All economic forecasts are subject to margins of error. This is because: There are many variables affecting the economy. For example, the role of shadow banking was largely ignored in 2007 forecasts but failed sub-prime mortgage debt had a much bigger impact on the wider economy than ever before. There is always a big element …
These are a collection of essays written for my economic blogs. Exchange Rate Essays Effects of a falling Dollar Why Dollar keeps falling Discuss Policies to Stop the Dollar Falling Does Devaluation Cause Inflation? Benefits and Costs of Falling Dollar Reasons for Falling Dollar The Dollar as the World’s Reserve Currency Economic Growth Essays Evaluate …
UK inflation since 1989. Definition – Inflation – Inflation is a sustained rise in the cost of living and average price level. Causes Inflation – Inflation is caused by excess demand in the economy, a rise in costs of production, rapid growth in the money supply. Costs of Inflation – Inflation causes …
Deflation Definition Deflation is defined as a decrease in the general price level. It is a negative inflation rate. Deflation means the value of money will increase. Deflation is often associated with periods of negative or stagnant economic growth (Great Depression, Japanese economy in the 1990s, early 2000s). In fact, deflation is often used to …
Firms generally prefer inflation to be low and stable. If inflation rises above 3 or 4%, firms may see a rise in costs and uncertainty. Inflation can also cause firms problems of rising costs, falling profitability, and a decline in international competitiveness. However, inflation is not necessarily damaging for a firm – especially, if they …
The first admission about writing on the economic policies of Donald Trump is that nobody can be entirely sure what it will be – perhaps even Donald Trump himself. Campaign promises are one thing, but the reality of a Republican controlled Congress, may be something else. I don’t think it unreasonable to think that the …
Foreign or external debt represents the amount a country (both public and private sector) owe to other countries. Foreign debt can involve: Outstanding loans to foreign private banks (both principal and outstanding interest) Due payments to international organisations like the IMF Outstanding payments for a current account deficit, with country owing money for imports Debt …
Readers Question: Between markets and concerted central banks intervention, e.g in currency and shares, which forces are likely to prevail? Market forces can be very strong in influencing the value of currency or shares (or bond yields). Governments and Central Banks can try and influence the value of the currency and bond yields. In certain …