Tejvan Pettinger Definition Trade diversion occurs when tariff agreements cause imports to shift from low-cost countries to higher cost countries. Trade diversion is considered undesirable because it concentrates production in countries with a higher opportunity cost and lower comparative advantage. Trade diversion may occur when a country joins a...
Tejvan Pettinger Readers Question: When my class and I try to test the Marshall-Lerner condition it doesn’t always work. i.e. we assumed a country with just one export and one import and assumed their price elasticities added up to less than one. We gave each a...
Tejvan Pettinger Readers question: Keeping a lower deficit of the National Budget would benefit Americans as interest rates would remain stable and allow new businesses to grow. Would you say this statement is correct? In theory, there is an argument that a rising deficit can cause a...
Tejvan Pettinger A carbon tax aims to make individuals and firms pay the full social cost of carbon pollution. In theory, the tax will reduce pollution and encourage more environmentally friendly alternatives. However, critics argue a tax on carbon will increase costs for business and reduce...
I recently wrote an article about Inflation in Zimbabwe, which has recently passed the 100,000% causing widespread hardship for the population. Definition of Hyperinflation: A rapid and unchecked increase in the price level. Typically it may involve inflation rates of greater than 100% or greater than 1000% Hyperinflation...
General strategies Profit maximisation. One strategy is to ignore market share and try to work out the price for profit maximisation. In theory, this occurs at a price where MR=MC. In practice, it can be difficult to work this out precisely.Sales maximisation. Aiming to maximise sales...
Adam Tooze ( Book Review by Andrew Cornford) July 5, 2019 Review and reflections by Andrew Cornford,Geneva Finance Observatory. Tooze’s remarkably up-to date book on the Global Financial Crisis (GFC) is notable for a number of reasons: the extensiveness of its coverage, its emphasis on cross-border banking operations as...
C. P. Chandrasekhar The general election is over and a new government has been formed. But the campaign does not seem to end. More than an hour of Finance Minister Nirmala Sitharaman’s maiden Budget speech was largely devoted to underlining what she claimed were the remarkable...
Jayati Ghosh In terms of economic vision, it has always been difficult to make sense of the Narendra Modi government. The previous five years were hardly inspiring in economic terms: relatively little was done in terms of positive changes to address the major problems in the economy....
C. P. Chandrasekhar Facebook has launched a process that would lead to the creation of a new cryptocurrency, “Libra”, in the first half of 2020. Named after a unit of weight used in ancient Rome, Facebook hopes Libra would become the dominant measure of value...