The Chairman of the Federal Reserve Ben Bernake recently warned that deep spending cuts could be “self-defeating to the still-fragile recovery”. Recent data showed that the global economic recovery remains fragile. The pace of economic growth is being held back by a combination of falling house prices, weak bank lending, high oil prices and lack …
In economics, there is often a trade off between macro economic variables. A simple trade off could be – increase interest rates; this leads to lower inflation, but also lower output. Cut interest rates, and you help boost growth, but increase inflation. In an ideal world, we would have low inflation, high growth and full …
In the past few years, we have had a bewildering array of different crisis – credit crunch, financial crisis, fiscal crisis, banking crisis, economic crisis, depression economics, oil price shock, currency crisis, housing crashes and more. Arguably, we should be calling continued mass unemployment a crisis. In many ways, it is more serious than a …
2010 will be a difficult year for the UK economy. After the deepest recession since the 1930s, the outlook is for a sluggish recovery. Though recovery is welcome, it still leaves the problem of spare capacity, high unemployment and record levels of peacetime government borrowing. It will be a difficult tightrope between boosting economic growth …
Readers Question: Why do the Government often fail to achieve its main objectives of high economic growth, price stability, and a surplus on the balance of payments. Other objectives worth adding are low unemployment, low government borrowing and maybe stable exchange rate. Looking at the current climate of the UK economy, the government is only …
A look at why oil prices are volatile. Readers Question: Dear Economics Help. Why is the petrol price so volatile and why when oil price falls don’t the prices of other commodities and services stay the same? The price of petrol is closely linked to the price of oil. In 2008, the price of oil …
There is an interesting article in the Economist about immigration and the impact on the Irish economy. Immigration tends to encourage a range of emotive responses, but, its impact on the flexibility of labour markets is worth considering. In the boom years, Ireland was growing by up to 5% a year or more. Growth was …
Readers Question: The Bank of England has released £15bn into the economy. That increase in the money supply will surely cause inflation? So interest rates having fallen will be raised, worsening the housing market and making the credit crunch even worse, not better….surely? The Bank of England is planning to inject money, primarily into the …