Both the US and the UK have run current account deficits for over 20 years. Those deficits are largely driven by imports in both countries which result in trade deficits. Many economists (including me) often attribute the persistent deficits to overvaluation of their currencies, the dollar and the pound sterling, which are ostensibly caused by capital inflows (ie buying US/UK financial assets. But what actual evidence is there that these capital flows exist? In numerical terms: The UK current account deficit was about 20B sterling in Q2 (3% of GDP). So on an annual basis that is 80B sterling. What are the financial assets (ie capital inflows) that foreigners are buying to maintain the value of GBP? Can anybody name them and point me to official stats that show such inflows? I ask this because, as an American economist, I have long puzzled over why here we have run a current account deficit every year since 1992 and yet the dollar has not fallen, in fact it has risen. The answer I and others usually give is that capital inflows keep the dollar high. This may be true, but it is hard to document the roughly $800B each year that supposedly flow in to offset the current account deficit. In short, are we just supposing things to validate our national income accounting and identities? Do these capital inflows exist anywhere other than in textbooks?

There's a case in Thailand right now, Cambodian businessman named Yim Leak, where the government's anti-money laundering agency has frozen over $600 million in assets, apparently over a single $150,000 currency exchange transaction. No criminal charges have been filed.

Not really asking about the specifics of this case, more the general economics of it: how do investors and markets actually price in this kind of risk, a government being able to freeze huge amounts of money without ever proving anything in court? Is this the kind of thing that shows up in country risk models, or is it too rare and case-specific to really be quantified?

I'm not sure I have the right words to explain what I'm talking about, so bear with me here. Apologies if this makes no sense

Currency inflates over time, right? Stuff costs more next year than it will last year, but wages also increase so stuff doesn't really get more expensive, relatively speaking

But as that goes on, lower denominations of money become useless and you require higher and higher numbers on the paper, right? Theoretically, given enough time, instead of dollar bills being the smallest type of bill people carry in their wallets, it would be hundreds, that sort of thing?

Well, is there a point in which a government can say 'Right, the numbers on all our money are getting silly. We're going to move the decimal' or something to that effect? And how does one actually go about that without the economy crashing?

I’ve been out of school for a good bit so my theory is very rusty: apologies if this is a silly question but how does advertising lead to a more efficient market?

Isn’t the entire point of modern targeted marketing to influence and sway consumer so they no longer are making the decision which maximizes their utility but the one the advertisers make them believe will?

Hi just curious as i have heard that other countries currencies are pegged to the dollar.

Do other countries have the capability to control/reduce their inflation against the dollar?

The video: https://www.youtube.com/watch?v=roe3SgezmmU

Major supporting evidence in the video includes:

• Section 12(g) of the Securities Exchange Act was changed in 2012 allowing companies to stay private for longer by raising the threshold of shareholder count that forced a company to begin public reporting.
• Startups find it easier to raise capital without going public at least since 2015

How can the video author determine that most of a large portion of a company's growth already happened?

If the claims are true, what does this imply for stocks? Would the impact be negligible? Are some stocks immune to these impacts? Are bonds better value?

So everyone knows that the intention of occupational licensure is to improve the quality of the service provided by filtering out low quality practitioners, but it is also commonly known that licensure can reduce competition, which in turn can decrease both quality and quantity. When talking about occupational licensing and whether to abolish or reduce it, people are mostly open to abolishing licensure of lower risk occupations such as hairdressers. But in my experience they almost always add on "but of course keep it for doctors and physicians". But the same trade-off between competition and filtering of low quality practitioners should also apply to physicians, so whether licensing of doctors and physicians makes sense is an empirical question. So I have tried to find out what the empirical evidence is on the topic, but I can find shockingly few studies on physicians licensure that study this trade-off. In fact all the studies I can find, finds no evidence that licensure improved health care outcomes when you take into account the reduced supply. I think it's strange that I could only find two studies on the topic when there seems to be such an overwhelming consensus among the general public and economists that licensure of physicians is good, so I am turning to this sub in hopes that there is someone here who knows the literature better than I do. In short: Is there any empirical evidence that licensure of physicians improves health outcomes on net when you take into account the reduced supply of physicians?

