Economics help blog – Page 222

Higher Inflation – Lower Growth

18 November 201719 January 2011 by Tejvan Pettinger

The latest inflation figures show a rise in inflationary pressure. CPI has increased from 3.3% to 3.7%. This places inflation considerably above target. Some commentators are now worried there is a danger the MPC could lose credibility in combating inflation. Just to further illustrate the dilemma for the MPC, the rise in inflation is being …

UK Balance of Payments Chart

18 November 201715 January 2011 by Tejvan Pettinger

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See: Factors affecting UK Current account deficit.

Post updated Feb, 2011.

The UK has had a persistent current account deficit for the past couple of decades. The deficit has never gained much concern from politicians or economists. However, with the recent increase in the size and significance of the deficit there are an increasing number of Economists warning that a current account deficit can pose a threat to long term growth

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The data shows a sharp deterioration in the third quarter of 2003. This quarterly deficit is equivalent to 5.1% of GDP.

Declining Gender Pay Gap 2011

18 January 202012 January 2011 by Tejvan Pettinger

In recent years, the gap between average female wages and men’s wages have decreased, however, for various reasons, men’s pay is still higher than women. Reasons for Gender Pay Gap Career breaks to have children (Studies have shown that women without children have a much smaller pay gap than women who take time off work …

Difference between CPI and PCE Inflation

18 January 202011 January 2011 by Tejvan Pettinger

Readers Question: Why do the Fed choose to prefer the PCE that leads to a lower inflation rate than the CPI? This refers to US inflation rates, UK readers may get more from RPI vs CPI Difference Between PCE Deflation and CPI The CPI measures the out-of-pocket expenditures of urban households. It is based primarily …

No Money For Potholes

18 January 20207 January 2011 by Tejvan Pettinger

– Pothole near Oxford – you can see this bit of road has been patched several times. Patched roads soon break down. The bad weather this winter and last winter has led to a sharp rise in the number of potholes on British roads. It is estimated councils are filling a record 1.4 million holes …

Forecast for Interest Rates 2011

18 November 201728 December 2010 by Tejvan Pettinger

The UK economy faces a few paradoxes. Low Growth – High Inflation. Firstly, after a deep recession the economic recovery is weak. In theory, high unemployment and low growth should lead to low inflation. However, due to rising energy and food prices, we have inflation above target. This presents a conundrum for the Bank of …

Signalling in Education

18 January 202015 December 2010 by Tejvan Pettinger

We tend to assume education is a merit good. – A beneficial good that has external benefits for society. However, another approach to education considers how education acts as a signal of ability. Signalling in education suggests productivity is independent of education, but education acts as a credential for greater ability. In other words, if …

Why deflation makes monetary policy more difficult

24 January 20209 December 2010 by Tejvan Pettinger

Readers Question: From the current economic crises government has been slashing its base interest rates to now 2%. However, how would deflation which is currently being experienced in several countries mainly due to decreasing fuel prices affect the attempted recovery from this crisis? Deflation makes monetary policy much less effective. In fact, deflation can cause …