Britain’s car industry could weather a storm of tariffs better than you’d think
The latest American Economic Review contains a timely paper. Keith Head and Thierry Mayer, at the University of British Columbia and the Banque de France respectively, estimate the consequences of changes in tariff and non-tariff barriers to the car industry. They look at both US-led protectionism and Brexit, and calculate how these might change the […]
In the case of sugar, the nanny state really does know best
Boris Johnson created a furore last week by announcing that he was considering getting rid of the so-called sugar tax. Was he right to question the levy, or does it serve a purpose? Introduced in April 2018, manufacturers now have to pay more tax if their drinks contain a high amount of sugar. The producers […]
Meet the engineers of economic theory: Market design has become a full-time job
What does someone with the job title of “chief economist” actually do? The most well-known in the UK is probably Andy Haldane at the Bank of England, but his role is not typical. So what do the others do? Nobel Laureate Alvin Roth’s paper in the latest issue of the American Economic Review describes the […]
How European commissioners really allocate EU funding
“Pork barrel” has been a theme in American politics for almost as long as the United States has existed. Many members of Congress work hard to secure public works projects, agricultural subsidies and the like for their own districts, almost regardless of the economic arguments for and against. Surely the European commissioners would rise above […]
Corbyn and McDonnell’s delusional tax plan would cut revenue and harm growth
The income tax system in the UK is highly progressive. Not many people know that, to use a catch phrase attributed, rightly or wrongly, to the great actor Michael Caine. The top one per cent of earners contribute 27 per cent of all income tax receipts. To put it in context, just 300,000 people pay […]
Anti-growth Welsh leaders are denying their voters prosperity by opposing shale
Leading Welsh politicians seem to be getting ideas above their station. Fifty years ago, Labour held all but four of the Parliamentary seats, and had over 60 per cent of the vote. Now, the Conservatives are by a large margin the second party in terms of votes, and are within hailing distance of Labour. They […]
Blame restrictions on the supply of land for new homes for rising wealth inequality
Official data released last week on London house price increases in 2016 generated a lot of interest. Given that housing represents by far the most important component of wealth for most people, it is not surprising that stories like this are read avidly. There is a feeling that the current situation regarding the affordability of […]
The death of cash, the rise of trade unions and other eclectic 2017 predictions
It’s certainly been an eventful year. But rather than dwell on the past, what sort of things can we expect in 2017? Here are a few eclectic predictions. Sweden may become the world’s first cashless economy. Notes and coins are already fast disappearing as a means of payment, and retailers are legally entitled to refuse to accept […]
The poor state of macro justifies scepticism with Brexit disaster forecasts
David Cameron has tried to frame the Brexit debate into one based on economics. Standing with him is the overwhelming consensus of economists themselves, from academics to the International Monetary Fund (IMF). Their pronouncements are not having that much impact on the electorate if the polls are to be believed. There is justification for this […]
The coming explosion in natural debt is a serious risk to the economy
Martin Feldstein of Harvard is an economist who should always be taken seriously. Writing in 1997 about the forthcoming introduction of the euro, for example, he argued that “the adverse economic effects of a single currency on unemployment would outweigh any potential gains from trade flows”. He went on to predict that the euro was […]
