politico.eu article). As experienced market watchers would expect, U.K. gilts have been rallying (yields falling), which is not the usual narrative that one hears about ratings actions. This article explains why bond investors treat credit ratings for free-floating developed sovereign governments as sources of entertainment, and not investment guidance.
Tuesday, June 28, 2016
Sunday, June 26, 2016
Friday, June 24, 2016
Although I should be enjoying the Fête Nationale du Québec, I just wanted to update the chart above. I first used it in this article, which discussed U.K. inflation. The point is that VAT changes can have a very large one-shot effect on inflation, and at an order of magnitude similar to the effect of currency changes.
Wednesday, June 22, 2016
Sunday, June 19, 2016
The book Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik is aimed at a wide audience, and explains how economists look at the world. What works, and what does not. For non-economists, the discussion is at an understandable level, and hard to argue with. However, the book can be viewed as an apology for the state of mainstream economics, and this aspect is probably much less convincing for advanced readers.
Saturday, June 18, 2016
link to BBC explainer). This brief article explains in point form why I have largely avoided the topic. (UPDATE: Based on the results, I probably should have kept avoiding the topic...) I will return to the consequences of the vote once the dust settles.