GDP Data Revisions

The importance of accurate GDP data is often understated and there is a need to document carefully the extent of revisions to statistics on economic activity and evaluate how this affects macroeconomic policy as well as examine ways to improve statistical methods. The Office for National Statistics (ONS) has a trade-off between providing estimates on Read more about GDP Data Revisions[…]

Why has wage inequality risen?

Wage inequality has increased in many economies in recent decades. Discuss the three leading hypotheses regarding the causes of this increase. What does the empirical evidence tell us about the quantitative importance of each of these factors? The US economy has almost double since the 1970s, and labour productivity has risen over this period. Yet real wages for Read more about Why has wage inequality risen?[…]

The Colonial Origins of Comparative Development: A Summary

Acemoglu, Johnson and Robinson (AJR) attempt to measure the effects of institutions on income differences by introducing an exogenous source of variation in institutions to measure their differing outcomes. They begin by pointing out that the history of colonisation resulted in different institutions being formed: some countries received extractive institutions (whereby the coloniser would simply Read more about The Colonial Origins of Comparative Development: A Summary[…]

Economic Growth: Where does it come from?

One of the fundamental questions of economics is why are some countries rich and others poor? Why do some countries experience heavy growth which allows them to catch-up with the economic giants of the world, whilst others are relegated to the bottom and are unable to jump on the growth train? Is it due to Read more about Economic Growth: Where does it come from?[…]

Did small scale firms inhibit Victorian Growth?

Britain’s manufacturing firms have been accused of remaining family-run and small scale in the period 1850-1914, so ignoring the benefits of the large corporation evident in the USA. Discuss whether this represents a form of entrepreneurial failure by the owners of British firms. Chandler identifies that corporation’s in America are vertically and horizontally integrated, invested Read more about Did small scale firms inhibit Victorian Growth?[…]

International Trade and Economic Growth

Does international trade increase economic growth? In this context, what are the trade policies that have been followed by developing countries? Standard textbook economic theory tells us that international trade benefits both parties in the trade, based on the gains from comparative advantage as laid out by David Ricardo. However, recent research into New Trade Read more about International Trade and Economic Growth[…]

Ricardian Equivalence

Explain Ricardian equivalence, and discuss what implication it might have on the efficacy of expansionary fiscal policy. Ricardian equivalence states that for a given level of government spending a change in taxes – financed by a deficit – will have no effect on the real economy. It is posited that individuals are forward thinking and Read more about Ricardian Equivalence[…]

Europe 2020

Within the overall Europe 2020 strategy, there will be difficult tensions to resolve between social and economic aims, as well as between qualitative progress and quantitative targets. The impact of Europe 2020 on employment and the labour market will be pivotal, because it is the policy domain that straddles the boundary between the EU as Read more about Europe 2020[…]

The Mundell-Tobin Effect

This article explains the Mundell-Tobin effect by showing the relationship between the ISLM and ADAS models. The Mundell-Tobin effect states that nominal interest rates may not rise 1:1 with price levels, as the Fisher effect states. The Fisher effect derives from Fisher’s identity of i = r + π where i=nominal interest rates, r = real interest Read more about The Mundell-Tobin Effect[…]

Quantitative Easing

What is Quantitative Easing and Why has it been used? Quantitative easing is a policy introduced by the Bank of England to pump [to date] £375 billion into the economy. It works by the BofE purchasing government bonds (known as Gilts) off private and institutional investors which increases the price of government bonds, thus lowering Read more about Quantitative Easing[…]