In 1980, Mrs Thatcher made a memorable speech. “To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: You turn if you want to. The lady’s not for turning!”(BBC Link) Background – The economy was struggling under the deflationary fiscal and monetary policy. Mrs Thatcher …
In economics, there is often a trade off between macro economic variables. A simple trade off could be – increase interest rates; this leads to lower inflation, but also lower output. Cut interest rates, and you help boost growth, but increase inflation. In an ideal world, we would have low inflation, high growth and full …
Readers Question: From the current economic crises government has been slashing its base interest rates to now 2%. However, how would deflation which is currently being experienced in several countries mainly due to decreasing fuel prices affect the attempted recovery from this crisis? Deflation makes monetary policy much less effective. In fact, deflation can cause …
Readers Question: I thought your explanation about whether to worry or not about the National Debt was pellucid but I would like to know, from an economics perspective, why governments (and people) were not worried about the debt after World War 2 given that it was far higher for many years than the UK debt …
“Don’t Panic, Captain Mainwaring.” – Dad’s Army The famous catchphrase could perhaps be adapted to UK debt levels. The 1940s and 1950s, were an example of high debt, but, it didn’t cripple the UK economy, the 1950s proved to be a decade of full employment and was one of the longest periods of economic expansion …
It’s the time of the year when many students are getting to start economics for the first time. It can be a little confusing with so many new concepts and words. But, if we had just one lesson, what could we teach about economics? Society wishes to optimise the distribution of resources. Economics considers how …
Definition of Fiscal Space – The difference between the current level of public debt and the level of debt that is sustainable and manageable. A key issue for many advanced economies is being aware of the level of government borrowing that is sustainable in the long term. Basically, how much can a government borrowing without …
There is speculation about how long interest rates will stay at zero. – See: – How long will interest rates stay at zero? Another issue is the limitations of zero interest rates. There is much hope / expectations that fiscal austerity can be offset by loose monetary policy – i.e. if we cut government spending …