The Strait of Hormuz: How a 40-Kilometer Chokepoint Is Holding the Global Economy Hostage
The closure of the Strait of Hormuz has triggered the largest oil supply disruption in history, with record price spikes,...
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Our blog covers every aspect of the global economy, and we update our content regularly, so you can be informed about the most important topics.
The Theory of Second Best: Why Fixing One Market Failure Isn’t Enough
The theory of second best shows that when one Pareto condition cannot be met, the others are no longer desirable....
Tragedy of the Commons: Overuse of Shared Resources and How to Fix It
The tragedy of the commons explains why shared resources are overused when individuals act rationally. Elinor Ostrom’s design principles show...
The Kaldor‑Hicks Criterion: Efficiency Without Unanimity, the Workhorse of Policy
The Kaldor‑Hicks criterion defines a policy as efficient if winners could compensate losers, regardless of actual payment. It underpins cost‑benefit...
Public Choice Theory: How Economists Study Politics and Why Politicians Don’t Always Serve the Public Interest
Public Choice Theory applies economic reasoning to politics, showing that self‑interest shapes politicians, bureaucrats, and voters, leading to rent‑seeking, rational...
Prospect Theory: How Kahneman & Tversky Changed Economics
Prospect theory explains how people actually make decisions under risk: they are loss‑averse, overweight small probabilities, and evaluate outcomes relative...
Purchasing Power Parity: The Theory Behind Exchange Rate Movements
Purchasing power parity (PPP) states that exchange rates should equalize national price levels in the long run. Despite short‑run deviations,...
The Nash Equilibrium: Understanding Strategic Behaviour in Economics
The Nash equilibrium defines a set of strategies where no player can gain by unilaterally changing their choice. It is...
The Akerlof Model (Market for Lemons): How Information Asymmetry Breaks Markets
Akerlof’s “Market for Lemons” shows how information asymmetry can drive quality products from a market, causing adverse selection and potential...
The Efficient Market Hypothesis: Can You Beat the Stock Market?
The Efficient Market Hypothesis asserts that stock prices fully reflect all available information, making consistent outperformance impossible. Despite anomalies and...