This week I wrote a post about escape velocity – the idea an economy stuck in recession needs a decisive burst to escape a liquidity trap, low spending and low confidence. If an economy can return to this normal trend rate of economic growth, we can end the period of ultra low interest rates and …
In physics, escape velocity refers to the speed necessary to break free of gravitational field without further propulsion. For example, to leave the earth’s gravitational pull requires approximately 40,320 km/h, or 25,000 mph. This was first achieved in 1959 by Luna I. Very interesting, but what does escape velocity mean in relation economics? It refers to …
Frequently we hear the argument that there is no austerity in the UK. Government spending has even continued to rise during the recession. Some would even go so far as to say that the modest rise in government spending is proof that expansionary fiscal policy is a failure, and we should actually be cutting government …
In the past five years, the UK has experienced an unprecedented period of stagnant economic growth. The fall in real GDP is longer than even the great depression. Given the unusually depressed nature of the economy, what policies could the UK pursue to boost economic growth and recovery? Here are eight possible policies with their …
Looking at the economic factors which will influence the value of the Pound Sterling to the Euro in the future.
The great moderation refers to a period of economic stability characterised by low inflation, positive economic growth, and the belief that the boom and bust cycle had been overcome. In retrospect, economists look back on the great moderation in a different light because although inflation was low, there was great volatility in financial markets and …
I like this article about the wrong kind of inflation by Roger Bootle Or as his cleaner said: “It’s not the inflation they need to sort out, Mr Bootle, it’s the rising prices!” Essentially, the wrong kind of inflation is cost-push inflation. This inflation is due to rising costs of production, such as rising energy …
Iceland’s crisis was brutally severe. With a bloated current account deficit and bad debts, Iceland experienced a severe balance of payments crisis and banking losses. Iceland responded by: Not guaranteeing all banking debt. Many large banks failed and were seized by the government Allowing the currency to devalue by 50%. Imposed capital controls to prevent …