Why nuclear?
Nuclear energy brings a lot of problems but it is a necessary part of the fight against climate change * I recently did a webinar about the planned new nuclear power station at Hinkley Point in Somerset, based on part … Continued
The IMF includes the RMB in the SDR basket
On 30 November 2015 the IMF voted to include the RMB (the Chinese “people’s currency” denominated in yuan) in the basket of currencies it uses to calculate the value of the Special Drawing Rights, from October 2016. This is largely … Continued
The true story of the Euro crisis
Most economist agree on the causes of the repeated crises of the Eurozone but that explanation is not the one that many governments, and the European Commission, want you to believe. * The problems of the Eurozone – bank failures, … Continued
Changes in the Federal Reserve’s measurement of short term interest rates
The Federal Reserve, the US central bank, is making some changes to the measurement and monitoring of the short term interest rate between banks, which is its key target for monetary policy, * Most central banks have goals such as low inflation … Continued
Cash remains king
Despite the increasing ease of electronic payments, cash remains popular in the UK, according to the Bank of England. * Money is anything that fulfils the three functions of money: i) a means of payment; ii) a unit of account; … Continued
Global foreign reserves are now falling
The foreign exchange reserves held by governments, having risen for over a decade, have recently fallen. This is mainly because they are being used, as intended, to protect against turbulence in financial markets that would otherwise hurt the developing economies. … Continued
Bank executive pay appears rigged against women
Research from the Federal Reserve Bank of New York finds evidence that women’s pay in banks is not just lower than that of men but the structure is different, in a way that best be explained by the view that … Continued
Is a market determined exchange rate always a good thing?
For years there has been pressure on China to allow its exchange rate to be determined by market forces rather than by the central bank. Now that seems closer to happening but it might mean a fall in the RMB, … Continued
Thinking about the risks to global economic growth
The fundamentals of global economic growth seem broadly positive but there are some reasons for caution, which can be understood through the savings-investment framework described in the previous blog. If savings are “too high” or investment “too low” then the … Continued
The elements of macro-finance
Macroeconomics is a complicated subject but it’s possible to understand quite a lot about the key questions in macro, and some of the policy challenges, by considering a few key concepts. This blog gives the elements of what ties macroeconomics to … Continued
The Chinese stock market mess may have a long term benefit
The Chinese stock market rise and fall is relatively unimportant for the Chinese and global economies but it has harmed the government’s reputation and may set back reform. But it if helps to kill the idea that the market can … Continued
When should we forgive debts?
Debt is a contract but sometimes contracts must be broken, either in the mutual interests of the contracting parties or in the interests of justice. But it’s hard to come up with general rules for this. The long-running arguments about … Continued
Why grading class participation is wrong
Giving marks for class participation is inefficient, unfair and offers an excuse for poor teaching. It is not allowed on the Cambridge MFin. * The majority of business schools include class participation in grading of students, typically 20-30% of the … Continued
Socially useful finance
Evidence from Nigeria shows that access to finance can help households reduce the impact of bad luck, reducing the fall in consumption that they suffer. * Yesterday I was part of a group discussing a draft research paper on the ethics … Continued
Should we be trying to change the world?
After introducing the MFin to a group of new joiners to Cambridge Judge Business School last week, one asked me whether we on the MFin were actually trying to change the finance industry? I think his unspoken assumption was that the … Continued