Intro: Economic distortions often only become visible after they have already caused some economic distress, but there are a number of things to look at to get a sense of whether growth is sustainable or at risk of coming to an abrupt end. Negative Real Interest Rates: If policy rates are set below inflation this…
Intro: Despite being very closely-watched economic indicators, unemployment figures lag behind actual economic activity and therefore give little insight into future growth. It is often even a contrarian indicator meaning that elevated levels of unemployment tend to indicate stronger-than-usual economic growth. While it is true that real GDP growth is a factor of how many…
Intro: Policies that are fundamentally positive in the long term can undermine growth in the short term by creating economic shocks that require large-scale readjustments by businesses leading to an initial decline in overall output before the recovery takes effect. Fiscal austerity measures are a prime example of where productivity-enhancing measures often expose the extent…
Intro: Terms of trade refer to the price of a countries exports relative to its imports. Oil price increases benefit oil exporting countries by allowing a greater amount of imports for any given level of exports. This allows more inputs to the domestic production process to be purchased from overseas, thus benefiting the profitability of…