The document discusses supply-side competitiveness and growth in the UK economy. It identifies several key supply-side challenges facing the UK, including a persistent productivity gap, high youth unemployment, low investment and research spending. It also discusses some potential policies to boost long-run supply-side growth, such as improving labour supply and mobility through immigration, investing in skills and training to boost productivity, and improving infrastructure to reduce bottlenecks. The effectiveness of these policies depends on overcoming challenges such as political opposition, significant costs, and long timeframes to see results.
One of the most significant roles of a modern government is to ensure that the economy performs to its full capacity.
The government has to consider the performance indicators like inflation, unemployment and economic growth and devise policies to achieve their aims. In this session we will consider the options that fall into the fiscal and monetary policy
portfolio.
AS Macro - Unemployment and the Labour Markettutor2u
Unemployment is one of the major macro-economic
performance indicators. The more unemployed people
in our economy the more we are producing below our
potential, less income is earned (reducing saving,
consumption and tax revenue) and there is a negative
impact on the welfare of society.
One of the most significant roles of a modern government is to ensure that the economy performs to its full capacity.
The government has to consider the performance indicators like inflation, unemployment and economic growth and devise policies to achieve their aims. In this session we will consider the options that fall into the fiscal and monetary policy
portfolio.
AS Macro - Unemployment and the Labour Markettutor2u
Unemployment is one of the major macro-economic
performance indicators. The more unemployed people
in our economy the more we are producing below our
potential, less income is earned (reducing saving,
consumption and tax revenue) and there is a negative
impact on the welfare of society.
Here is a recording on key aspects of Keynesian economics applied to current policy issues for the UK and other countries.
An understanding of Keynesian ideas can be helpful in evaluating macroeconomic stability in terms of prices, jobs and incomes.
Keynesians believe that free markets are volatile and not always self-correcting in the event of an external shock
The free-market system is prone to lengthy periods of recession & depression
Economies can remain stuck in an “underemployment” equilibrium
In a world of stagnation or depression, direct state intervention may be essential to restore confidence and lift demand.
Keynes was one of the first economists to criticise the profession for adhering to unrealistic assumptions
AS Macro Question - Falling UnemploymentEton College
This is a revision resource for students taking the EdExcel unit 2 economics paper - suggesting a way of approaching the 30 mark question and scoring high marks for evaluation.
Falling unemployment, declining inflation and stronger growth – a better picture for the UK in 2014? But can it last?
After several years of weak expansion, the UK economy is enjoying a relatively strong cyclical recovery
Can the UK continued to experience a recovery in output, jobs and investment?
Will the recovery be balanced and sustainable?
How resilient is the UK? What are some of the major threats to growth in 2014 and beyond?
This is a suggested answer to an exam-style question (for AS macro) on whether the Bank of England should start to raise interest rates to help sustain the UK economic recovery.
AS Macro Economics: Economic Cycle and Objectivestutor2u
In this session we are going to focus on the performance of
the UK economy over recent years and see how economic
growth appears to follow a cyclical pattern
Here is a recording on key aspects of Keynesian economics applied to current policy issues for the UK and other countries.
An understanding of Keynesian ideas can be helpful in evaluating macroeconomic stability in terms of prices, jobs and incomes.
Keynesians believe that free markets are volatile and not always self-correcting in the event of an external shock
The free-market system is prone to lengthy periods of recession & depression
Economies can remain stuck in an “underemployment” equilibrium
In a world of stagnation or depression, direct state intervention may be essential to restore confidence and lift demand.
Keynes was one of the first economists to criticise the profession for adhering to unrealistic assumptions
AS Macro Question - Falling UnemploymentEton College
This is a revision resource for students taking the EdExcel unit 2 economics paper - suggesting a way of approaching the 30 mark question and scoring high marks for evaluation.
Falling unemployment, declining inflation and stronger growth – a better picture for the UK in 2014? But can it last?
After several years of weak expansion, the UK economy is enjoying a relatively strong cyclical recovery
Can the UK continued to experience a recovery in output, jobs and investment?
Will the recovery be balanced and sustainable?
How resilient is the UK? What are some of the major threats to growth in 2014 and beyond?
This is a suggested answer to an exam-style question (for AS macro) on whether the Bank of England should start to raise interest rates to help sustain the UK economic recovery.
AS Macro Economics: Economic Cycle and Objectivestutor2u
In this session we are going to focus on the performance of
the UK economy over recent years and see how economic
growth appears to follow a cyclical pattern
Macro-labour linkages are being studied on the basis of an unemployment flow model with a macro-economic closure, using a reduced-form New Keynesian Phillips Curve. The presentation gives an overview of the main model mechanisms and estimation resutls. In a policy section, the working of tighter employment protection and more rigid wage developments are being presented.
