It is fortunate that Mark Carney, who moves from the governorship of the Bank of Canada to that of the Bank of England in July 2013, is no stranger to political minefields.
A key component of modern economic theory is production theory. Production theory is the study of the economic process of converting inputs into outputs. Production uses resources to create goods or services that are then sold in the market, explained by the supply and demand theory.
Economists, of which I confess to be one, always create models based on a number of assumptions to explain behaviours of the markets. So far so good right? But the problem is more often than not these assumptions are beyond the realm of the possible, and due to a failure to create better models, we end up accepting the only available models and forget the assumptions on which it was built.
On 15 March, 2013, the Cayman Islands government announced its intention to sign an agreement with the United States authorities to adopt a Model 1 Intergovernmental Agreement (IGA) in response to the US Foreign Account Tax Compliance Act.
Politicians in the U.S. have brought their campaigns to a new low by calling each other unpatriotic for using the Cayman Islands. Few of them remain fully insulated from the “Cayman benefits” - even those insulting other candidates without doing their homework.
Now that the US election is over, the focus in Washington has moved to the US’s budget deficit and its “fiscal cliff”. At press time, it’s uncertain whether the US will jump off of the cliff, or find a solution which involves restructuring taxes and spending.