Readers Question: How does inflation targeting operate when there is a deflation? and what are the problems associated with this? It’s a good question to ask at the moment, especially with regard to the ECB and Eurozone. Firstly, the EU inflation target is – below but close to 2%. If inflation falls below 2%, the …
In the recent blog – Post-war economic boom and reduction in debt, we saw how the UK successfully reduced national debt as a % of GDP from 230% of GDP to 30% of GDP, over a period of 40 years. However, the story after the First World War was very different. The UK finished the …
Readers Question: Should the world adopt a unified currency? I haven’t given it much thought; given the great difficulties of the Euro single currency within parts of the European Union, the idea of extending this to include even more disparate countries seems a non-starter. From a philosophic point of view, I think the world is …
Readers Question: What is the economic impact of proposed welfare benefit freezes proposed by Chancellor, Mr Osborne? Mr Osborne has proposed a welfare freeze, worth £3 billion of savings over two years. This benefit freeze includes Jobseeker’s Allowance, Income Support, Child Tax Credit and Working Tax Credit, Child Benefit and Employment Support Allowance (paid to …
Generally I try and remain politically uncommitted. But, in the past few weeks, I’ve been surprised at how much the issue of Scottish independence has affected me. Despite a mental desire to feel nationalistic identity as unimportant, I feel deep down it really means a lot – and I hope Scotland votes to remain part …
If Scotland gains independence, the Yes campaign has argued that their preferred option is to keep the Pound Sterling and enter into a currency union with the rest of the UK. This means sharing the same currency Pound Sterling, and having the same monetary policy. Monetary policy would continue to be set by the Bank …
A look at the effects of how an over-valuation of the exchange rate can cause deflation. Readers Question: does an appreciation in the exchange rate cause deflation? An appreciation does tend to reduce inflationary pressures. This is because after after an appreciation in the exchange rate: Price of imports will fall, causing a fall in …
Readers Question: What policy strategy is good to reduce unemployment in Greece? The Greek economy is experiencing grave problems, with record levels of unemployment. Unemployment in Greece is running at 27.5% – (end of 2013) This unemployment rate is even higher amongst young people. The unemployment is primarily caused by the prolonged recession which has …