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: Also what are the negatives to the Robin Hood Tax that has been suggested and is it akin to the suggested European transaction tax? A ‘Robin Hood tax’ is a popular name for a Tobin tax that was proposed by Nobel laureate James Tobin. Initially, the idea was to place a small tax …
Fiscal union involves individual countries sharing the same common budget. It means spending and tax levels would be taken by a central fiscal authority. Fiscal union also means debt would be financed by a common bond rather than individual countries. Fiscal union is proposed as a step for further European integration. It would mean a …
A feature of the UK housing market is the low quantity of new houses built compared to the long term growth in demand. Despite high house prices, firms are unable / unwilling to build as many as market forces dictate. The supply of housing is price inelastic. The lack of supply has meant that the …
The highest credit rating is a AAA rating with ‘stable outlook’. A AAA credit rating implies there is no remote chance of default on government debt. A negative AAA credit rating implies there is a chance of downgrading the debt to AA. A credit rating of BBB- or higher, it is said to be ‘investment …
Standard & Poor downgraded the US fiscal position from AAA to AA. This reflects the credit rating agencies believe that the US fiscal position has deteriorated and they are more pessimistic over long term fiscal consolidation in the US. It means that the rating agency feels the threat of US defaulting on its federal debt …
Readers Question: What have been the drivers of the mortgage default rate in the 2008 recession compared to the late 1980s/ 1990s? Despite the depth of the recession in 2008, the mortgage default rate in the UK has been lower in the current recession than in the early 1990s. The peak for home repossessions occurred …
Readers Question: I thought of an analogy and wondered if I am correct. Suppose there is a concert venue that seats 10,000 people. On one day, the Rolling Stones are scheduled to perform there. Tickets are nominally $50, but since the venue is likely to sell out, scalpers buy them up. Let’s assume that Rolling …