Economic Thoughts and Essays

By Rhys Williams

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[…]

What is the WACC?

The weighted average cost of capital (WACC) is simply an average cost of the two types of capital: debt and equity. It tells us the amount an investor would need in compensation to invest in a project. Therefore if we were to offer a lower return than the WACC, we would find that we have Read more about What is the WACC?[…]

What is economic development?

‘What is economic development and how would you measure it? Does an increase in per capita national income always constitute an increase in the standard of living?’ Economic development is hard to define, but is an improvement in the living conditions of the population as a whole. Whilst closely linked with economic growth – high Read more about What is economic development?[…]

Unemployment during the Inter-War period

The 1919-20 reduction in working hours accompanied by the maintenance of the weekly wage has been argued to underlie the rapid rise in unemployment in Britain in the early 1920s and some of the persistence of unemployment through to 1939. To what extent can these aspects of interwar unemployment be attributed to this supply-side change? Read more about Unemployment during the Inter-War period[…]

A letter to my children

In Cambridge we have the weird tradition of a parenting system, where 2nd years can get college children: it’s basically a buddy system to help freshers integrate into Cambridge life. Below is info for Girton Economists, but most should apply for Cambridge Economists. Dear Kids, Hi, my name is Rhys and I’m your college father. Read more about A letter to my children[…]

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[…]

Technological Revolution

Explain the debate between Allen and Mokyr on the role of institutions and resources in explaining the Industrial Revolution in Britain Mokyr believed that the Industrial Revolution was greatly aided by the technological changes which came about through an increase in scientific knowledge from what he termed the Industrial Enlightenment. This enlightenment came about through Read more about Technological Revolution[…]

The Lewis Model

Describe carefully the Lewis dualistic labour surplus model. Does the Lewis model describe accurately the process of economic development in poor countries? The Model The Lewis model proposes a dualistic economy consisting of a formal, industrial and urban sector, and an informal, agricultural and rural sector. The formal sector is characterised as capital intensive and Read more about The Lewis Model[…]

Expansionary Fiscal Contraction Hypothesis

Expansionary fiscal contraction can occur under certain assumptions whereby a major reduction in G changes future expectations about taxes and G which leads to an increase in C causing higher GDP if the rise in consumption exceeds the fall in G. This can only happen if government expenditure as a percentage of GDP is reduced Read more about Expansionary Fiscal Contraction Hypothesis[…]