Global economic imbalances refer to an unfair distribution of resources between different countries or it may refer to a one-sided trade situation. Global economic imbalances include Balance of Payments. Unbalanced trade between different economies, e.g. US trade deficit with China Unemployment levels, e.g. high unemployment in southern Europe versus low unemployment in US, UK. Poverty …
Monetary policy involves influencing and controlling the money supply/interest rates to target inflation and economic growth. Monetary policy primarily involves changing interest rates, though it can include other tools such as quantitative easing and open market operations. In recent decades there has been a trend to making Central Banks independent and responsible for setting interest …
Taxation on goods, income or wealth influence economic behaviour and the distribution of resources. For example, higher taxes on carbon emissions will increase cost for producers, reduce demand and shift demand towards alternatives. Higher income tax can enable a redistribution of income within society, but may have an impact on reducing the incentives to work …
Currency substitution occurs when an economy uses an alternative currency to the domestic currency. The alternative currency maybe used in parallel to the domestic currency or some cases may completely replace it. Currency substitution can also be referred to as ‘dollarisation’ when the dollar is used. Examples of countries with official currency substitution include Ecuador …
A tortoise economy refers to an economy that is barely growing – either economic growth is stagnant or growth is very slow. In particular, it has been used to describe a sluggish recovery from recession. In the aftermath of the great recession – 2007/08, many western economies experienced a very slow economic recovery. GDP was …
Readers Question: Given the widely varying fiscal policies of countries, both left and right, how come their growth rates over the long term are so close? source: World Bank To some extent growth rates are close; though it also depends which data and countries you use. However, from a very broad perspective, growth rates do …
Readers Question: In the U.S. I have noticed that most restaurants and fast food places have window signs advertising for workers. Would these minimum wage workers, as a collective, be considered a monopsony or a monopoly? To answer your question, these minimum wage workers would be considered neither a monopoly or monopsony. The fact that …
A look at the benefits and costs of capital flows.