Economics help blog – Page 223

Mrs Thatcher’s speech on U Turns in Economic Policy

18 January 20203 February 2011 by Tejvan Pettinger

In 1980, Mrs Thatcher made a memorable speech. “To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: You turn if you want to. The lady’s not for turning!”(BBC Link) Background – The economy was struggling under the deflationary fiscal and monetary policy. Mrs Thatcher …

A Worse Trade Off

30 June 202024 January 2011 by Tejvan Pettinger

In economics, there is often a trade off between macro economic variables. A simple trade off could be – increase interest rates; this leads to lower inflation, but also lower output. Cut interest rates, and you help boost growth, but increase inflation. In an ideal world, we would have low inflation, high growth and full …

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 …