The great moderation refers to a period of economic stability characterised by low inflation, positive economic growth, and the belief that the boom and bust cycle had been overcome. In retrospect, economists look back on the great moderation in a different light because although inflation was low, there was great volatility in financial markets and …
I like this article about the wrong kind of inflation by Roger Bootle Or as his cleaner said: “It’s not the inflation they need to sort out, Mr Bootle, it’s the rising prices!” Essentially, the wrong kind of inflation is cost-push inflation. This inflation is due to rising costs of production, such as rising energy …
Iceland’s crisis was brutally severe. With a bloated current account deficit and bad debts, Iceland experienced a severe balance of payments crisis and banking losses. Iceland responded by: Not guaranteeing all banking debt. Many large banks failed and were seized by the government Allowing the currency to devalue by 50%. Imposed capital controls to prevent …
Readers Question: how can Germany show a surplus? I mean I can understand that German exports have always been their main source of income , but with all the world exports shifting to China and India wouldn’t we expect the German exports to decline? Thanks! German Current Account Surplus Germany has a current account surplus. …
Summary of UK Economy at the Start of 2013 The UK economy starts 2013 after one of the longest periods of economic stagnation on record. GDP has been flat for the past two years, and real GDP is still way below the 2008 peak. Despite the depressing picture of economic growth, unemployment (7.9%) is much …
In the lead up to the Euro debt crisis, there was a marked divergence in competitiveness within the Eurozone. In fact, some economists suggested that the currency imbalances were the root cause of the Eurozone fiscal crisis. (VOX article) However, recent evidence suggests some restoration of competitiveness within the Eurozone. We can examine competitiveness in …
A look at the future prospects for the Pound in the coming months of 2013. The Sterling index measures the value of the Pound Sterling against a basket of trade weighted currencies. In Dec 2011 the index was 80.4 By Oct 2011, the exchange rate index has increased to 83.6 This modest appreciation in the …
Introduction – Recent UK economic performance The UK economy is currently growing at an annual rate of 1.6%, it has low inflation close to the governments target of 2.%. Unemployment has risen in the last 8 months but it is still low at 1.4 million (ILO Survey) compared to the last recession of 1992. The …