Archive for the Economic theory Category

Policy makers have learned from the mistakes of the 1930s

Nobel Prize winner Paul Krugman will shortly be in town.  With Lord Richard Layard, he will be calling for more public spending and borrowing.  The two have issued a ‘Manifesto for Economic Sense’.  But is it? The opening sentences make dramatic claims: ‘More than four years after

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Macro-economic modelling and its uses

An International Macro Symposium conference this week hosted by the ESRC and the Oxford Martin School has brought home to me how little things have changed in some quarters.  There is still a belief that with some tweaks the old modelling frameworks can capture the elements that

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How Big Is My Multiplier?

The debate rages about whether the Chancellor should implement a Plan B, or C or D or even Z. There seems to be a plethora of alternatives. But many of them share a key common theme. Namely, that an increase in public spending will boost output in the economy

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How to unpick the apparent paradox of falling GDP and rising unemployment

GDP estimates are eagerly awaited in the City, and dominate the media headlines.  Huge significance is attached to arithmetically trivial differences, whether between market expectations and the announced figure, or to subsequent revisions to the data. But GDP is not something which can be put in a

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The Olympics, traffic in Central London and a bar in Santa Fe

We all know now about the empty roads and deserted shops, all quite contrary to the official announcements before the Games began.  No doubt Transport for London used their massively complicated, expensive models of the transport network to deduce that the system would be under massive strain.

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Transparency, Clarity and Understanding

The call for more transparency is a compelling one.  We should have more information, more easily available.  Stuff should not be hidden away.  I am generally a believer in all of this, and that people have greater ability to absorb and critique than they are given credit

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Why Can’t Debt Just be Inflated Away?

The debt problems which the UK and Europe currently face are essentially ones of political economy.  Basically, there is a lot of debt around and the simple question is: who is going to pay for it?  All the economic theory in the world does not get around

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Ignore the IMF: Economic forecasts have a history of being unreliable

So the IMF has slashed its growth forecasts for the UK economy.  This august body has just pronounced that Britain’s economy will come to a virtual standstill.  Growth in 2012 will be just 0.2pc, compared with the IMF’s April forecast of 0.8pc growth.  It cut its 2013

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