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?[…]

Negative Interest Rate Policy and the Zero Lower Bound

Neoclassical Story of the Monetary Policy Transmission Mechanism The traditional orthodox story tells us that interest rates affect the economy through a number of channels including (i) the investment channel whereby higher interest rates reduce investment, as it becomes more costly to invest thereby inducing firms to either invest with retained earnings or forego investment Read more about Negative Interest Rate Policy and the Zero Lower Bound[…]

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[…]

Minimum Wages

Why have statutory minimum wages become more prominent in recent decades? Why have they generally had little adverse effect on employment? Prior to the introduction of the national minimum wage (NMW) in 1999 there had been no statutory wage floors since the abolishment of the Wages Councils in 1993 by the Conservative government. Growing wage Read more about Minimum Wages[…]

Paul Mason’s Capitalism

Paul Mason today gave a ‘sermon’ (they even made us sing hymns!) on what he describes as Post-Capitalism. Without yet having read his book I wanted to address a few of his points based on his talk. Therefore some of my issues and criticisms may be cleared up at a later date. I find it Read more about Paul Mason’s Capitalism[…]

What is hysteresis?

I recently wrote an article on the situation in Greece, and mentioned the effects of hysteresis which I will expand upon in this blog article. Hysteresis is a theory developed by the Keynesians to explain why laissez-faire economic policy may be damaging in the long run. Neoclassicalists would argue that during an economic downturn, when Read more about What is hysteresis?[…]