Policy makers should return to managed global exchange rates, fiscal stimulus to ease domestic debt burdens, and a continuation of QE in the EU.
Has economics become an illusion? Yes. Economic policy making is ‘but a walking shadow, a poor player that struts and frets his hour upon the stage’ of natural numbers, coupled with policymakers throwing ‘sixes and fives in games of chance’, as ‘wise folk know the conditions in every country’ – targets and trends, patterns and probabilities.All the policymakers are merely players; they have ‘their exits and their entrances sans teeth, sans eyes, san taste, sans everything’. There are no hard lines of distinction. Deflation may be temporary if capacity is absorbed by the real economy.
However, a finite measurable increase in sales – and thus output – cannot be secured by small marginal reductions in price. Some industries are depressed and household balance sheets are insolvent.
US dollar strength against the Euro is due to deflation in Europe and deflation in Europe is driving up the US dollar. Policymakers ‘cannot sleep’; with their ‘eyes severe, and beard of formal cut, full of wise saws, and modern instances’ they are actors in a Shakespearean play of infinite length as big data, social media and the Internet of Things transform real lives.
In a deflationary period, a mismatch in prices and quantities occurs as companies and consumers both fear to spoil the chance of getting a better price later. Competition breaks down and imperfections – for example, short term working, poverty and inequality, exchange rate volatility, competitive devaluations and lower wages – emerge with lasting impact.
Without China’s continued growth, there is no economy in the world large enough to absorb further contraction in the EU and the US. Only those who believe that economic policy making is akin to a Shakespearean play ‘full of strange oaths’ will enjoy the summer recess.
But action is required now if deflation’s short period is to be defeated, best illustrated by the life of the mayfly than that of an elephant.
A menu of policies should include a return to managed global exchange rates for a period of time, fiscal stimulus in order to ease domestic debt burdens, and a continuation of QE in the EU. Falling prices are little comfort for the indebted householders and unemployed. It is better to end austerity now than regret doing economics by numbers.
The authror is a visiting fellow at Manchester Business School, and formerly the chairperson of the Irish and Jersey Competition Authorities.
Student Reviews
Alliance Manchester Business School
The course structure
The course is well structured and organised effectively. Every subject in the field of international business is covered in the course module. The lectures are of excellent quality and are simple to comprehend.
· The lecturers are also very knowledgeable about their subjects, quite thorough, and very helpful when it comes to answering questions and giving additional information on their subject.
· Students can easily access the assignment, lectures, and seminar content thanks to the blackboard technology. Students also benefit greatly from the reading materials that are posted on the blackboard.
Practical Business Experience
3 live consulting projects, Non-for-Profit consulting, Commercial Business Consulting and International Business Consulting projects within the programme, provide us with a great opportunity to exposure to the real business world.
Quality education and student support system
What I love about The University of Manchester is the fact that, alongside with the excellent education it provides, it also takes care of the well being of the students and supports them throughout the year.
Endless networking opportunities!
I would 100% recommend this university! Throughout my 4 years there I received endless guidance and support from the amazing staff; both professors and student support teams. A particular highlight was the insightful guest lectures, networking employability events and career meetings, these significantly helped in preparing me for my future career.
Fantastic University!
AMBS provides excellent teaching and outstanding facilities, both of which combine to make a great learning experience.
The teaching staff make sure we have plenty of resources to aid our learning, and always make sure we are making the most of our studies.
The business building itself is the most impressive on campus, and provides plenty of places in which we can work.
Great facilities and support
It is a great university that provides extra support for its students. The teachers are very helpful and willing to support you and the environment is just great. It offers good facilities, study spaces and workshops that can help in your experience as a student.
New building, innovative teaching methods
The staff is very well prepared and pays a lot of attention to the student. The building is new and full of updated facilities. Teachers propose intriguing learning methods and there are plenty of international students to learn from.
It's an amazing University!
I think that AMBS is among the most well rounded universities in the UK. The cultural diversity among the students as well as the faculty is what catches my attention the most. The campus is very new and beautiful and has all kinds of facilities.
Quality and QS World Ranking
AMBS has the diverse set of batch where the students get the opportunity to mingle with the students coming from different parts of the world. The group of faculty is also very diverse having different skill set. I'd always recommend it for studying masters in business analytics.
