Readers Question: If the markets decide the UK is not such a safe haven and bond yields rise will pension funds heavily weighted in Gilts tend to fall? Yes. If investors feel that the UK is not a safe haven (they feel increased risk of UK government default). Then investors will sell UK bonds, this …
Readers Question: What is economic analysis? Can you give some examples? Kindly refer me to an easy to read book on economic analysis. Economic analysis involves examining issues and problems from the perspective of an economist. Economic analysis would involve some or all of the following: Examining the opportunity cost of a decision. (e.g. if the …
Readers Question: I am wondering why the 75 billion of quantitative easing that the Bank of England announced today to be “injected into the economy” isn’t spent on infrastructural projects? Why spend those funds on government bonds? This doesn’t seem to be the best way of using these funds. Many thanks. It’s a good question. …
Readers Question: Can you please elaborate on “fiscal devaluation” as a suggested solution for Euro area competitiveness problems? Fiscal devaluation is an attempt to restore competitiveness through changes to the tax system. In an exchange rate devaluation, a country allows its currency to fall in value. This makes the countries exports cheaper and more competitive; …
Readers Question: It is unclear what Seasonally adjusted means? Seasonally adjusted figures take into account seasonal factors in time series. Unemployment will have seasonal patterns. For example, over the summer holidays extra jobs are likely to be created and unemployment will typically fall. In winter, unemployment may rise as less tourist jobs are available. (apart …
Readers Question: Is it possible for central banks to fail in devaluing their currency since they can print unlimited amounts of money e.g like in the Swiss bank intervention. Do their losses matter, since they can write off their losses at essentially no cost? In theory, there is no limit to the amount of money …
A feature of the UK housing market is the low quantity of new houses built compared to the long term growth in demand. Despite high house prices, firms are unable / unwilling to build as many as market forces dictate. The supply of housing is price inelastic. The lack of supply has meant that the …
I saw this in the Telegraph. The Centre for Economics and Business Research (CEBR) said soaring inflation coupled with low pay rises means household peacetime disposable income is at its lowest since 1921. Rising food, clothing and energy prices mean the average British family will have £910 less to spend this year than they did …