Posts Tagged ‘econ70.com’

Yields on Greek & Spanish bonds (credit downgrade looms) are up; Irish bond yields are also up to 8.4%, which, in real terms is over 10%. Something is going to give because that is unsustainable when real GDP is CONTRACTING at a 2% rate. In the old days currency devaluation & debt restructuring would have…

2010 NOV U.S. retail sales up 0.8% but Autos down 0.8%, Furniture/appliances down 0.5%, Electronics down 0.6% & Building materials down 0.1%. What was up? Groceries 0.8% Gas 4.0% Drug stores 0.9% & Clothing 2.7% What we had was a surge in “necessities” which rose 2%, the largest increase since Nov 09. Either there is…

Some economists say higher income taxes keep people from working. This is the substitution effect–because leisure becomes relatively cheaper people consume more of it. But higher taxes also reduce after-tax income so one might work more due to higher taxes. This is the income effect. The question is whether within certain ranges of tax rates,…

The risk of front-loaded fiscal austerity in the UK is that big cuts in spending, subsidies, public employment & increases in taxes will have a recessionary effect on an anemically recovering economy. A credible early commitment to gradual fiscal consolidation phased in in a back-loaded manner would have reduced the risk of a double-dip while…