly due to economics, but also partly an intuition – that there is no greater recipe for political disaster than having disastrous economic policies dictated by a foreign power (EU, IMF, Germany) The frustration in Greece at Europe is well-merited. Leaving the Eurozone will perhaps make Greece masters of their own destiny. They will not feel they are…