Readers Question: Are People hungry because the world does not produce enough food? No. Essentially it is a problem of distribution. In particular, in developing countries, many people lack sufficient income to buy enough food The United Nations, World Food Programme WFP, states 925 million people do not have enough to eat and 98 percent …
Danny Blanchflower, a former member of the Bank of England, writes a critical piece on the Bank of England’s forecasting record in the Independent. “The second chart gives cause for concern because for the umpteenth time the MPC is forecasting rapid recovery, which is extremely unlikely to happen, and it seems that little has been …
Readers Question: How is it possible for countries with massive debt to have a strong currency, e.g Japan and the US? Sometimes countries can have large debts that are sustainable. In the case of Japan and the US, the general consensus is that there is a very low risk of default. US debt is very …
A primary budget deficit refers to the amount by which government spending exceeds government tax revenues. It does not include the additional cost of debt interest payments on the government bonds. This is why you sometimes hear different statistics. For example, the primary budget deficit of Greece is about 9% of GDP, but with debt …
Since 2007, the UK has experienced a variety of economic shocks which have caused a prolonged period of economic stagnation, high unemployment and uncertainty. In 2011, the economic recovery proved much weaker than expected, yet inflation was stubbornly high. In 2012, fundamental weaknesses are likely to keep the UK economy depressed with high unemployment and …
The European debt crisis raises many issues. Debt Levels Pre Crisis Public Sector debt as % of GDP Source: EU Stat In 2007, just before the financial crisis, European debt levels were relatively low by historical standards. Irish government debt was very low at around 27% of GDP. Spain was around 37% of GDP. UK …
The Genuine Progress Indicator (GPI) is an attempt to measure the real increase in economic welfare. The GPI measures the improvement in economic welfare – costs associated with growth. It is measured using the formula GPI = A + B – C – D + I A is income weighted private consumption B is value …
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 …