Inflation

Inflation has taken the world by storm, as rises in oil prices, agriculture goods and energy costs over the past month fed through to consumer prices. In the UK, it has reached its highest level in Britain in 11 years; the pound sterling is declining as inflation accelerates. "the pound losses could signal markets are shifting from single-minded focus on higher inflation and beginning to look toward the potentially deleterious impact of higher rates, inflation and slower growth,'' Citigroup Inc. analysts including Tom Fitzpatrick, New York-based global head of currency strategy, wrote in a client note.

"Selling pressure seemed to ease after the State Bank of Vietnam raised an interest rate last week to 14 per cent from 12 per cent, its second rate rise in three weeks, as part of an increasingly aggressive monetary tightening." The Financial Times (19th June 2008) reports. Inflation in Vietnam has hit a record-high 25 per cent at the end of May, the highest level since 1993. This sudden rise threatens to hurt expansion in the region's second fastest growing economy.

A sudden surge in inflation is adverse for the economy; it brings economic growth to a stand-still, and a stagnant economy leads to lower wages and mass unemployment. Many governments take on an aggressive approach with their monetary policy to curb inflation, eg drastically raising interest rates. However, the question is: Is raising interest rates a misguided policy prescription to counter inflation?

Chik A5

The Bellerbys Economics Blog

Firstly, a very warm welcome to the Bellerbys Economics blog. This blog is primarily started with the notion of providing the students of Bellerbys College an interactive medium to not only share their views and opinions on economics (whatever they may be), but also to share any information gathered individually, so we would have a collective pool of resources through this blog. Hence, please feel free to leave a comment; if you come across any interesting websites/links, books, study-materials, or even the notification of any upcoming public lectures.

To kick-start this first entry, I would leave you guys with a list of economic books that you may want to read during your summer holidays, some of them may prove to be useful for your academic modules, others are just simply a fascinating read!

1. John Kay - The Truth about Markets (Allen Lane the Penguin Press)

2. Joseph E. Stiglitz - Globalization and its Discontents (Penguin Books)

3. Tim Harford - The Undercover Economist (Abacus)

4. R. H. Coase - The Firm, the Market and the Law (University of Chicago Press)

5. Steven D. Levitt & Stephen J. Dubner - Freakonomics (Penguin Books)

6. J. Williamson & C. Milner - The World Economy (Harvester Wheatsheaf)

There are numerous answers and thoeries to the fundamental question of WHAT economics is really about, however, there's still a missing piece to the puzzle; which is the question of WHY economics matters.

Thus, I would like to end today's entry by posing this question: Why does Economics Matter?

Chik A5