Readers Question: What on Earth is the point of the Eurozone borrowing money from China when the ECB can print any amount of money it wants any time? Of course the effect of the ECB printing money donating it to indebted Euro countries and/or the banks holding those countries’ bonds is likely to be inflationary …
Readers question: What exactly are the solutions to the EU crisis? It is a difficult question to answer. The dynamics of the single currency mean that many of the conventional solutions to economic problems cannot be used. The difficult task is to reduce levels of government borrowing whilst also managing to target economic recovery and …
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; …
Ireland has faced tremendous economic turmoil in recent years. Government debt has soared after the banking bailout and effect of a deep recession. The economy has faced a combination of Falling house prices bank losses and decline in bank lending Fiscal austerity (government spending cuts) to try and solve budget deficit. All these factors have …
Readers Question: What is Creating money electronically? Creating money electronically is something a Central Bank can do when pursuing a policy of quantitative easing. It basically involves making its bank balance bigger. In quantitative easing, the Central Bank wishes to increase the money supply and purchases bonds from commercial banks. The Central Bank will decide …
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 …