Can Governments Increase the Rate of Economic Growth? Governments often seek to increase the rate of economic growth. Higher growth rates improve public finances, increase economic welfare and help reduce unemployment. However, it is debatable how much the government can actually increase the rate of economic growth. The greatest potential for increasing economic growth occurs …
Readers Question: In 2009, both inflation and growth went down, but in 1991, the inflation went up, even though the growth went down. What could be the reason for the difference in behavior? (UK Growth Rates) In 1990 inflation was high. This high inflation was a result of the previous economic boom. In the late …
The latest inflation figures show a rise in inflationary pressure. CPI has increased from 3.3% to 3.7%. This places inflation considerably above target. Some commentators are now worried there is a danger the MPC could lose credibility in combating inflation. Just to further illustrate the dilemma for the MPC, the rise in inflation is being …
Readers Question: How can the U.S. economy be growing, even at 2%+, when the unemployment rate is so high. The unemployed don’t pay taxes, and obviously can’t spend their earnings. The US economy may be growing by 2%, but, it is still along way below potential output. It is merely recovering from a deep recession. …
Readers Question: Does growth forecast always corresponds to the mesured growth? If a bias exist, is it always on the same side? Recently, growth statistics published on February 26th showed that the GDP figures for the fourth quarter of 2009 were a higher than first recorded. GDP grew by 0.3%, rather than the initial estimate …
Readers Comment (Ralph Musgrave) from Why is Chinese Yuan undervalued You claim “Chinese growth is dependent on exports” (2nd bullet point). You then argue that a lot of labour is quitting agriculture and state industries. Plus this labour needs jobs, therefore an undervalued currency and a healthy export sector is helpful in creating such jobs. …
M4 is known as the ‘broad money supply’. It is a measure of notes and coins in circulation (M0) + bank accounts. This includes private-sector retail bank and building society deposits + Private-sector wholesale bank and building society deposits and Certificate of Deposit. The Bank of England produce figures on M4 growth. [link] Money supply …
Readers Question: we say that higher fiscal spending leads to higher economic growth but does this negative public saving also not lower investments hence lowering future growth opportunity? so is the current growth stimulus at a cost of future growth? Cutting taxes and boosting spending will lead to higher borrowing. This will hopefully boost aggregate …