Economy Forward

The exchange rate has become a new talking point in the world in the middle of fast monetary tightening by central banks led by the US Fed and other leading central banks. For example, significant appreciation of the US Dollar in international currency markets these days has become a major stress in the global economy. Meanwhile, the sudden tumble of the Sterling Pound to historic low level in the last week (on 27 September) consequent to speculations created on the record tax cuts-based mini budget of the UK new government is a new noise in the global economy. The exchange rate is a day-to-day issue confronted in macroeconomic management in all developing countries from the inception of their central banks because of heavy dependence of the respective domestic economies on imports and foreign capital. However, the subject of the exchange rate has a wide theoretical and empirical literature in economics. Therefore, economics as well as politics of the exchange rate are highly confu...

The purpose of this article is to shed some light on risks of a global economic pandemic caused by central banks with the misconception of their ability to control inflation in the old monetary model (Quantity Theory) applicable to tribal economies. The world is confronting four decades high inflation with large supply side bottlenecks consequent to two major sources or external shocks, i.e., global Corona pandemic and Ukraine-Russia warfare whereas policy solutions initiated in the old fashioned models are seen ineffective and driving the global economy towards a pandemic ahead. How the Corona pandemic caused inflationary pressures and supply bottlenecks The Corona pandemic in 2020 and 2021 shattered the global economy as economists were not aware of macroeconomic management models in the presence of such health pandemics. The lockdowns and social distancing policies followed to fight the spread of the pandemic has caused lasting impacts on the global economy through the dis...

  The UK’s new fiscal policy launched in last week through the mini budget of the new government has shaken up the global community of monetary pandiths and central banks. The reason is the landmark cuts in tax rates and the cap on energy bills of households (or energy price guarantee). The new fiscal policy is known as growth plan for the UK economy. The new Chancellor in his first day of the office sacked the Treasury Secretary, who was credited for tight control of spending, by claiming for the focus on growth not fiscal discipline.   Accordingly, new fiscal responsibility is to return to GDP growth of 2.5% and control of the soaring cost of living. All Ministries have been requested to be growth units in respective areas. The UK is the global origin of the growth-focused fiscal policy school emerged on the philosophy of John Maynard Keynes, a renowned British Economist (1883-1946). Therefore, the present UK fiscal policy is no doubt driven by same school. Therefore...