The aim of this study is to explore the structure and the dynamics of regional labour markets in terms of gross job and worker flows. The regional turnover rates are related to macroeconomic indicators, demographic factors and industry-structure by employing the data of 85 Finnish regions over the period of 1988–1997. The results imply that different factors can have similar effects on net changes in employment and unemployment by various means of affecting gross changes.
ETT Jonathan Chaloff jmc Riga 11 5-15 Macro-Economic Aspects of Peoples Mob...euromonde
Macro Economic Aspects Of People's Mobility
Mr. Jonathan Chaloff, Administrator, International Migration Division,
Directorate for Employment, Labour and Social Affairs, OECD
http://euromonde.eu
Preparing for the AS Economics Macro Paper 2012tutor2u
This comprehensive revision presentation by tutor2u Co-founder Geoff Riley is designed to provide support for AS Economics students (and their teachers) in the final stages of their revision for the Unit 2 paper on macroeconomics.
In these slides we discuss about Economic Growth & Business Cycle like GDP, Real GDP, Ways of measuring GDP, GNP, Aggregate Demand and Supply, Stages and Shape of Business Cycle, Growth / Expansion, Peak / Boom, Recession, Depression
AS Macro: The Effectiveness of UK Macro-Economic Policiestutor2u
We have considered the three key areas of macroeconomic policy – monetary policy, fiscal policy and supply-side policies.
In the longest essay questions on data response papers examiners often ask students to consider how effective these are when they are used to manage the economy. How can we judge whether the performance of the economy is improving as a result of them? In this session we will remember how to assess macroeconomic performance, think about some of the issues with measuring growth,
and focus on ways to evaluate the effectiveness of different policies
Presentation given by Graeme Harrison, Associate Director of Oxford Economics to the NICVA Centre for Economic Empowerment (CEE) conference on Working Poverty, 28 May 2014.
In this revision presentation we look at recent trends in UK trade union membership, consider how trade unions can affect both pay and employment and challenge the textbook view that union-negotiated pay increases inevitably have negative consequences for employment.
In this revision presentation we cover key examples of pure and quasi public goods and consider the arguments for and against an increase in government spending on public goods.
Poverty Reduction Policies in Low Income Countriestutor2u
This revision presentation covers some of the main causes of continued high levels of extreme poverty in low and middle income countries and considers a range of pro-poor government interventions designed to increase productivity and regular employment and waged income in formal labour markets.
You don’t need to produce a lot of evidence in your macroeconomics exams but knowing some basic and key facts and figures can make your answers stand out from the crowd! Here is a quickfire journey through twenty important economic numbers that won’t change before the exam – use them to support your answer and impress the examiner!
Microeconomics - Great Applied Examples for Examstutor2u
In this presentation, I have chosen loads of current examples that you might want to use as context in your microeconomics exams. We look at examples from different market structures, recent mergers and takeovers, the world's most valuable companies, the largest employer, unicorn business, de-mergers, the biggest initial public offerings (IPOs) and much else. Hopefully a useful video to go through to add some super examples into your revision notes.
This revision presentation considers the variety of stakeholders impacted by business activity. How will a change in objectives, such as a move from profit maximisation to revenue maximisation have an effect on different stakeholders?
This revision presentation looks at profit satisficing as an alternative objective for businesses. Why might firms satisfice? What are some of the possible consequences for economic welfare and efficiency?
In this short revision video, we look at the substantial productivity gap between the UK and many of the UK’s major competitor countries.
Paul Krugman, the Nobel Prize-winning economist said twenty fives years ago that “Productivity isn’t everything, but in the long run it is almost everything,”
In this presentation we consider the theory of wage-setting with a monopsony employer and the possible impact that a trade union might have on wages and employment. We also look at efficiency wage theory and mutual gains from pay bargaining between stakeholders.
For many economists, the labour market is the most important market of all to study, analyse and evaluate. Like product markets for goods and services, labour markets can also fail. The main types of labour market failure are labour immobility including skills gaps, inequality, disincentives to be economically active, labour market discrimination and the effects of monopsony power of employers.
Updated revision presentation on aspects of behavioural economics and topical issues where behavioural nudges are being used to change the choices of consumers and businesses.
5. Reminder of key objectives of macroeconomic policy
Price Stability – i.e. Low
Positive Inflation
A Sustainable Growth of
Real GDP (National
Output)
Falling Unemployment /
Full Employment?
