In the 1960s, a big political issue was the size of the deficit. Not the budget deficit, but the current account deficit on the balance of payments. In recent years, worries about the balance of payments (current account deficit) have slipped from the political and media agenda. However, we have a very strong importance attached …
Readers Question: What is meant by economic uncertainty? Economic uncertainty implies the future outlook for the economy is unpredictable. When people talk of economic uncertainty, they usually imply there is a high likelihood of negative economic events. Economic uncertainty could involve. Predictions of a higher and more volatile inflation rate. (inflation uncertainty) Concerns over economic …
The past few months have seen a rise in the US dollar. The trade-weighted index has risen from 95 in 2011 to 111 in Jan 2011. There has been a near 10% rise in the value of the dollar since July of 2014. Against the Euro, the dollar has been even stronger. One Euro was …
Readers Question: Sorry I’m really confused on how the weak oil prices affects EUR/USD currency. I’ve tried searching for articles but there are really different arguments. For EURO – Weak oil prices worsens Eurozone inflation therefore European bank ,to prevent deflation and boost economy will continue with their negative interest rates and Quantitative easing which …
A carry trade occurs when an investor borrows in one country (at a low interest rate) and invests this money in another country (which has higher interest rates.) If we assume exchange rates are stable, then this carry trade enables an investor to make a profit – and the profit could be even more if …
The money supply is the amount of money in circulation measured by narrow money (MO) and broad money (M4). The money supply can rise if Central Banks print more money. Banks choose to hold a lower liquidity ratio. This means banks will be willing to lend a larger proportion of their funds. An inflow of …
Definition of beggar my neighbour policy: This is an economic policy that seeks to promote a country’s economy at the expense of another country. It assumes that economics is a zero-sum game. In other words, if you want more income, you have to take it from other countries. It should be noted that most economists …
In recent months, the Chinese stock market has been very volatile, with sharp drops in prices since last July. On August 24th, share prices fell 9% – one of the biggest single day falls. People fear this is the bursting of the Chinese stock market bubble which could have serious effects on the global economy. …