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Should we be losing sleep over the corporation tax NOT paid by big business?

One of the challenges of becoming an economist concerns developing a broad focus. This is particularly important as politicians and the media love to slip the blinkers on when it comes to debating economic issues. This has been highlighted recently by the lively debate caused by the revelations of the corporation tax certain organisations haven’t been paying!

While on the face of it not paying much corporation tax might seem like bad behaviour, corporation tax is just one of the many taxes that exist to alter economic incentives, redistribute income and fund the cost of merit and public goods. VAT on sales and income tax on salaries, bonuses and dividends to name a few. As economists (provided we do not allow our own politics to cloud our judgment) we should be more interested in the overall tax paid rather than on the amount of individual tax components.

We should also keep thinking about the circular flow of income and how tax changes alter the balance between injections and leakages. After all we should be focussed on increasing investment so that the productive capacity of the economy continues to rise leading to sustainable real growth in the economy. Even if companies don't pay any corporation tax at all (the Government could decide to abolish it!) and use the money instead to invest or create jobs, would that be such a bad thing? 

Taking a holistic economic view of the position, the issue is not about whether the taxes should be higher, it should be about whether economic activity can be improved by adjusting the taxes. This will only happen if the government can spend the tax revenue more wisely than the corporations would if they retained the value of the taxes within the business. Who would you back?

This week’s edition of EzyEconomics News, Jack Matthews takes a thought provoking look at this debate to try and present a more balanced and multi faceted analysis of this hot subject.

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Is People’s QE as insane as it sounds?

If you need some interesting material to kick start the term, then where better to start than People’s QE. Extensive news coverage since the idea was first floated means that many students have heard of it but how many actually know what it is or what it might achieve?

Jack Matthews focuses on this subject in this week’s EzyEconomics News. He provides some general context on QE, explains how the new proposal differs from previous flavours of QE and why some politicians believe just creating money to spend may not be as insane as it actually sounds. It might just provide a basis for future sustainable economic growth rather than stoking the fires of inflation. 

This lecture avoids getting drawn into the technical swamp that surrounds QE and focuses on making it accessible and relevant for A-level students. It achieves this by using the circular flow of income, production possibility frontiers and AD/AS analysis to explain People’s QE.

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The 2015 commodity market slump.

This week Jack Matthews looks at the recent slump in global commodity prices. Over the last 12 months oil and iron ore prices have declined by over 50%, copper by 21%, aluminium by 18%, sugar by 17% and coffee by almost 40% (why have none of my favourite coffee bars reduced their prices!).

Jack uses some basic macro and micro approaches to analyse and evaluate the causes of this slump - demand side weakness, supply side strength or a combination of the two.   He also considers the likely outlook for commodity prices. 

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The National Minimum Wage is dead long live the National Living Wage!

The new national living wage has been in the news. This is partly because the old national minimum wage has just risen, but also because the Government believes it will offset the negative aspects of changes to the UK welfare system.

This week’s edition of EzyEconomics News analyses and evaluates the economic impacts of the forthcoming introduction of the national living wage. It will consider whether the changes will simply lead to unemployment or whether our chancellor is a canny chap and that the end result will be inflation within target and higher growth and employment. 

 

 

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Achieving affordable housing and rents

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The Principal Agent Problem - Why football agents cause so much trouble.

The rumblings generated by the recent football transfer window have inspired this week’s edition of EzyEconomics News.

It looks at the impact the principal agent problem and misaligned incentives have on the market for professional footballers and houses.

Apart from considering the general background to this issue if also looks at some economic research (Rutherford, Springer and Yavas) that measured the possible extent of this distortion in the housing market.

 

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Extended Essays and Evalaution - Macro

This edition of EzyEconomics News considers how to approach extended essays and various evaluation techniques. It concludes with a suggested blueprint to make sure that effectively structured answers can be produced by students within the time allowed in exams.

Although it focuses on the AQA structure, the techniques and suggestions for structuring answers will work effectively across exam boards provided appropriate adjustments are made to reflect board specific time allocations.

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Analysis and Chains of Reasoning - Macro

This video focuses on key aspects of analysis. Although the video refers to the AQA exam board the skill is applicable to all exam boards. The only significant difference between boards is how they award marks for this skill.

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AQA Exam Technique - Evaluation

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AQA Exam Technique - Analysis and Chains of Reasoning

This video focuses on key aspects of good analysis and effective logical chains of reasoning.

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AQA AS Exam Structure

This outlines the structure of the AQA AS exams and provides some tips and strategies to help achieve top marks.

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EzyEconomics News - Inflation and the increasing risk of deflation

This week's edition looks at the basis of inflation measurement in the UK and the recent publicity concerning the decline in the UK's inflation rate.

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EzyEconomics News - the Autumn Statement and the economics of stamp duty

This week's edition looks at the Chancellor's Autumn Statement.  It highlights the main changes announced and showcases how to analyse and evaluate the changes in stamp duty.

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EzyEconomics News - the 2014 oil crisis

This week's edition looks at recent events in the oil market.  An analytical approach is used to compare recent price changes to movements over the last 10 years, explain the likely causes of the price movements using demand/supply analysis and consider why OPEC has decided not to reduce production.

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EzyEconomics News - financial markets and government debt

This is the final video on government debt. it explains the role of financial markets and the risks associated with the trading conditions relating to the UK's government debt.

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EzyEconomics News - arranging government loans

This is the 2nd of 3 videos on government debt. it explains the role of the Debt Management Office in arranging loans for the government and the important role of the second hand market that trades government debt after initial issue.

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EzyEconomics News - the deficit and government debt

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EzEconomics News - "the cost of living crisis"

The publication of the UK Labour Market Report last week re-energised the "cost of living crisis" debate. The report highlighted that for the first time in 5 years the annual rate of growth in earnings was higher than annual rate of growth in prices. This indicates that the economy might be returning to normality with purchasing power increasing rather than reducing as it has for the last 5 years.

This week's EzyEconomics News takes a look at the relationship between earnings and prices and why this will be a key political issue in the run up to the general election next year.

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