The Economist Articles — Week of 13 Feb 20163 min read

Every week I read through The Economist to pick out articles that may be useful for teaching in the classroom. I’ll be sharing some of my notes and the discussion prompts I’ve come up with in these weekly posts. For students, they can serve as guide-rails for your reading. For teachers, I hope they will be helpful for your teaching.

1. Smoking in France — Between a puff and a Kalashnikov

Opportunity cost: the opportunity cost of smoking outside school premises has increased given the threat of terrorist attacks.

Demerit goods: “Fully 32% of French 17-year-olds admit that they smoke daily” “Tobacco is the leading cause of preventable death in France, far ahead of alcohol or road accidents.” “…smoking has been banned in cafes and offices.” “… all packets will be henceforth sold in ‘unattractive’ shades of mud-brown and khaki, with lurid health warnings.”

Comparison with Singapore context: what do you think are the private costs and benefits of smoking to a teenager in France v.s. Singapore? “If you want to be with the cool kids, you hang out with the smokers outside the gate.”

2. Latin American currencies — Border bazaar

Comparison with Singapore/Malaysia: “The peso lost a quarter of its value in 2015 and continues to slide this year. This has been a windfall for Ecuadorean shoppers living near — and sometimes not so near — the border, and for Colombian shopkeepers who serve them.” “We can buy things 50% cheaper here than at home”

Exchange rates: why does a depreciation occur? How does it affect trade? When a country uses a fixed exchange rate, what are some problems it might face?

Decision making by firms: why do firms charge higher prices? “The price of clothes has doubled over the past year while that of fruit and vegetables has risen by 30-40%.”

3. Railways in America — Doing the locomotion

Derived demand: how the decade from 2008 to 2016 has been a “golden one for shipping goods around the world’s biggest economy” “But now this privately fuelled locomotive has been derailed. In the last quarter of 2015… combined earnings… fell by a fifth… because of the commodity-price crash.”

Merger: who will be affected by a merger and what sort of impact can we expect?

Timeline analysis: “Since being deregulated in 1980… plenty of tailwinds are behind them… freight volumes grow with GDP” “Greasing the tracks in the past decade was the commodity bubble.”

Firm’s decision making: how will the industry cope with unfavourable conditions?

4. Free exchange — Optimising romance

Information problems in economics; fun article

5. Turkish wine producer — Sour grapes

Interaction between culture and economics: “In keeping with its Islamist roots, Turkey’s ruling Justice and Development Party… urges Turks to stop drinking… big tax rises since 2004 have more than trebled in real terms.” “A law… in 2013 prohibits… promotion of alcohol… even wine tastings.”

Black market: “29% of the booze consumed in Turkey is sold illegally.” Why do you think this is the case? How do black markets form?

Firm’s decision making: “What’s the point of investing if you can’t advertise?” Discuss this statement.

6. Sri Lanka’s economy — Taxing times

Balance of payment crisis: “its growth averaged 6% a year over the past decade.” “yet… its leaders requested a loan from the IMF.” “… the country suffered big capital outflows last year as foreign investors sold down their holdings of government bonds.” What is the cause of the BOP crisis? How can the government begin to resolve it? Could Singapore be subject to similar problems? Why?

Interaction between fiscal policy and external stability: “the main source of Sri Lanka’s fragility is its own fiscal mistakes… a combination of cumbersome debts and a rickety tax system has made it vulnerable to the withdrawal of foreign funding.” Using Sri Lanka’s as a case study, examine the possible links between fiscal policy and a healthy balance of payments.

I hope to hear your thoughts and contributions in the comments section below.

Till next time, dream economics.

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