Friday, January 11, 2013

Another Event!

In addition to the Al Roth lecture on February 4th (note room has changed to Vaughan Jeffreys due to demand for the event), on January 29th (Tuesday of week 4) David Smith, economics editor for the Sunday Times and blogger at, will be speaking at 5pm in the Law Building Lecture Theatre 1.

As with the Al Roth event, you need to sign up for this event, so please do so quickly before space runs out!

Thursday, January 10, 2013


On Tuesday in econ101b we looked at inflation alongside unemployment for the first time. We're going to return to these later in term in more detail, but for now we thought a little about the different types of inflation (CPI, GDP deflator, producer price inflation and wage inflation), and also the theoretical concepts of demand-pull and cost-push inflation.

Simon Wren-Lewis, who I've mentioned previously, blogs today on inflation, and in particular the idea that we're about to see a 1970s style explosion in inflation.  As Simon points out, it isn't fools that are warning about this - he links up to Andrew Sentance, who until recently was on the Monetary Policymaking Committee (more later in term on what this does - suffice to say for now it does what it says on the tin).

A regularly aired concern is that because of quantitative easing (again, more later in term), which can be described in a simplification as printing money, inflation is just around the corner - once people spend all that money that's out there.

Wren-Lewis though makes an astute observation - wage inflation has been lower than price inflation, something I pointed out in the lecture yesterday - which means that people simply don't have the extra money to spend, which may then lead to inflation - what happened in the 1970s, as Wren-Lewis's graphs show.

Wages are increasing at a slower rate than the general price level, which means that we are all getting poorer in terms of what we can actually afford with our wages - which means we are unlikely to start spending more, a precursor to higher inflation (aggregate demand increasing).

Tuesday, January 8, 2013

Farmer and Fiscal

Continuing on the theme of interesting and useful contributions by macroeconomists writing on blogs, John Quiggin is an economist based between the US and Australia, and along with some co-bloggers organises a blog called Crooked Timber. He's also well known for a book called Zombie Economics, where he looks at ideas that we might think are way past their sell-by date yet persist.

The day before yesterday he blogged on the current state of macro with regard the effectiveness of fiscal policy (part of a series on big macroeconomic issues - well worth reading the others too). He requested views from a particular kind of macroeconomist, ones who work on what are called DSGE models (particular kinds of theoretical models at the forefront of research in macroeconomics), and he got at least two responses - one from Simon Wren-Lewis, who I flagged up yesterday, but also one from Roger Farmer.

The particular point about Roger I'd like to make is that while he is based at a US university, UCLA, he will be visiting the Bank of England in the coming year, and in fact at the end of April he'll be in Birmingham for a conference being organised by John Fender, Christoph Goertz and myself. As you'll learn from his contribution on fiscal policy, he is very good at explaining things well. He's written a number of very important contributions to theoretical macroeconomics. I'd highly recommend a read of what he has to say about fiscal policy - it'll be handy for when we get there later in term.

Monday, January 7, 2013


As I mentioned in today's lecture, amidst the administrative and technological chaos, this blog serves to link what we look at in the lectures to the real world. I'm not the only lecturer that does this, and so I'll regularly post interesting and useful blog posts by other economists.

Simon Wren-Lewis lectures in Oxford, and writes a blog called Mainly Macro which is a treasure trove of well written and thought out contributions. He's written yesterday on the "B word", borrowing, and it's a nice response to those, often on the political right, who oppose any kind of suggestion of borrowing.

Well worth a read.

Friday, January 4, 2013

GDP and indicators thereof

On Monday, we're going to learn about national income, the amount produced in an economy, and how we measure it - Gross Domestic Product, or GDP. GDP is only ever available with a significant lag - so currently, we have no real idea what happened in the last three months of 2012, and won't know for a few weeks yet.

Because of this, many other bits of information are often used to get some sense of what is going on.  David Smith (Economics Editor at the Sunday Times and a keen blogger), points out that the Purchasing Managers' Index (PMI) serves just that purpose, and if it is to be believed, then GDP numbers for 2012Q4 may well be disappointing (in the sense that suggest low or even negative growth).

The PMI considers the actions of those charged with making orders at private sector companies in the economy, surveying them to ask whether they believe conditions are getting better, worse or not changing. If the index falls, it suggests that the general perception amongst those active in the economy is that things are getting worse, and if it rises, it is a suggestion of growing confidence, which usually translates into growth.

More about this in the coming weeks...

Thursday, January 3, 2013

Not the Treasury View...

In preparing for the lectures this coming term, I've been looking over Chapters 14 to 17 in Sloman, the textbook we use. Particularly Chapter 16 looks at the development of macroeconomics, and the role the UK Treasury, alongside John Maynard Keynes, played in this development.

It's a fascinating story that we'll think about much more in the first few weeks of term. In the meantime though, it reminded me of an excellent blog that I subscribe to the posts from, called Not the Treasury View, and is written by Jonathan Portes at the National Institute of Economic and Social Research. The name harks back to what was the Treasury view back in the time of Keynes, around the Great Depression of the 1920s and 1930s - namely to balance the budget and trust that in the long run the economy would return to equilibrium and growth.

Keynes provided the alternative view, namely that government could, and should do more than this, and actively intervene in the case of deficient demand, as it was argued was the case back then. It's argued by many (for example, see another interesting blogger, John Quiggin here on unemployment) that Keynes was the founder of macroeconomics as we know it, pointing out that the economy as a whole could experience long periods of disequilibrium, characterised by high unemployment.

I'd really recommend subscribing to the RSS feed from Not the Treasury View. You may initially think Portes to simply be a leftie hence a critic of Tory policy, yet if you dig far enough back you'll find he's critical of all government policy that flies in the face of simple economic theory and evidence. Part of the course this term is to start forming coherent analyses of government policy - you can do much worse than become an avid reader of Not the Treasury View.

Thursday, September 6, 2012

Marginal Revolution University!

If not yet, I hope to encourage you whilst you study economics to become avid readers of blogs written by economists. After all, this is one of them. They are a great resource - they make available to you high profile economists in real time, as you get their reflections on every day events. This is a really important aspect of learning to think like an economist.

One really intriguing development has recently been announced by Marginal Revolution, a very popular blog - Marginal Revolution University, or MRUniversity as they seem to be dubbing it.  The blog post introducing it is here, and the website to get more information about it is

They plan to offer courses freely online it appears, and in formats that are not prohibitively costly to access (e.g. data plans on mobile phone contracts).

Well worth keeping an eye on - it's always good to get as much good tuition as possible, and one thing is quite sure about this initiative is that it will provide high quality tuition.