The European Union is facing the prospect of a serious bout of deflation (or at least, very low rates of inflation / disinflation) Deflation occurs when prices fall. But, very low rates of inflation are considered to raise problems associated with deflation. In the Eurozone, the main index of inflation has fallen to 0.7% – …
Readers Question: In Risks and benefits of Quantitative easing one point the programme mentioned was: The scale of quantitative easing could make it impossible to sell bonds back to market and this will damage the UK’s ability to borrow in the future. If the UK’s ability to borrow is constrained, this will lead to higher …
There are different ways of looking at the UK recovery. Firstly, we can look at the damage done to the economy since the peak in 2008. The black lines suggests a possible pre-crisis trend rate of economic growth. A rough rule of thumb, suggests that had economic growth been maintained at the pre-crisis trend rate …
The German Finance Minister Wolgang Schauble has been a strong advocate of austerity, supply side reforms and ‘sound money’ policies. (i.e. sticking rigidly to inflation targets). Generally, this has been the preferred approach of Europe to the ongoing debt crisis and recession of the past few years. Recently, he has claimed that the European economy …
My Q: can you see any reason the ECB can’t do a version of QE for Greece? Not necessarily the US/UK way of buying bank bonds and hoping; there may be other ways? But if they could do it somehow, interest-free, so that the new money gets out into the economy, with the proviso that …
After enduring a deep economic crisis, Latvia are poised to be ‘rewarded’ with membership of the Euro in 2014. The Latvian miracle story It seems a strange that countries are so keen to join the Euro, when membership of the Euro has been a major factor in creating a real depression amongst many Euro countries. …
This years OCR F585 global economy pre-release stimulus material is about Estonia and its economic performance. This post gives a few extra graphs about the state of the Estonian economy and considers important issues and questions, related to Estonia. Brief synopsis From the early 2000s Estonia experienced rapid economic growth as it benefited from joining …
Readers question: Why is the stock market peaking when the economy is doing badly? There is an old saying that the stock market has predicted 10 out of the last three recessions. Similarly, you could argue the stock market has been predicting several recent economic recoveries which haven’t really materialised. How to explain why the …