We take it for granted that capitalists hire workers rather than workers hiring capital, but why? The main reason is the difficulty of diversifying labour, which means that workers ideally require some form of insurance to offset their concentration of … Continued
A group of us from Cambridge visited the resort of Sanya in China’s Hainan province, to take part in the annual Sanya Forum and launch our China Advisory Council * The Sanya Forum can be loosely thought of as a sort … Continued
China’s $3.9 trillion foreign exchange reserves were not planned but arose as a side effect of a strategy, now ended, of keeping the RMB exchange rate lower than the market would have set it. * Last week I visited the … Continued
There is a great need for infrastructure investment in both developed and developing countries. The former need both refurbishment of old assets and additional capacity. The latter need lots of new capacity, mainly arising from rapid urbanisation. There is also … Continued
Central banks, which are the most important financial institutions in most countries, have typically employed lots of economcs graduates in the past. They might benefit from adding a few finance graduates in future. Central banks have responsibility for controlling inflation … Continued
Money can mean physical cash, or the funds in a bank account or the flows of short term funding used by government and companies. No wonder finance can be confusing. * Finance is a subject bedevilled by jargon – words, … Continued
A global commodity, in economic or investment terms, is a standardised, homogeneous good that sells for the same price everywhere, subject to transport costs and tax. Oil is the classic global commodity. A chart from the IMF World Economic Outlook, just … Continued
Every year when the new MFin class starts, there is usually at least one person who asks the question: when will QE cause a big rise in inflation? The person is often from a hedge fund or trading background because … Continued
Physical money is becoming increasingly unnecessary in everyday life. Could it be heading for extinction and does it matter? I’ve just spent three days on holiday in the wonderful city of Copenhagen, using physical cash only once (when the ice cream … Continued
Countries that had similar levels of economic prosperity two or three generations ago have diverged spectacularly. Getting economic growth right makes a huge difference to the lives of people. Here are two examples: The US and Argentina, and South Korea … Continued
Africa’s economic potential is usually thought to lie in its natural resources. But the continent’s people may be its greatest strength. One of the few areas where long term forecasts have some value is demography, the study of population size and structure. … Continued
Economics students learn early in their microeconomics course that there is a desirable market condition called perfect competition, which consists of large numbers of more or less identical firms competing aggressively to meet the customer’s wants. The competition is so … Continued
Although the world appears a very turbulent place, financial volatility is currently rather low. How do we know this? One method widely used by commentators and market analysts is to refer to a measure of global risk aversion called the VIX. This post … Continued
Ahead of attending the Cambridge-Beijing Forum on market reforms in China, hosted by Cambridge Judge Business School next month in Beijing, I thought I should check the official Chinese government position. The Chinese Premier (head of the State Council, loosely … Continued
It is rare to meet your heroes. I wouldn’t exactly describe Professor Robert C. Merton as one of my heroes – I’m not sure I have any heroes actually – but he is somebody I admire greatly. He is probably … Continued