Category: Terms and Concepts

The Cobra Effect: Unintended consequences

Countless examples of this theory can be observed in everyday life. A lot of policies that were brought into action to address a problem only worsened it. The Cobra Effect simply implies that public policy is not as easy as it sounds, and good intentions does not always lead to suitable results.

Art of Balance, by Ilya Zomb

Purchasing Power Parity; hey look, a balance

  Our willingness to pay a certain price for foreign money must ultimately and essentially be due to the fact that this money possesses a purchasing power as against commodities and services in that country. On the other hand, when we offer so and so much of our own money, we are actually offering a purchasing power as against commodities and services in our own country. Our valuation of a foreign currency in terms of our own, therefore, mainly depends on the relative purchasing power of the two currencies in their respective countries.  Abnormal Deviations in International Exchanges, Gustav Cassel,...