A good post by Simon Wren Lewis on future UK macroeconomic policy – learning from the experience of the past few years. – Bold macroeconomic policy for a new government. Essentially, it involves committing to a more flexible fiscal policy which can take into account the different requirements of liquidity trap (ZLB). Monetary policy should …
Readers Question: 1. Does state capitalism as practised in China pose a fundamental challenge to the Western model of liberal-democratic capitalism? No, I don’t think so. From a political perspective, no matter how economic successful China might be, there will never be any enthusiasm to replicate China’s one party political system. In fact, it is …
Readers Question: my question is If the UK. had joined the Euro back when it first started would the UK. have benefited like Germany or would we be in the same situation as Greece, Italy, and Spain? If the UK had joined the Euro from the start in 1999, the UK economy would definitely have …
Back in February 2007, I wrote an essay – Evaluate the effectiveness of the MPC in controlling inflation. The last line was: MPC have done a good job so far. However the real test may come when there is a rise in structural inflation or global instability. Given the knowledge of the past five years, …
Readers Question Discuss the view that the Phillips Curve is irrelevant in explaining the relationships between unemployment and inflation in the UK. The standard Phillips curve suggests there is a trade-off between unemployment and inflation. This relationship occurs because of the Keynesian view of the AD/AS diagrams. Diagram showing an increase in AD As AD …
Readers Question: Why do countries that experience a boom risk losing international competitiveness? An economic boom implies that an economy is growing above its long term trend rate. This means that the rate of economic growth is high, but there tend to be inflationary pressures because demand is growing faster than supply. The impact of …
Readers Question: How sustainable do you think that the austerity measured imposed on European countries are in economic and political terms? This is a good question. Firstly, I feel there is a certain political appeal of austerity. See: Why is austerity politically popular? When austerity was introduced, there was a reluctant support for austerity – …
Readers Question: In response to the post on ‘printing money, imports and inflation’, why can’t the British government just print lots of money and import goods from abroad to relieve the pressure on its budget? In theory, they could do that. But, if you print money and spend it on imports, you would see a …