Revision Links

I was trawling through text books earlier as i tried to find explanations as to how trade barriers work amd after having no luck in finding anything i decided to try the internet. It staggered me as to how many economics related videos there were on youtube and i think they provide not only an excellent revision resource but also explanations that even "Average Joe" can understand. Here are a few which i found particularly useful (U6 students can thank me later!)

Quota 1

Quota 2

Export Subsidy

Tariff

The IMF, what is it?

Just a short one today amidst preparation for my A-levels....


Recently, the alleged sexual assault of Dominique Strauss-Khan on a hotel maid has hit the headlines across the world. Strauss-Khan was formerly the head of the IMF, which is the International Monetary Fund and up until the recent events i had seldom heard of the IMF. So i decided to look into it further...


The IMF describes itself as an "organisation which works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". What this really means is it tries to prevent recessions from occuring and resolving them once they occur.


Comprising of the 187 members the IMF provides advise to its member's government based on global economic trends or forecasts as well as training to help countries manage their economies efficiently. However, over the last few years the IMF has been mainly seen as a provider of credit to countries to help deal with the global financial crisis. This works via the process by which the member countries pay into effectively a pot of money which can be drawn upon should the country encounter economic difficulties. The overall aim is to therefore act as a safety net for the individual nations.


The IMF is sometimes mistaken for the World Bank and although they are similar, they are actually different institutions. The World Bank focuses primarily on poverty reduction whilst the IMF, as the name would suggest, focuses on monetary issues. However, their work often complements the other, for example, if the IMF tries to reform part of an economy to reduce structural unemployment, this will inevitably reduce relative poverty within that same economy, thus accomplishing an aim of the World Bank. The IMF also works closely with the World Trade Organisation (WTO) in order to promote free trade which is essential to satisfying many macroeconomic objectives. 


I have only skimmed the surface of what the IMF is and what it does. From my research i have found that the role of the IMF is much deeper and more important than i first thought. If anyone out there is interested to learn more about the IMF than their website is quite a good place to start

Eurozone growth

Earlier this year i wrote on essay in which i ferociously condemned any pleas for the UK to join the Eurozone. The basis of my argument was formed on the idea that we would lose control of our monetary policy and this would lead to longer recessions, slower growth and periods of high inflation. However, it appears that i may have been a little too quick to banish the euro. Figures released recently show that the eurozone grew by 0.8% in the first quarter of this year, up from 0.3% on the last 3 months of last year. Even debt-ridden Greece experienced growth of 0.8%. Not only was this growth unexpected but it comes at a time when the UK economy has had its own growth forecasts downgraded as inflation is set to rise close to 5%, 3 percentage points above the target level. The growth of the eurozone was for the most part, due to the economies of Germany and France prospering, with respective growths of 1.5% and 1%. Obviously, the efficiency of these two economies has led to an increase in their competitiveness which has increased the volume of exported goods and services. I am still not for the UK to join the Euro, i feel that losing our sovereignty and the various menu costs of converting would harm our economy. However, it does beg the question, if we are not using our monetary policy to control inflation, then why not join the euro and at least benefit from this accelerated growth?

The rich list.

Inside today's Sunday Times was the annual "Rich list" which is exactly what it says on the tin. Philip Beresford writes an interesting piece which describes how because the rich have got wealthier over the last year, this might provide the boost that the economy needs. Now any A2 economist will tell you that governments often try and reduce the inequalities in income distribution by progressive taxation and a series of benefits etc. However, Beresford argues that amidst the government spending cuts and squeeze on middle class families, the £60 billion rise in fortunes of the super-rich will help fill the gaps left in domestic demand. After all, when people feel richer they often spend more so when the super-rich feel wealthier, they are most likely to spend a heck of alot more. After a bit of rambling on, Beresford ends with a really interesting and valid point. As the coalition has promised to cut red tape and stimulate private enterprise this may be the best time for the super rich to spend on businesses that would generate future wealth. If they hold on to their wealth, the possibility of a labour government in 4 years would surely cost them through the use of "vengeful policies".

Raining on the Royal Wedding

Today was of course, the royal wedding and a day of national celebration so as only an economist can do, i must dampen the situation. It is thought that the royal wedding could potentially bring in a £107 million to the city of London. This seems positive news however, the UK economy will experience a much greater loss due to the bank holidays recently. Over a 2 week period there will have been 4 bank holidays which means that the economy is effectively not producing and so there is a loss of productivity. This could equate to a fall in GDP of 0.1% this year or £1.5 billion. When this is added to the security costs of the day which are around £20 million, which is coming from the taxpayers, suddenly it is looking like a rather expensive day. When this is coupled with the recent growth reports of 0.5% which were published on wednesday, could the royal wedding cause the UK economy to slip into a double-dip recession?

This whole situation ties in nicely with my current revision for my final economics A-level exam. Does the royal wedding illustrate the limitations of GDP as an indicator of living standards. The general idea is that higher GDP levels indicate higher standards of living and happiness. However, here we see that GDP may fall due to the royal wedding and recent bank holidays but the most people would be happier with the extra days off work and sense of national pride that the wedding has caused. Therefore, if GDP were to fall we must not think that living standards are deteriorating. After all, Happy workers are good workers.

Growth!!

Struggling for time at the moment as i am preparing for my A2s so this blog has had to be put to one side. However, growth figures released today show that the UK economy grew by 0.5% in the first 3 months of 2011, Yipppeeeee! Here is the article which explains it further and shows how uncertain times ahead still are. http://www.bbc.co.uk/news/business-13206430

The North Caucasus...

I have just read a really good article in The Economist (9th-15th April edition), it is entitled "From Moscow to Mecca" and it raises a couple of interesting points. In short the article tells us how fundamental islam is taking a strong grip on the region of North Caucasus in Russia. The area is dominated by muslims who are separated into two main groups, Sufis and Salafis. Sufism is a traditional form of islam which recognises the state and includes local customs. Salafism however, rejects the state and insists that islam should "rule all spheres of life". This separation led to the second Chechen war in 1999 where the different ideologies clashed and the police and Russian army sided with the Sufis. What is striking from the Russian prospective is that the state have not done themselves any favours in the fact that they have not been trying to conquer the "Hearts and Minds" of their opponents. The police is often responsible for brutality which goes unpunished and the abolishment of local elections has led to an increase in support for the fundamentalists. 50% of the population of Novosasitli (a region within North Caucasus) now consider themselves Salafis, an increase of 40 percentage points on ten years ago. It seems that Russia is straining to stay intact. From an economists point of view, what this shows is that Russia is too large a country with many different ethnic groups to be ruled centrally. Is Russia showing managerial diseconomies of scale? What is true however is that local elections need to be reintroduced so that the people of North Caucasus can elect their leaders themselves (at present leaders are appointed directly from the Kremlin) which would hopefully stem some of the violence. What can also be seen from this situation is the effect it would have on the Russian economy. The violence, corruption and political instability is holding back economic growth for the region which would help to win over the "Hearts and Minds" of the people. Surely if the economy was prospering the violence and insecurity would subside.