Part of the CIE A2 macro syllabus focuses on the wage price spiral which relates to the Phillips Curve. Here are some excellent notes that I picked up from Russell Tillson in my early days teaching at Epsom College. As…
Part of the CIE A2 macro syllabus focuses on the wage price spiral which relates to the Phillips Curve. Here are some excellent notes that I picked up from Russell Tillson in my early days teaching at Epsom College in…
Bill Phillips (a New Zealander) discovered a stable relationship between the rate of inflation (of wages, to be precise) and unemployment in Britain from the 1850’s to 1960’s. Higher inflation, it seemed, went with lower unemployment. To economists and policymakers…
I have done numerous blog posts on the Phillips Curve some of which have discussed the missing trade-off between inflation and unemployment. Recent data from the US suggest that reducing rates of unemployment have not activated higher levels of inflation.…
Part of the CIE A2 macro syllabus focuses on the wage price spiral which relates to the Phillips Curve. Here are some excellent notes that I picked up from Russell Tillson in my early days teaching at Epsom College. As from previous posts, the Phillips Curve analysed data for money wages against the rate of […]
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It is usual in an economy for low inflation to be driven by weak demand, a large output gap and downward pressure on prices. However in the New Zealand economy it feels like a supply side expansion including: technological change,…
Coming from Ireland I took a keen interest in the book entitled “Understanding Ireland’s Economic Crisis” edited by Stephen Kinsella and Anthony Leddin. It is a series of papers written by Irish academics which focuses on the causes of the…
I saw this on the Tutor2u blog. Remember the Phillips Curve (named after New Zealander Bill Phillips) relates the level of unemployment to the rate of change of money wage rates (which are a proxy for inflation). If you look…
When Bill Phillips is mentioned most people think of the Phillips Curve. However, while a student at the LSE, Phillips used his training as an engineer to develop MONIAC, an analogue computer which used hydraulics to model the workings of…
Consumer prices in New Zealand rose 5.9% annually in the December quarter.Core inflation measures rose to 5.4% annually. Core inflation excludes certain items that are known for their volatility — namely, food and energy. With this figures it seems that…
In the past expansionary monetary policy (low interest rates) would have acted as a catalyst to the real danger of a wage price spiral in which rising wages and prices become self-reinforcing, pushing inflation up. This was very apparent in…
This is a very good video on inflation from The Economist – it discusses why over the past two decades inflation has remained low in good times and bad. There is a brief look at historical rates of inflation and…
I held the annual 50 question quiz during the last session of the CIE A2 revision course. I split the class into 5 teams (approx 4-5 in each) and asked 5 questions at a time – with a time limit…
Video from CNBC looking at why central banks became independent and if it still should be the case – very informative and they use the Phillips Curve in their explanation. WIth the ongoing inflation problems in the 1970’s and 80’s…
Chris Giles of The FT wrote a very good article explaining the output gap using Goldilocks and the three bears. As you may know in the story Goldilocks found the first bowl of porridge too hot, the second bowl too…
The Economist had an article in its Finance and Economics section on the fact that after record low interest rates and extended quantitative easing global inflation seems stubbornly low – see graph. In order to explain this you need to…
Since the GFC in 2007/8 the developed economies have been awash with stimulatory forces including quantitative easing, record low interest rates and increased government spending. This has led to accelerating growth levels driven by an increase in Aggregate Demand –…
Since the GFC in 2007/8 the developed economies have been awash with stimulatory forces including quantitative easing, record low interest rates and increased government spending. This has led to accelerating growth levels driven by an increase in Aggregate Demand –…
I have being going over the theory behind the output gap and here is an explanation – written a few years ago. Probably not so applicable to the economic environment today Just as Messrs Friedman and Phelps had predicted, the…
It seems ironic that after a global focus to contol inflaton it transpires that what we really need is more. According to Time magazine there are 2 key points why we need inflation: 1. Inflation would shrink the value of…
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