The past few years have seen a rapid rise in real food prices – especially, fruit, vegetables and meat. At the same time, we have seen falling real incomes for low-income decile groups. The consequence is that those on low incomes have been changing their diet in response to higher prices. With squeezed real incomes, …
Readers Question: Can you please elaborate on “fiscal devaluation” as a suggested solution for Euro area competitiveness problems? Fiscal devaluation is an attempt to restore competitiveness through changes to the tax system. In an exchange rate devaluation, a country allows its currency to fall in value. This makes the countries exports cheaper and more competitive; …
Lovely organic vegetables, but will anybody be buying them in a period of falling real incomes? It seems we like our organic food, but only when incomes are rising. During the period of strong economic growth in the mid naughties, sales of organic food grew by up to 30% a year. However, last year demand …
I woke up this morning to the site of 8 inches of snow. My first thoughts were great! – no school today. (teachers enjoy a day off as much as students). Quite a few county councils have been alarmed at how quickly their stocks of salt for gritting the roads has dwindled. There appears …
Readers Question: What effect does expansionary fiscal policy have on the fishing sector? If successful, expansionary fiscal policy will increase Aggregate demand and increase the rate of economic growth. In a recession, expansionary fiscal policy could play a significant role in increasing level of living standards and levels of consumption. Expansionary fiscal policy involves changes …
Today, is the first day of term for my students. A few are in their second year. A few are doing retakes and a few are studying economics for the first time. For many students, taking economics can be challenging because it is a subject they haven’t studied before. There are quite a few new …
Readers Question: When my class and I try to test the Marshall-Lerner condition it doesn’t always work. i.e. we assumed a country with just one export and one import and assumed their price elasticities added up to less than one. We gave each a price and quantity that led to a current account balance =0 …
Q. Is A Strong Canadian Dollar A Good Thing? This is an interesting question. The effects of an appreciation are good for some aspects of the Canadian economy, but, create problems for Canadian exporters. The real winners are Canadian consumers who are able to buy US goods at a much cheaper price. US border towns …