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
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
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
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
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
Central banks have balance sheets like other banks and in theory their liabilities can exceed their assets, meaning they are insolvent. But they can always create new money so they can settle their debts. So can they really go bust? … Continued
Greece this week repaid €750m to the International Monetary Fund (IMF) which it funded by drawing on its SDR account at the IMF. This legitimate but unusual move caught many commentators by surprise and drew attention to the little known … Continued
This week it was reported (*) that the European Commission was investigating some southern EU nations to see if they had unfairly and illegally allowed banks to count deferred tax assets towards their capital. What does this mean and what … Continued
As an economist, over the years I’ve been asked two things repeatedly by people who hold economics in touchingly high regard. One is, which way will house prices move? And the other is, what will happen to the value of … Continued
The biggest topic in the global economy remains the oil price. It’s notoriously difficult to forecast commodity prices but how can we make sense of what would push the price up or down? A basic demand and supply framework gets … Continued
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
CDOs – collateralised debt obligations – were widely seen as the main villain of the financial crisis. CDO issuance peaked in 2007, collapsed in 2008 and is now gradually recovering. Should we be worried? * The latest Bank for International … 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
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