How do falling share prices affect the economy? Lower share prices mean investors will see a fall in wealth. However, this is unlikely to influence consumption significantly. Most people who buy shares are relatively affluent; if their stocks decrease in value it doesn’t mean their consumption will suffer. Usually, people who buy shares see it …
Recently, the Euro has fallen from 1.5 Dollars to 1 Euro in 2011 to near parity in March 2015. The fall in the value of the Euro has been very steep in the last six months. This is a very significant depreciation in the Euro, and primarily reflects the greater economic weakness in the Eurozone. …
Readers question: In all the media coverage of the UK deficit / debt / recovery, two aspects are rarely highlighted / quantified / contextualized. 1. The £50bn interest payments on the debt (opportunity cost / %) 2. UK productivity (output per head / sector / history) I think interest payments on debt are an important …
Readers Question: Is there an inbuilt deflationary bias in the Eurozone? Note: I originally wrote this post in 2010. Unfortunately, every year there is a reason to update the post and suggest the deflationary bias in the Eurozone keeps getting stronger. Deflationary bias means that there is a tendency for economic policy to promote lower …
What is the UK’s debt burden? Firstly, there are different types of debt to consider Government debt – See: public sector debt (often referred to as National debt) Private sector debt – indebtedness of householders, finance sector and non-financial companies. External debt – the amount we ‘owe’ to other countries In addition, you might take …
Question from the Economist. – It is easy to understand the case that European austerity is self-defeating. But it is also easy to see that one cannot run large deficits year after year without limit and that some countries (Greece, Portugal) have exhausted the willingness of private investors to finance them. Is Austerity self-defeating? Austerity …
Readers Question: Would it be possible for a nation to claim that is reducing inflation rate successfully through economic measures, however at same time is allowing increase of commodities prices such as bread, meat, and etc… Firstly a fall in the inflation rate, means prices are still rising. Just at a slower rate. For example …
Readers Questions: is this the worse time to be a young adult in the UK? I will answer this question primarily from the economic point of view. The first thought that springs to mind is that if you look at the long history of the UK, this is probably a good time to be young …