Using the Keynesian Income-Expenditure Model Analyze the Impact of the Recent Eurozone Crisis on the Uk Economy
| USING THE KEYNESIAN INCOME-EXPENDITURE MODEL ANALYZE THE IMPACT OF THE RECENT EUROZONE CRISIS ON THE UK ECONOMY | | PRINCIPLES OF ECONOMICS (MACROECONOMICS) BMAN10002 COURSEWORK ASSIGNMENT |
| USING THE KEYNESIAN INCOME-EXPENDITURE MODEL ANALYZE THE IMPACT OF THE RECENT EUROZONE CRISIS ON THE UK ECONOMY | | PRINCIPLES OF ECONOMICS (MACROECONOMICS) BMAN10002 COURSEWORK ASSIGNMENT |
The Eurozone crisis is a major issue among academia and society, which is having a large impact on the world economy. It was triggered by a sovereign debt crisis, which started in some countries from the periphery of the Eurozone (Portugal, Ireland, Italy, Greece, Spain, also known as PIIGS). This later transmitted to the other members of the monetary union and members of the EU as a whole through financial contagion by trading and banking (Andrews and Parlapiano, 2012). The result is negative consequences to these economies (such as recession, increased unemployment and possibility of default). This essay will attempt to explain the reasons behind this crisis and apply the Keynesian income-expenditure model in analyzing its impact to the UK economy. Finally, it will draw some conclusions and the limitations of the research will be pointed out.
The reasons behind the Eurozone crisis are complex and are subject to a thorough research. However, it is widely agreed that it was triggered by the global financial crisis, which started in August 2007 (Soros, 2008). Economists see the globalization of financial markets and easy access to credits and extremely low interest rates as the background of the financial crisis. Those factors contributed to the creation of housing bubbles in the USA and Europe, which later caused a failure in the money markets. (Taylor, 2009). Investing in real estate seemed to be reasonable as prices were going up immensely. These assets soon lost their value, but the liabilities of investors did not decrease, meaning that they
| USING THE KEYNESIAN INCOME-EXPENDITURE MODEL ANALYZE THE IMPACT OF THE RECENT EUROZONE CRISIS ON THE UK ECONOMY | | PRINCIPLES OF ECONOMICS (MACROECONOMICS) BMAN10002 COURSEWORK ASSIGNMENT |
The Eurozone crisis is a major issue among academia and society, which is having a large impact on the world economy. It was triggered by a sovereign debt crisis, which started in some countries from the periphery of the Eurozone (Portugal, Ireland, Italy, Greece, Spain, also known as PIIGS). This later transmitted to the other members of the monetary union and members of the EU as a whole through financial contagion by trading and banking (Andrews and Parlapiano, 2012). The result is negative consequences to these economies (such as recession, increased unemployment and possibility of default). This essay will attempt to explain the reasons behind this crisis and apply the Keynesian income-expenditure model in analyzing its impact to the UK economy. Finally, it will draw some conclusions and the limitations of the research will be pointed out.
The reasons behind the Eurozone crisis are complex and are subject to a thorough research. However, it is widely agreed that it was triggered by the global financial crisis, which started in August 2007 (Soros, 2008). Economists see the globalization of financial markets and easy access to credits and extremely low interest rates as the background of the financial crisis. Those factors contributed to the creation of housing bubbles in the USA and Europe, which later caused a failure in the money markets. (Taylor, 2009). Investing in real estate seemed to be reasonable as prices were going up immensely. These assets soon lost their value, but the liabilities of investors did not decrease, meaning that they