Recent unemployment data from the US shows a sharp fall in the unemployment rate. EU unemployment remains stuck at 11.4% – the highest since the introduction of the Euro in 1999. The diverging unemployment rates highlight the different stages of economic recovery between the two economic zones. However, sluggish EU recovery and a continued EU …
The fiscal multiplier looks at how much an initial change in injections affects real GDP. For example, if increased government spending of £1bn causes overall GDP to rise by £1.5bn, the multiplier effect is 1.5 If £1bn worth of tax rises causes real GDP to fall by £0.5bn, the multiplier effect is (0.5) Since 2009, …
Readers Question: What would happen if a major currency, such as the dollar gets backed by gold again? If a major currency was backed by gold it means the government must hold sufficient gold to convert representative money into gold at the promised exchange rate. It means that the country would not be able to increase the money …
What are the key issues affecting the UK economy over the next few years? Recession and Recovery The biggest problem facing the UK economy is the lack of economic recovery. After a fall in GDP of 6% in 2008/09, the economy briefly recovered, but the recent double dip recession of 2012 has left the UK …
Ever since the Euro debt crisis hit the headlines in 2008, economists have argued that the ECB need to act and buy bonds to prevent liquidity fears and prevent bond yields from being artificially high. Held back by fears of the ECB exceeding their mandate, we have watched in despair, as bond yields on Eurozone …
Balanced Budget Fiscal Expansion is an attempt to increase aggregate demand through changing spending and taxation levels, whilst leaving the overall fiscal budget situation the same. Essentially, the idea is that if you increase spending and taxes equally, the increased government spending has a bigger positive impact on economic growth than the negative impact of …
The purpose of harmonised competitive indicators is to show changes in relative competitiveness of countries. They are are also consistent with the real effective exchange rates (EERs) of the euro. This shows the divergence in competitiveness between a country like Germany De (improved competitiveness) and other countries like Greece and Ireland which have seen higher …
Interesting perspective from Norbert Walter a former chief economist of Deutsche Bank Group and head of Deutsche Bank Research. – What Euro Crisis? Basically, his view; There isn’t really an economic crisis in the Eurozone If there is a crisis, it could easily be resolved through a bit more immigration and the European Union becoming like …