This is an article published in the LSE about the Austrian view of the Eurozone crisis ‘The Work of Hayek shows why EU governments can’t spend their way out of problems‘ I’ve attempted to summarise the article, but I advise reading it for yourself: The recent boom and bust was caused by artificially low interest …
What explains the difference between UK and US economic growth rates since the start of the crisis in late 2007? Firstly, the recession was slightly deeper in the UK with a 6% fall in real GDP during 2008. Possibly, the recession was deeper in the UK because of our greater reliance on the financial sector. Since …
Readers Question: Would a devaluation help Greece? If you look at the Greek economy, their exchange rate has been effectively overvalued for several years. This overvalued exchange rate has caused Greek exports to be relatively uncompetitive and has caused various economics problems. Combined with efforts to tackle an unsustainable debt level, the over-valuation has contributed …
Balanced Budget Fiscal Expansion is an attempt to increase aggregate demand through changing spending and taxation levels, whilst leaving the overall fiscal budget situation the same. Essentially, the idea is that if you increase spending and taxes equally, the increased government spending has a bigger positive impact on economic growth than the negative impact of …
The Chancellor George Osborne is coming under pressure to alter government policy and promote economic growth through higher public spending financed by government borrowing. After two years of focusing on deficit reduction, critics argue the government should change approach and concentrate on getting the economy out of the persistent recession. The IMF recently stated: “The …
The purpose of harmonised competitive indicators is to show changes in relative competitiveness of countries. They are are also consistent with the real effective exchange rates (EERs) of the euro. This shows the divergence in competitiveness between a country like Germany De (improved competitiveness) and other countries like Greece and Ireland which have seen higher …
Readers Question: Will Cutting Public spending bring economic growth?Do Countries with lower government spending as a % of GDP have higher economic growth rates? After recent data on -0.7% growth in Q2 2012, several experts offered suggestions for restoring economic growth to the UK. In the Guadian, Sheila Lawlor suggested (link): The UK’s output figures, …
Readers Question: Whose is to blame for the continued UK recession? With the banking crisis and economic recession, politics seems to be currently dominated by a ‘blame’ game – trying to work out whose fault it is. Unsurprisingly, the coalition have tried to shift blame on to Euro crisis and banks. Others have blamed the …