How to evaluate the reliability of economic data?

Readers Question: how to evaluate the reliability of economic data? This is a good question. In brief, some issues to consider Is there a political angle? – Political leanings of media/think tank In what context is the data presented? How to interpret the data. Should we look at nominal data, real data or as a percentage of GDP – each stat will give a different impression Is the data being used to support a particular opinion? – Is the publisher looking for…


Economic impact of Margaret Thatcher

A look at the economic and social impact of Mrs Thatcher’s economic policies.   Summary of Thatcher’s Economic policies Belief in the desirability of free markets over government intervention. E.g. pursuing policies of privatisation and deregulation. The pursuit of supply-side policies to increase efficiency and productivity. Reducing the power of trades unions and increased labour market flexibility. Financial deregulation, e.g. building societies becoming profit-making banks. Reducing higher rates of marginal income tax to increase incentives to work. Ending state subsidies for major manufacturing companies. Encouraging home ownership and share…


What could cause the next recession?

A recession is a period of negative economic growth – a fall in output accompanied by rising unemployment. Recessions tend to occur in cycles of 8-10 years, though there is no hard and fast rule. Attempting to predict a recession by the number of years is not guaranteed to work. Recessions in UK Source: ONS Total fall in GDP. 2009 (Types of recession) The last recession 2008-09 occurred after 16 years of economic growth and some claims that we were seeing the end…


Policies for Economic Development

Economic development implies an improvement in economic welfare through higher real GDP, but also through an improvement in other economic indicators, such as improved literacy, better infrastructure, reduced poverty and improved healthcare standards. Policies for economic development could involve: Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth) Free market supply-side policies – privatisation, deregulation, lower taxes, less regulation to stimulate private sector investment. Government interventionist supply-side policies – increased spending on ‘public goods’ such as education, public transport and healthcare. For developing economies, other issues…


Winners and losers from globalisation

Globalisation involves the increased integration and interdependence of the global economy. Since the 1960s, there has been an increased rate of globalisation, which has been characterised by rising trade, rising exports as % of GDP, greater movement of labour and capital, and an increased interdependence of the global economy. Globalisation has benefitted some countries more than others. In particular, South East Asian countries, such as Vietnam, Korea and China have seen a growth in living standards due to their export boom. However, countries in Sub-Saharan Africa have struggled to experience…

Advantages and disadvantages of devaluation

Advantages and disadvantages of devaluation

Readers question: what are the advantages and disadvantages of devaluation? Devaluation is the decision to reduce the value of a currency in a fixed exchange rate. A devaluation means that the value of the currency falls. Domestic residents will find imports and foreign travel more expensive. However domestic exports will benefit from their exports becoming cheaper. Advantages of devaluation Exports become cheaper and more competitive to foreign buyers. Therefore, this provides a boost for domestic demand and could lead to job creation in…

The importance of economics

The importance of economics

Readers Question: What is the importance of economics? Economics is concerned with the optimal distribution of resources in society. The subject involves Understanding what happens in markets and the macroeconomy. Examining statistics about the state of economy and explaining their significance Understanding different policy options and evaluating their likely outcomes. Examples of the importance of economics Dealing with a shortage of raw materials. Economics provides a…

The Turkish boom and bust

The Turkish boom and bust

After a decade of secular stagnation in the west and ultra-low interest rates – from an economic perspective, the Turkish economy is ‘interesting’ in the sense that it gives a very different set of economic circumstances. An economic boom with parallels and similarities to the 1997-98 Asian Crisis. Since 2000, the Turkish economy has grown rapidly, helped by foreign direct investment which is attracted by new markets and an economy which is growing faster than the more sclerotic West.