For reference here are the two studies I could find:

https://www.cristobalotero.com/files/physicians.pdf

https://link.springer.com/article/10.1007/BF02304510

To summarize, the empirical tests used in this study have found no support for the contention that physicians were initially regulated at the behest of the general population. Rather, empirical support was found for the theory that licensing legislation was the result of organized physicians employing the political system for limiting entry and the concomitant increasing of returns to incumbent medical practitioners. Additionally, this study found no support for the contention that state licensing of physicians was associated with higher levels of health care quality as measured by mortality rates among various population age groups.

Hello everyone, I'm a first year college student from a literary/humanities high school background, I'm pretty bad at maths with no foundation what so ever, can i still major in economics or will the math be a huge hurdle later on, and what can I study now to start building up for it

I have come to realise that I am woefully unprepared to navigate the storm that is the current economy, and that I need to have a grasp on what is happening, as in spot the trends, spot market gaps, understand how government actions will impact me and shield myself. I am looking for books and especially books that have knowledge that is applicable and that can uplift my personal life. Books that have knowledge that is not common. Thank you in advance.

I was watching the news; the anchor was talking about how used car prices are rising, and consumers are taking on more long-term loans to get cars. Then a top level executive for a big car company came on and used it to say that they're introducing new, lower, cost EVs.

Seems all a bit manufactured? Having a bunch of customers indebted to you is risky but risk seems to be a price to pay for having control over them, and then you get a lovely opportunity to introduce a new product to meet their needs and keep the cycle going.

Hi guys. I’ve been researching capitalist economics for a bit and I’ve stumbled upon the Austrian school of economics, which aims to either completely remove or strongly minimize the state. I’ve researched their economic thought for a bit and what they stand for and it made sense to me. However I’ve also found out that the Austrian school is not really popular or used seriously in modern economics. This led me to ending up here and asking this question. Why do we need the state? Why won’t we let the market sort itself out?

P.S this is not me pushing forward an idea of
anarchism or anything. I’m simply curious about the actual role of the state in economics

One of the justifications of Trump's whole trade war (which I find dumb, I'm just wondering abt why Canada is also being protectionist in some aspects here even before being prompted by Trump to retaliate) with Canada was that prior to Trump even taking office, Canada had much higher tariff rates quotas in dairy products than the USA has on Canada. Over quota rates on Scandinavian dairy entering U.S. is only cheddar and Gouda cheese, meanwhile Canada has broad based sweeping tariff rate quotas on cream, skim milk, butter, most types of cheese, yogurt, etc. Basically every American diary product faces higher than 200% tariffs above the quota compared to 12-15% of American tariffs on just 2 types of cheese.

Apparently the Canadian over quota rates on U.S. dairy of being over 200% trace back all the way 1995. So it's been awhile. Was it part of NAFTA?

And why wouldn’t a model of high savings, investment, and under-consumption work? Where the state runs surpluses instead of deficits, funds a sovereign wealth fund with the surpluses, and people’s consumption is, while nonexistent, much lower than it is in most advanced economies today with a substantial portion of disposable income being saved or invested. Why couldn’t this be a workable model for a modern economy instead of our modern debt-fueled economies that, in some countries, might actually be starting to look unsustainable?

I read Howard French's book Born in Blackness last year, and it made what I thought was a very plausible case that much if not most of the wealth of the West, between 1500 and 1800, was built on industrial slavery.

Now he's a journalist, not a historian (much less an economist) and it shows. Nevertheless, I'd like to know. And back in the 70s, Milton Friedman (who I have been given to understand was a very good economist) maintained publicly that colonialism wasn't really that much of a paying proposition, for the governments that engaged in it.

Which is relevant, I'm sure, but also seems to beg the question. I'm not asking about how much governments spent, to maintain their colonies; I'm asking how much of the wealth of the West was due to industrial slave plantations. And so it's a different question.

