Fear is a powerful emotion which can have significant economic implications. Often real fears are ignored in a wave of over-exuberance. Sometimes, if people had greater fear of getting into debt and falling asset prices e.t.c, the economy would be less prone to bubbles and the consequent mess. Perhaps fear isn’t the right word. – …
The UK ‘Public sector Debt’ is now approximately £800 billion (July 2009 – ) Question: Who do we owe it to? People and financial institutions who bought the UK bonds and gilts. These are mainly financial bodies such as pension funds, investment trusts. The irony is that many people in the UK who have private …
Today, is the first day of term for my students. A few are in their second year. A few are doing retakes and a few are studying economics for the first time. For many students, taking economics can be challenging because it is a subject they haven’t studied before. There are quite a few new …
As output falls, you would expect a rise in unemployment. If output is lower, firms will need less workers. Okun’s law is a look at the relationship between falling output and rising unemployment. As a rough rule of thumb, in Okun’s original statement of his law, he found a 3% increase in output corresponded to …
An interesting graph showing relationship between the output gap and levels of government borrowing. A negative output gap indicates GDP is below full capacity and there is unemployed resources. Therefore, in a deep recession, like 2009, the output gap will rise. In a boom, we will have a positive output gap as firms struggle to …
Readers Question: I would like to know more on the issue of who exactly benefits from the UK national debt that my great grandchildren are going to be paying. It is helpful to think of the three aspects of the government debt Structural deficit – related to above inflationary increases on health and education and …
A good thing about studying economics is that new issues crop up. A year ago, few people would have heard of quantitative easing, but, now it is has become an important part of UK monetary policy. Because it is relatively untried, there is a degree of uncertainty how it will work and whether it will …
Readers Question: What is Sensex and impact on economy? The Sensex is the leading measure for the Indian Stock Market. It is based on the 30 Largest trading companies on the Bombay Stock Exchange BSE (India’s primary financial market) Like other indexes, the Sensex is recalculated at various times to change the 30 largest trading …