Higher Average Living
Standards (Income per
capita)
Improved Global
Competitiveness / Trade
Balance
A More Equitable
Distribution of Income
and Wealth
6. Reminder of key objectives of macroeconomic policy
Price Stability – i.e. Low
Positive Inflation
A Sustainable Growth of
Real GDP (National
Output)
Falling Unemployment /
Full Employment?
Higher Average Living
Standards (Income per
capita)
Improved Global
Competitiveness / Trade
Balance
A More Equitable
Distribution of Income
and Wealth
7. Reminder of key objectives of macroeconomic policy
Price Stability – i.e. Low
Positive Inflation
A Sustainable Growth of
Real GDP (National
Output)
Falling Unemployment /
Full Employment?
Higher Average Living
Standards (Income per
capita)
Improved Global
Competitiveness / Trade
Balance
A More Equitable
Distribution of Income
and Wealth
8. Reminder of key objectives of macroeconomic policy
Price Stability – i.e. Low
Positive Inflation
A Sustainable Growth of
Real GDP (National
Output)
Falling Unemployment /
Full Employment?
Higher Average Living
Standards (Income per
capita)
Improved Global
Competitiveness / Trade
Balance
A More Equitable
Distribution of Income
and Wealth
9. Reminder of key objectives of macroeconomic policy
Price Stability – i.e. Low
Positive Inflation
A Sustainable Growth of
Real GDP (National
Output)
Falling Unemployment /
Full Employment?
Higher Average Living
Standards (Income per
capita)
Improved Global
Competitiveness / Trade
Balance
A More Equitable
Distribution of Income
and Wealth
10. Reminder of key objectives of macroeconomic policy
Price Stability – i.e. Low
Positive Inflation
A Sustainable Growth of
Real GDP (National
Output)
Falling Unemployment /
Full Employment?
Higher Average Living
Standards (Income per
capita)
Improved Global
Competitiveness / Trade
Balance
A More Equitable
Distribution of Income
and Wealth
11.
12.
13.
14.
15.
16.
17. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
18. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
19. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
20. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
21. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
22. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
23. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
24. Key Supply-Side Challenges for the UK Economy
Persistent
Productivity Gap
High youth
unemployment
Deep regional
economic divide
Structural trade
deficit (BoP)
Low trend growth
of GDP
Rise of Emerging
Nations
Low investment &
research spending
Rising inequality /
relative poverty
27. Long run supply side growth
• Analysis - Identify 3 policies
that might boost the supply
side of the UK economy in
the long term
• Evaluation – What factors
might limit the effectiveness
of your suggestions?
28. Improving labour supply
Analysis
• A labour shortage is
often a reason limiting
the economy’s scope
for growth
• Additional labour can
be obtained from
overseas, or by boosting
participation rates of
the native UK labour
force.
Evaluation
• Immigration is politically
controversial – depends
on nature of migration
• Tax and welfare systems
can create disincentives
for people to take paid
work
29.
30. Longer Term Dynamic Effects of Migration
Labour Market Fiscal Effects
Consumption Competitiveness
Waves of inward migration can have structural effects on a
country’s macroeconomic performance
Increase in the
labour supply
which might cause
lower unit labour
costs for host
country
Inward migration
increases pressure
on govt spending
but will also lead
to rising tax
revenues
• Human capital
helps generate
new ideas
• Many migrants
start businesses –
possible exporters
• Knowledge
spillovers
• Increase in
population size
• Rising demand
for public services
• If housing stock
is fixed, can lead
to higher prices
and rising rents
31. Longer Term Dynamic Effects of Migration
Labour Market Fiscal Effects
Consumption Competitiveness
Waves of inward migration can have structural effects on a
country’s macroeconomic performance
Increase in the
labour supply
which might cause
lower unit labour
costs for host
country
Inward migration
increases pressure
on govt spending
but will also lead
to rising tax
revenues
• Human capital
helps generate
new ideas
• Many migrants
start businesses –
possible exporters
• Knowledge
spillovers
• Increase in
population size
• Rising demand
for public services
• If housing stock
is fixed, can lead
to higher prices
and rising rents
32. Longer Term Dynamic Effects of Migration
Labour Market Fiscal Effects
Consumption Competitiveness
Waves of inward migration can have structural effects on a
country’s macroeconomic performance
Increase in the
labour supply
which might cause
lower unit labour
costs for host
country
Inward migration
increases pressure
on govt spending
but will also lead
to rising tax
revenues
• Human capital
helps generate
new ideas
• Many migrants
start businesses –
