Recently, there has been much debate about the direction of monetary policy. Should we make monetary policy ‘looser’ – expansionary monetary policy through quantitative easing / lower interest rates in order to boost growth and reduce unemployment. Or should we consider ‘tightening’ monetary policy – higher interest rates, no quantitative easing in order to reduce …
M4 Definition M4 is a broad money supply measure. Briefly, M4 includes all notes and coins in circulation, deposits at banks and building societies, plus assets which are considered relatively liquid (short-term bonds, commercial paper) M4 growth is currently negative. M4 lending to private sector is currently 6.0% lower compared to past 12 month (July …
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 …
Readers Question: Would a devaluation help Greece? If you look at the Greek economy, their exchange rate has been effectively overvalued for several years. This overvalued exchange rate has caused Greek exports to be relatively uncompetitive and has caused various economics problems. Combined with efforts to tackle an unsustainable debt level, the over-valuation has contributed …
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 …
Readers Question: Whose is to blame for the continued UK recession? With the banking crisis and economic recession, politics seems to be currently dominated by a ‘blame’ game – trying to work out whose fault it is. Unsurprisingly, the coalition have tried to shift blame on to Euro crisis and banks. Others have blamed the …