Being pro-business risks supporting incumbent firms against new entrants – this is not good. * Economists are generally in favour of markets as ways to organise activity. Introductory microeconomics teaches students about how a competitive market brings demand and supply together efficiently: consumers get choice in what to buy, and companies are forced to be… Continue Reading
Author Archives: Simon Taylor
Why an abrupt tightening of climate change policy may be our only hope
To spend time with climate scientists and energy economists these days is to take part in an increasingly tortuous mental conflict. Outwardly, scientists, policy analysts and academics hoping to influence policy must remain positive and optimistic, while keeping a strong sense of urgency. Privately, many are in despair at the lack of progress on cutting… Continue Reading
Some recent books that help explain the world
I see my job as trying to understand what is going on in the world of economics and finance, mainly by reading the research of others, and communicating it as best I can to others. It’s a privilege of my job that I have the time to read some of the fascinating books produced by… Continue Reading
Institutions seldom die
Recent news that the EBRD (European Bank for Reconstruction and Development) is thinking of lending to Sub-Saharan Africa shows how institutions evolve to find new goals rather than quietly close down. The EBRD, which I believe enjoys a high reputation in the development finance world, is a multilateral financial institution set up in 1991 to… Continue Reading
Could China’s population halve by the end of the century?
Demography, the study of population, is one of the few areas of the social sciences where long term predictions (over one or more decades) can have some value. This is because the dynamics of population growth depend on the current age structure (how many young versus old people), which is fixed in the short term,… Continue Reading
What has the world economy ever done for us? – EMBA elective reading 2 (*)
A lot of people in the richer economies appear doubtful that economic globalisation has been good for them. But there are hundreds of millions in the rest of the world for whom globalisation has been a critical part of their escape from poverty. * Globalisation means the greater international movement of goods and services, finance,… Continue Reading
Populism then and now – EMBA elective reading 1(*)
Consider the following list of political facts: high and rising income inequality; a perception that global market forces are leaving local people powerless; anti-immigrant feelings; blaming banks and monopolistic corporations; a perception that politics is dominated by the rich; anxiety about culture and values being eroded. This might well describe the US and some European… Continue Reading
Lost in (Russian) Music
At the age of eight, in a school with only 70 students, in a small village in the middle of Lincolnshire, a county not famous for much (except Sir Isaac Newton), and in a classroom with a view of a field of sheep (whose wool made the area wealthy in the the late middle ages),… Continue Reading
Perhaps money can buy you happiness
A lot of people believe that if they only had a bit more money – or perhaps a lot more money – then they would be happier. Many psychologists doubt this but some recent research on Swedish lottery winners suggests it is true. * Standard economic theory assumes that more of what you like is… Continue Reading
Is the US yield curve close to inverting – and does this mean a recession?
We have had a long period of economic growth since the great recession of 2009, leading many market commentators to fear a recession is overdue. One fairly reliable indicator of coming recession is an inverted yield curve – meaning that short term interest rates are above long term rates. This looks increasingly possible but is… Continue Reading
Are we heading for a world like that of “1984”?
I think the world may be fragmenting into increasingly separate economic and cultural regions, one dominated by China, another led but not dominated by the US, with other nations watching and wondering how best to position themselves. This reminds me of the novel 1984. * When people refer to a world like that in George… Continue Reading
Why hyperinflation is thankfully rare
Venezuela’s economic difficulties include very high inflation which threatens to become another example of hyperinflation. But what is this and why is it historically quite rare? * Inflation in Venezuela has recently been reported as reaching 46,000% with the IMF projecting it could reach 1,000,000% by the end of 2018. An article in The Spectator… Continue Reading
What’s the future for peer-to-peer lending?
P2P (peer-to-peer) lending is the biggest and most developed form of alternative finance. But does it have any enduring value to add in the financial system? * P2P lending platforms have sprung up in many countries since the global financial crisis, particularly in China, where they are now in crisis. According to research from the Cambridge… Continue Reading
Financial innovations behind the US real estate boom and bust of 2002-2008
As we commemorate the 10th anniversary of the Lehman Brothers bankruptcy, which marked the point where the US financial system truly moved into crisis, it’s worth reviewing the innovations that led to the real estate bubble that lay behind Lehman’s (and Bear Stearns’) problems: the separation of mortgage origination from who owned the debt; securitisation;… Continue Reading
Ten years of the Cambridge Master of Finance
The MFin is ten years old and I’m stepping down as director. A few thoughts on the last decade. * Nearly 11 years ago, I was asked to create a new post-experience master of finance degree for Cambridge University’s Judge Business School. It was an interesting challenge, with little guidance other than complying with the… Continue Reading