possible exporters
• Knowledge
spillovers
• Increase in
population size
• Rising demand
for public services
• If housing stock
is fixed, can lead
to higher prices
and rising rents
33. Longer Term Dynamic Effects of Migration
Labour Market Fiscal Effects
Consumption Competitiveness
Waves of inward migration can have structural effects on a
country’s macroeconomic performance
Increase in the
labour supply
which might cause
lower unit labour
costs for host
country
Inward migration
increases pressure
on govt spending
but will also lead
to rising tax
revenues
• Human capital
helps generate
new ideas
• Many migrants
start businesses –
possible exporters
• Knowledge
spillovers
• Increase in
population size
• Rising demand
for public services
• If housing stock
is fixed, can lead
to higher prices
and rising rents
34. Longer Term Dynamic Effects of Migration
Labour Market Fiscal Effects
Consumption Competitiveness
Waves of inward migration can have structural effects on a
country’s macroeconomic performance
Increase in the
labour supply
which might cause
lower unit labour
costs for host
country
Inward migration
increases pressure
on govt spending
but will also lead
to rising tax
revenues
• Human capital
helps generate
new ideas
• Many migrants
start businesses –
possible exporters
• Knowledge
spillovers
• Increase in
population size
• Rising demand
for public services
• If housing stock
is fixed, can lead
to higher prices
and rising rents
35. Improving labour mobility
Analysis
• The UK housing market
often makes it difficult
to overcome problems
of geographical
immobility of labour
• Big differences in house
prices and poor
transport links prevent
labour movement
Evaluation
• Tackling the housing
market and transport
infrastructure problems
Britain faces is a huge task
• Interventions are often
hugely expensive with
significant time lag
problems
36. Improving
labour productivity
Analysis
• It’s vitally important that the
UK doesn’t just have more
labour, but better labour –
that can produce higher
value output
• Investment in skills, training
and equipment are all
possible routes to higher
productivity
Evaluation
• This is a long term
problem that can take a
generation to tackle.
• Who is responsible?
Firms or government?
• Who should pay?
37. Improving
innovation and enterprise
Analysis
• By creating the conditions in
which innovation and
enterprise thrive, new
businesses will start-
up, new products will be
developed and new markets
pioneered
• The greater the
incentive, the bigger the
gains
Evaluation
• Tax cuts to incentivise
entrepreneurial wealth
might cause increases in
inequality.
• Innovation often has high
failure rates, making it
hard for governments to
‘pick winners’.
38. Improving infrastructure
Analysis
• Improved infrastructure
could help reduce the
‘bottlenecks’ that prevent
the economy from
expanding
• Improved transport can aid
labour mobility, cheaper
energy reduces costs across
the economy.
Evaluation
• Transport and energy
infrastructure is expensive
and are subject to
significant time-lag effects.
• Infrastructure provision
sometimes conflicts with
other policy goals, such as
reducing environmental
impacts
39. Economic Importance of Infrastructure Investment
Examples of UK infrastructure projects
• 2nd Forth Road Bridge
• Cross Rail and the High Speed Rail project
• London Gateway Port & new London super sewer
• Nuclear power plants including Hinkley Point
Economic significance of infrastructure
• Potentially high multiplier effects from multi-
billion investment projects – boosts AD and jobs
• Lack of infrastructure may discourage FDI
• Increases the capital stock / productive potential
40. Economic Importance of Infrastructure Investment
Examples of UK infrastructure projects
• 2nd Forth Road Bridge
• Cross Rail and the High Speed Rail project
• London Gateway Port & new London super sewer
• Nuclear power plants including Hinkley Point
Economic significance of infrastructure
• Potentially high multiplier effects from multi-
billion investment projects – boosts AD and jobs
• Lack of infrastructure may discourage FDI
• Increases the capital stock / productive potential
41. Examples of UK Government Supply-Side Policies
Privatisation of
Royal Mail
Patent Box
Incentive
Modern
Apprenticeships
Welfare Caps /
Reforms
Shale Gas Tax
Cuts
Corporation Tax
Cuts
National
Infrastructure
Plan
Launch of Green
Investment
Bank
42. To what extent could supply side improvements
improve UK competitiveness?
Knowledge
Application
• Refer to supply side problems that raise UK business costs
and restrict competitiveness
Analysis
• Identify supply side policies and explain how they might
work. Use an AS/AD diagram to show the impact of changes
in AS on real income, and especially the price level.
Evaluation
• Discuss the problems and limitations of supply side policies.
Introduce other factors that influence competitiveness,
such as the exchange rate.