The importance of whole systems analysis in economics

I was reminded by Michael Pettis’ most recent blog post of the importance of taking into account the global economy as a whole when analysing national economies. Continue reading

Challenging Osborne’s new economic ‘plan’

In today’s Guardian newspaper, 77 economists have signed a letter sharply criticising the UK chancellor’s plan to enshrine in law that the government must run budget surpluses in ‘normal’ economic times. Continue reading

Binding fiscal policy

The UK chancellor, George Osborne, today announced that he intends to legally bind current and future governments to running a budget surplus (an excess of tax receipts over spending) when the economy is growing. Does this make sense? The answer must be no. Continue reading

Germany: the key to sustained recovery in the eurozone

Economic growth in Germany apparently slowed to just 0.3% in the most recent quarter, and performance across the Eurozone, while positive, remains sluggish. Despite a weaker euro, which should boost net exports for the region as a whole, and the quantitative easing policy of the European Central Bank (ECB), this is bad news. Continue reading

Change afoot in China

As many economists have argued, the structure and evolution of China’s economy has a huge impact on the global economy, and its very high rate of investment, with overall saving even higher, especially in the run-up to the global financial crisis, was part of the cause of the imbalances that contributed to that crisis. Continue reading

Social welfare and macroeconomic performance

The political left is usually a strong supporter of the welfare state, as it believes that it provides social insurance to the population at large, and aims to benefit those most in need, even if outcomes sometimes fall short. In this way it is thought to reduce poverty and inequality and increase social justice. Those on the right tend to be less enthusiastic. Continue reading

Continued recovery and disguised unemployment

So we have a Conservative government with an overall parliamentary majority: a most unexpected outcome in yesterday’s general election. One of the challenges facing the new administration will be to try to ensure that economic recovery continues, creating more jobs and raising wages for the majority, rather than simply those at the top of the income distribution. Continue reading