A new traffic law was recently implemented in Lebanon. It is being taken very seriously by the authorities and of course the Lebanese Internal Security Forces. The reactions vary, some support the new traffic law others don’t. This blog post tackles the the implementation of the new traffic law from an economic point of view, and discusses how different parties in the economy will be benefiting from this traffic law. Read More…
Today has been a historical day for Lebanon. I spent my day watching the news on TV and checking them online. My Facebook wall and my Twitter feed were full of accusations, encouragements to have a revolution, or to attack the Serail, and close the roads with burning tires. On the other hand, others were sad, disappointed, disgusted, etc.. with what they were witnessing.
In RAGMAG, Issue 25, June 2012
Normally natural resource abundance is negatively correlated with economic growth, but this relationship has always represented a conceptual puzzle. A country that is endowed with natural resources increases wealth and purchasing power over imports. In the case where a country has natural resources, it will use them to create investments; these investments will increase employment rate which will lead to additional income circulating in the economy, therefore more consumption resulting in economic growth. Venezuela is a good example in this case. The oil rich country has used the revenues to finance diversified investments and call this act “sowing the seeds of oil revenues”. Read More…
In RAGMAG, Issue 24, May 2012
The concept of money laundering is the subject of blockbuster films and bestselling works of fiction. It’s also on the lips of scores of Lebanese: who is and isn’t money laundering and what exactly does it entail? In this edition of Dollars + Sense, we explain how money laundering works and what measures authorities do in such cases. Read More…
In RAGMAG, Issue 23, April 2012
John Maynard Keynes (1883- 1946), a revolutionary British economist who debunked neoclassical theories1 in the 30s, gave large importance to the demand and its effects on the overall level of economic activity. The Keynesian school of thought was based on the ideas of Keynes, also known as demand side economics. He argued that an insufficient aggregate demand can be the cause of high unemployment rates. His theory surged in the 1930s during the Great Depression when the American economy was in a deep downturn. The recommendations of Keynes were adopted by almost all capitalist states in the 1950s and 1960s. The success of the theory began to fade away in the 1970s after large criticisms of the theory by Friedman and others who feared that governments were not able to regulate the business cycle with fiscal policies. Read More…
In RAGMAG, Issue 22, March 2012
Where are we today?
After 15 years of civil war, the Lebanese economy suffered from large public debt, low growth, inflationary pressures, low investments to name just a few of the repercussions. Stabilizing the economy is of crucial importance, especially in a highly competitive world, a highly precarious political situation in the region and financial crises. Obviously the current efforts are not in the right place; maybe the factors that are considered as the causes of this unstable economy are not the correct ones. A more general look might shed the light on some disregarded factors. Or maybe adopting new policies could help resolve some of the problems we are facing. Read More…
In RAGMAG, Issue 21, February 2012
Have you heard of the invisible hand? No! Think again! The invisible hand is part of Adam Smith’s body of work- he’s also the father of capitalism and the author of the “Wealth of the Nations”. Smith, an advocate of free markets, as opposed to protectionism and government regulated markets, used the term as a metaphor. The term refers to the self-regulating nature of the marketplace. Basically, it’s the natural force that guides free market capitalism through competition for scarce resources. Smith posited that individuals when pursuing their own goals will be promoting the goals of the entire society. Smith has illustrated how he believes the economic society operates: Each individual in the society will be pursuing his/her own goal of increasing his/her wealth. In order to do so, the individual must engage in an exchange of goods and services with someone else in the society who will value what is offered. In a free market and due to the division of labor the society’s interest will be improved. Therefore, there will be no need for any regulations in the market since the “invisible hand” will guide the market to equilibrium.
In RAGMAG, Issue 19, December 2011
The gold standard is defined as “a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold. National money and other forms of money (bank deposits and notes) were freely converted into gold at the fixed price,” according to the Encyclopedia of Economics and Liberty. Therefore each country’s money supply is tied to the gold reserves it holds. Let’s take a look at what that actually means. This month’s Dollars + Sense is going for the gold- helping you understand the financial speak behind it and what that means for Lebanon. Read More…
In RAGMAG, Issue 17, October 2011
Did you know that 3 Lebanese Pounds were equal to a dollar before the Lebanese civil war? A Cola cost 0.25 Lira, 2kg of Bread cost 0.5 Lira, and a full tank of fuel cost 7 Liras. Can you imagine the effect of such a rate today? Chart 1 illustrates the Lebanese Lira exchange rate with the U.S. Dollar from January 1964 to May 2011. This historical illustration describes the volatile exchange rate with the USD and the inflationary effect of the civil war. The “Loubnani” card, launched by Bank Audi in August 2010, is surely contributing to the comeback of the Lebanese Lira, but how? This issue, RAGMAG looks at our national currency and what measure can be taken to really bring back the value of our greenback.
