Priyanka's Econ Blog

DANGER ZONES August 30, 2010

Filed under: Section 3 — priyanka821 @ 1:14 am

My biggest danger for the final IB exam is poor time management. I tend to spend too much time on one part of the question rather than equally distributing my time. I will have to improve this year. Another problem I have is misreading instructions. Sometimes I don’t follow the directions because I misunderstand the question since I don’t read it carefully. Lastly, sometimes I have ineffective evaluations because I do not know what to write and I write random things. I think I need to plan out my writing and read properly in order to improve my scores.

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The Wealthy and their Taxes August 26, 2010

Filed under: Section 3 — priyanka821 @ 6:22 am

US Treasury Secretary Timothy Geithner says the “misguided” tax cut policies of the Bush regime must end. Geithner says that the policies are to blame for the huge US fiscal deficits thus the tax cuts for the wealthy must end. Geithner emphasizes that tax cuts for those who make $250,000 over a year will only add to the deficit. However, the Republicans blame the Democrats for jeopardizing the economy further if the tax cuts are not extended. The Republicans claim that with the increase in tax will not increase government revenue and if the rich have money in their pockets they will stimulate the economy.

The Laffer Curve

Those who do not want the Bush tax cuts to expire without being renewed, argue that there is a point at which the government can be over taxing thus lowering their revenue. For instance as seen in the figure above, at T1 the tax rate is too high. This tax rate is a disincentive for workers and businesses to work hard or expand because all their extra profits are going to the government. However, at T2, the government is maximizing their revenue because everyone is working as hard as they and there are no disincentives.

 

The Lorenz curve demonstrates the degree of inequality in the distribution of income. If the rich were to have their Bush tax cuts suspended, predictions are that the curve

 

Google & Gay August 23, 2010

Filed under: Section 3 — priyanka821 @ 2:06 pm

In an effort to support and keep employees Google has decided to cover the extra costs gays and lesbians must pay. This is an effort to attain equity– the state of being fair and impartial. Guidelines for taxes are often thought to be unequal as people’s incomes vary significantly. Williams Institute estimates that homosexuals may pay over $1,100 more than married couples as employer-provided health benefits for domestic partners are counted as taxable income, if the partner is not considered a dependent.  Based on the article  Connie found, Google has decided to raise equity for its 21,000 homosexual employees by covering the extra cost they have to pay which their whose straight colleagues do not.  However, Google is not the first company to benefit its employees, yet their decision may encourage other firms who compete for the same employees to do the same. Google’s decision to pay the extra tax may help the macroeconomic goal of equity to be achieved. Though straight and married employees may not benefit from Google’s decision, the point of equity is to treat people differently in order to reach a just outcome.

For more information visit:

Google to Cover Gay Tax Inequality

 

Best Economy in the World? April 13, 2010

Filed under: Section 3 — priyanka821 @ 11:46 pm

Deep and I analyzed different economies of the world to determine what the best place to live would be. We determined between Luxembourg and India by using indicators of education rates, Gross Net Income per Purchasing Power Parity and standard of living as measured by the Human Development Index. Take a look at what we came up with :

1.Mine and Deep’s Voice Thread Analysis

2. Our Answer

 

Luxembourg Criteria Reflection

Filed under: Section 3 — priyanka821 @ 1:16 pm

After listening to the various presentations, I still hold my initial standpoint that Luxembourg would be a great place to live due to the education rates, GNI per PPP and standard of living (measured by Human Development Index). Another indicator I learned about from the presentations was economic stability as measured by inflation.

Inflation is when everything becomes more valuable except for money. This implies that the prices of goods and services increase over time.

From the presentations I watched, several said that a healthy inflation rate for an economy was 1-3%. One of the reasons that a healthy inflation rate is required is because it prevents deflation which can be more detrimental. Zimbabwe has an inflation rate of over 500%, and judging by its economy we can say that it is economically and politically very unsound.

As we can see in the Figure above, Luxembourg has maintained quite a healthy inflation rate over the last several years. From 2003 inflation rates have risen, however they did not sky-rocket or pass the optimum percentages. Only in 2009 we see an inflation rate that is about 3.5% which is undesirable. This is due to the global economic crisis which had economies suffering from various problems. The inflation rate as of now in 2010, seems to be very low, yet as the year progresses it is expected to rise. Since Luxembourg is also doing well with economic stability, I still believe it has the world’s best economy.

For more information please visit mine and Deep’s Voice Thread:

Best Economy in the World

 

OECD- Spain April 2, 2010

Filed under: Section 3 — priyanka821 @ 3:21 am

In the last decade the OECD nation, Spain has experienced a 3% growth in GDP and has made sincere efforts to GDP per capita of 98% of the EU average in 2004. This is due to the reforms in Spain that have created multiple job opportunities. However, “Low productivity growth, which during the last decade has been below the EU average, coupled with persistently high inflation is damaging competitiveness (Spain, 2004).”

The GDP per capita has been estimated to about $33,600 in 2007. Spain has effectively been keeping good house price statistics, for a range of areas and housing types which helps produce accurate statistics.

GDP per CAPITA IN SPAIN COMPARED TO OTHER NATIONS


As we can see from this chart, Spain does not rank very high in the GDP per Capita, it is in the middle .

GDP REAL GROWTH

As we can see from the information the real GDP increased in the last decade. However due to the economic recession, there has been a -3.60% in real GDP indicating that Spain will need to recover. The highest year of real GDP is 2007, with a growth of 3.90%.

Until 2008, Spain was regarded as one of the most dynamic economies in the EU and had attracted a lot of foreign investment. However in recent years, the major economy has been deteriorating. Even in 2010, while other OEDC’s have been growing, Spain remains in recession. In January, unemployment reached 18.8%, the highest level by far in the European Union, where the average is 9.5%. The inflated housing and construction industries indicate trouble. Spain must work on more reforms that will provide the unemployed with jobs and stimulate the economy.

Read more:

Spain’s economy

 

Japan’s Destruction March 29, 2010

Filed under: Section 3 — priyanka821 @ 12:21 pm

Japan was once considered to have one of the world’s most powerful economies, yet in the recent decades it has collapsed. Why can’t Japan rise again???

1. Exports fell- Japan used rely on export-led growth. However, productivity growth fell in the 1980s and the Japanese companies lost to South Korea and Vietnam as the people offered lower wages. Furthermore, in 1992, China and India’s economy’s started to develop.

2. DeflationThe government did not take action against deflation quickly enough. The drop in prices made life easier for those who worked, but decreased the incentives to spend.

3. Debt- The cumulative central and local government debt is about 180% of the GDP. The government spending of 2010 will be financed by new borrowing. By 2030, a third of the population will be over 65 which will reduce tax revenues but increase health care costs.

4. Women- The role of women seems to only extend to childcare. If more women entered the work force it would compensate for the pregnant women leaving it .

5. Budgeting- The new government cannot cut the deficit in the budget, as corrupted scandals are promised before the July elections for the upper house. The budget is only focused on the election. Atshushi Makahima, chief economist of Mizuho Research Institute says, “[the budget] does nothing for the corporate sector”. It does not help cut taxes, deregulate the service sector or aim to raise capital.

Japan in the middle of this turmoil, has not lost its optimism. It will climb its way out of this mess eventually.

For more information visit:

Building on a Japanese Crisis