IB Economics B

Imposition of levies (taxes) by G20 governments to reduce government budget deficit: The G20 summit held in Canada over the weekend has confirmed the trend of fiscal consolidation which is happening in many of the major world economies in the wake of the financial crisis and recession. Leaders have agreed that debt as a proportion of gross domestic product needs to be stabilised or actually reduced by 2016 and it was noted that all the G20 countries had committed to halving their respective deficits within three years. Plans to introduce a global levy on banks have, as expected, been dropped although the summit confirmed that member countries would be free to introduce their own measures. The UK introduced a levy in the emergency Budget last week and some other European countries also have plans to do so...

The UK started reducing government expenditure, easing its fiscal policy to compensate for debt: There are a couple of notable points raised by the BRC in the Outlook: one is their view of economic growth and the other is the number of job losses caused by the Chancellor of the Exchequer, George Osborne's public spending cuts. The BRC state that they believe the UK economy will continue to recover but at a slower pace than after the recessions of the 1970s, 80s and 90s. They put this "sluggish outlook" down to "the gradual normalisation of credit conditions, efforts to reduce private sector indebtedness and the impact of the Government's fiscal consolidation."

This article discusses how, in some circumstances, fiscal policy has no knock-on effect onto private spending. This is the case when government debt is high (over 60 per cent of GDP) and when exchange rates are flexible.

Many rich countries' debt levels are uncomfortably close to 150-year highs, despite relative peace in much of the world. There is a no easy way out. For now, low world interest rates are restraining debt-service costs, but debt levels can be reduced only very gradually over long periods, whereas real (inflation-adjusted) interest rates can rise far more quickly, even for rich countries. More examples regarding indebted countries and whether or not they should reconsider their fiscal policies to relieve their debt are further discussed in the article.

The article discusses the stability and growth Pact that regulates EU member states' budgets, and its impact on fiscal policy on member nations. Another dimension of fiscal policy is its political implications, and the article articulates this dilemma. Particularly in the case of the EU, where one government's spending has an effect on all other countries as the currency is common, a government's fiscal policy adjustments have political impacts. thus, aside from the economic implications, governments must consider the political ramifications of their actions before implementing fiscal policy.

This article discusses the business cycles of the US. It talks about how these cycles are getting smaller and smaller for the US with fewer years in between crest and trough. This article also discusses how these shorter business cycles are affecting the value of the US dollar, inflation, etc.

The article discusses the Chinese government's intervention in the banking industry to avoid a 'boom and bust' cycle. Banks were seen to be lending large sums of money, increasing aggregate demand in the economy and 'overheating it' causing rapid inflation. The fear was that this inflation would then in turn lower consumer sentiment and cause a 'bust' in the cycle. The policies set to curb this lending were designed to reduce the sudden effect of a bust.

This article suggests that the recession on global economy may be over but there is still a high rate of joblessness

This article talks about how unemployment has been raising during the recession but now the recovery situation is contributing to the creation of new jobs.

This article is about Nebraska. This state lost 27000 employees during the 2007-2009 recession and it is continuing its recovery even today. As economist Ernie Goss says, Nebraska has restored 45% of those lost jobs over last year.

This article is about the the shifting business cycle within offices. Glen Clarke of GE is quoted saying: "GE Capital has been involved in office equipment leasing for 20+ years and we believe the business cycle has now shifted. We're expecting modest growth in the industry this year as companies replace and upgrade their existing equipment."

This article discusses hope of Latin America's business cycle turning for the better in the future.... Boosting business confidence, increasing demand for exports, tourism, technological advances and implementation, as well as increasing consumer confidence all suggest a promising future for Latin America. Or perhaps not?

A recent flurry of data suggests things may finally be turning up for Japan's economy. Deflation has moderated to nearly zero, and the central bank believes gentle inflation may at last return. Capital expenditure also was up slightly in the most recent period, raising the prospect of green shoots of corporate activity. Yet against those positives come fears over rising oil prices?

The thrust of fiscal policy in South Australia since 1994 towards reduced budget deficits and the elimination of government dissaving (borrowing to fund consumption, mainly salaries) was opposed from the outset from within the ruling alliance, with calls for a larger role for the state in the economy being accompanied by demands for increased government spending and larger deficits. With president Thabo Mbeki 's departure in 2008 brought about in part by the same political elements, there were reasons for believing that fiscal policy might change. But the global financial crisis and the local recession instead took precedence over policy debates within the alliance. Budget deficits rose and interest rates fell, but for cyclical reasons and not ideological pressures.

"Consumer spending makes up more than 70 percent of the economy, and it usually drives growth during economic recoveries." This article discusses how the truth is that consumer spending does not account for 70 percent of economic activity and is not the mainstay of the U. S. economy. Investment is! Business spending on capital goods, new technology, entrepreneurship, and productivity are more significant than consumer spending in sustaining the economy and a higher standard of living. In the business cycle, production and investment lead the economy into and out a recession; retail demand is the most stable component of economic activity.

In general German businesses remain confident and productive, "The business-cycle traffic lights still signal 'green.' " (nytimes article). A recent Confidence meter has just gone down from 111.3 to 111.0, this signals a steading of the business cycle or another recession, although most signs lead to the contrary.

This article discusses how the rise in oil prices will be one of the huge risk factors for another recession. High oil prices would be caused by a diminishing supply of oil. Higher prices of oil would cause inflation and since people would not be payed more, the economy would fall into another recession.

This article discusses the correlation between Reality TV and the economy. It discusses whether the resurgence of certain reality tv shows indicate that the economy is coming out of a recession.

This article warns economists that oil prices might well cause a recession. In just a month's time, oil prices have risen from 85 to 106$ a barrel. This article examines how that price rise might affect the economy.

This article talks about the recession going out in Spain and, more precisely, about the new challenges that the government is facing in order to reduce deficit and public debt, which by the way, has been downgraded by Moody's last week.