Category: Economy

Governments use spending and tax policies to steer the economy, but their impact isn’t always predictable. The fiscal multiplier effect determines how much a change in policy amplifies or diminishes GDP growth—and it varies depending on whether the economy is in a recession or expansion. During downturns, multipliers tend to be stronger, making stimulus more…

Governments worldwide implemented more than 2,500 industrial policy measures in 2023. These interventions have reached record levels, and more than two-thirds of them affect global trade patterns. The policy surge comes mainly from China, the European Union, and the United States, which account for almost half of all new industrial measures. A dramatic change toward…

Monthly visits to generative artificial intelligence tools have reached nearly 3 billion worldwide, yet the technology’s adoption shows remarkable disparities between economies. Middle-income countries generate more than 50% of this traffic, while low-income economies barely reach 1%. The gap goes well beyond AI accessibility. Broadband penetration tells a concerning story – Least Developed Countries have…

Denmark, Finland, and Sweden are the only Nordic countries that understand how human capital propels economic growth. These nations have surpassed the EU’s ambitious 3% R&D spending standard. Their achievement represents more than mere statistics. Human capital significantly affects economic prosperity. Studies reveal that regional GDP per capita can rise by 1.05% with just a…

Inflation expectations shape wages, pricing, and monetary policy, yet few understand how they’re formed. When businesses and consumers misjudge future inflation, it can lead to wage-price spirals, misaligned investments, and ineffective policy responses. Traditional models, like rational and adaptive expectations, attempt to explain how people forecast inflation. But which one truly reflects actual market behavior?…

Economic downturns can devastate businesses, erode jobs, and trigger widespread uncertainty. But should economies be left to self-correct, or do they require government intervention to recover? Classical economists trust market forces to restore balance, believing that flexible prices and competition will fix downturns over time. However, Keynesian economists argue that waiting is risky, as demand…

Imagine the economy as a living, breathing organism, constantly circulating lifeblood—money and resources—through its veins. At the core of this intricate system lies the circular flow of income, a model that captures the endless dance between households, firms, governments, and the global market. This isn’t just a theoretical concept; it’s the invisible force shaping your…

The Aggregate Demand-Aggregate Supply (AD-AS) model is the backbone of macroeconomic analysis. It captures the fluctuations in output, employment, and inflation, making it essential for understanding economic cycles. At its core, the model explains how aggregate demand interacts with aggregate supply to determine price levels and national output. Shifts in either component can trigger expansions,…

Macroeconomics studies large-scale economic forces that shape nations and influence global markets. It focuses on broad indicators such as GDP, inflation, and employment to assess financial health and guide decision-making. Governments and central banks rely on macroeconomic analysis to design policies promoting growth, controlling inflation, and stabilising financial markets. In modern economies, understanding macroeconomics means…

Economic forecasting has only been right about 40% of the time, which shows why we need better ways to predict market trends. Machine learning has become a pioneering alternative to traditional economic modeling. This new approach challenges the longtime dominance of Dynamic Stochastic General Equilibrium (DSGE) models. DSGE models have been the foundation of macroeconomic…