Economics Roundtable

May 2014 Payroll Employment

After 76 months, we finally got back to the prerecession level of payroll employment.

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Jobs

The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .


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Graph-of-the-Year Candidates

Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?

Brad DeLong favors the U.S. gdp gap.


Remember M1?

Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?


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EconModel

The Economics Roundtable is sponsored by EconModel.

The Classic Economic Models cover micro, macro, and financial markets.


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Economics Help

"Helping to Simplify Economics”


August 17, 2016, 5:23 am, 1665112

The lump of labour fallacy is the contention that the amount of work available in an economy is fixed.  But, most economists argue this belief there is a fixed number of jobs (or fixed number of hours) is usually incorrect.


August 5, 2016, 7:23 am, 1661185

Readers question: Firstly, I wholeheartedly praise the magnificent work done by you in exhibiting economic knowledge and demystifying it to us, the mediocre audience. I seriously question one fact that you presented about capitalism and how it “inevitably causes monopoly”. I grew really surprised and perplexed the moment I read ...


August 5, 2016, 5:23 am, 1661170

Is there any relationship between the base interest rate and the savings ratio?

In theory, interest rate can affect the decision to save in two ways.

Substitution effect of change in interest rate – lower interest rates reduce the incentive to save because of relatively poorer returns. There is a bigger ...


August 4, 2016, 9:23 am, 1660786

A look at the economic effects of a cut in the Central Bank base rate.

Summary: Lower interest rates make it cheaper to borrow. ...


August 4, 2016, 9:23 am, 1660785

Interest rates have been cut to a record low of 0.25% – essentially due to grim economic news from the short-run demand side shock of Brexit.

Economic theory states that in normal circumstances, lower interest rates should boost aggregate demand (AD).

To give a quick recap, lower interest rates should in theory:

Reduce ...


August 3, 2016, 5:23 am, 1660273

Readers question: What are the function of government in a capitalist economy?

In summary, the economic functions of a government include:

Protection of private property and maintaining law and order / national defence. Raising taxes. Providing public services not provided in a free market (e.g. health care, street lighting) Regulation of markets, e.g. regulations on ...


August 2, 2016, 5:23 am, 1659817

Wind farms seek to offer an environmentally sustainable source of energy that will help reduce our dependence on non-renewal fossil fuels. However, this clean and safe source of energy is controversial with many opposed to their use, often on grounds of aesthetics or lack of efficiency. This looks at pros ...


August 1, 2016, 7:23 am, 1659463

To what extent has the UK seen cuts in spending to the NHS and health care spending in recent years?

In short:

Actual spending on the NHS has increased. Real spending per capita has been broadly flat in recent years. As a share of the nations wealth, it is falling and it is true ...


July 29, 2016, 5:23 am, 1658522

The fundamental economic problem is one of scarcity. The basic question of economics becomes:

What to produce? How to produce? For whom to produce?

You could also add

When to produce?


July 27, 2016, 7:23 am, 1657636

One potential benefit of leaving the EU is the opportunity to radically change how we spend agricultural subsidies. The Common Agricultural Policy CAP is one of the great mistakes of the EU. Given the share of EU spending on agriculture, it is their flagship policy, yet the CAP has ...