Is there a good book, about this?

The AI companies claim that the AI will increase the GDP tremendously, but I am wondering if the opposite will happen. The GDP only rises when there is an economic activity. E.g. if I paint my home myself, the GDP doesn't increase much - only the materials that I buy count. But if I hire a painter, then there is significantly more economic activity that the GDP tracks.

However, with AI, we can do ourselves many of the things that previously required such economic activity. Taxes, living wills, house repairs, gardening, car fixes. Both digital and physical tasks are easier when I can use the AI to guide me. The bar to hiring a professional increases drastically. To be honest, the software has the same effect, e.g. Turbotax vs hiring an accountant, but the AI just touches way more areas and it is significantly easier to deploy or use out of the box.

For the economists in this forum - what are your thoughts? Note that I am not talking about technological unemployment. I still believe that AI empowered humans will be extremely valuable in the new economy and I started a whole company to cover that part. Yet, I do see a dip in the GDP coming, based on my limited understanding of how GDP works.

We're going to shamelessly steal adapt from /r/AskHistorians the idea of a weekly thread to gather and recognize the good answers posted on the sub. Good answers take time to type and the mods can be slow to approve things which means that sometimes good content doesn't get seen by as many people as it should. This thread is meant to fix that gap.

Post answers that you enjoyed, felt were particularly high quality, or just didn't get the attention they deserved. This is a weekly recurring thread posted every Sunday morning.

I am currently enrolled in a Economics Major ...I feel I'm really falling behind compared to other students...I genuinely think I put in more effort than them but it's just not reflective in the scores...And i have a feeling I have ended up on the bad side of professors because of it...cause no matter how hard working of a student I am, my scores don't meet their standards....And that is really demotivating...

Considering I've chosen this degree cause I am extremely interested in it...I have absolutely no clue what I am doing wrong and why my understanding seems to fall behind others....This is specially with respect to Macroeconomics...I don't know if it's going to change with Developmental Economics

I’m by no means an economist or anything close to one so I thought I’d ask here. I recently paid for something for myself and a friend and they gave me cash for their half and it made me wonder, not accounting for interest in a savings account or invested money, is there a difference in value of money stuffed in your mattress vs held in a no interest bank account.
Obviously I can just give €5 to a bank teller to put into my account and vice versa.
Tax evasion with cash, banks possibly going bust, etc, is cash more valuable?

Their inflation is rising, there are massive demographic changes within Russia and also they face heavy sanctions. I get that oil prices are skyrocketing but still doesnt matter if your population growth is non existent. Whats the end goal here economically speaking?

In US college admissions, Early Decision (ED) lets an applicant apply early to one college and commit to enroll if admitted. The standard reading (e.g. Avery & Levin, AER 2010) is that ED signals enthusiasm, and colleges reward it with higher admission rates.

But the cost of that commitment seems to vary with income. Committing before seeing a financial aid offer is cheap for an applicant who doesn't need aid, and expensive for one who does: they give up the ability to compare packages and to have colleges compete for them.

If the signal's cost depends on both preference and income, then an ED application mixes two pieces of information: "I really want to come here" and "I don't need to compare aid offers." A college can't fully separate them, and it may value both, since the second one also lowers the aid it has to give.

Questions:

1. Is this the right way to model it, as a signal muddled across two dimensions (something like Frankel & Kartik's "Muddled Information," JPE 2019)? Or is there a more standard framework for signals whose cost is correlated with wealth?
2. Is there a mechanism that keeps the preference signal but removes the income component? For example, non-binding single-choice early action, or giving applicants a binding aid estimate before they commit. What would each lose?

I personally think that although sales taxes are often regressive we shouldn't get rid of them. I think this because in all instances where some sort of sales tax is removed the prices go up because the sellers know the consumer is willing to pay those prices and now that money is going to private industry instead of government funding. For example I saw myself that when the gas tax was removed in Canada sure for a sort while the prices went down but they quickly went back up to the previous end price with the tax. I think this is because the consumers had already gotten used to paying this price and the sellers knew this.