Patterns in these systems often self-replicate at different resolutions; they are “fractal”. 7 One interesting question is whether economic systems also exhibit self-replicating patterns. If so, this has implications for how we understand and model them. We consider these questions using a sequence of maps. Many of these maps are not new. For example, Philip McCann from the University’s Productivity Insights Network (PIN) has published an excellent book setting out a range of fascinating regional facts and maps. So too have others.8 These maps provide useful context when testing the Tip O’Neill hypothesis and when modelling and managing the economy. To provide the clearest visual guide, these maps are scaled by economic rather than geographic size – so-called cartograms.9 Each region is initially scaled to have the same geographic area and then rescaled in line with economic differences. This means some areas shrink (such as Scotland) while others expand (such as London) even without differences between them. This helps when visualising local differences. (a)  Differences between regions  To fix ideas, Charts 1a and 1b plot a map and an accompanying cartogram of population by region in the UK and, by way of comparison, Germany. It uses a resolution one-level below the national – administrative “regions” in England and each of Scotland, Wales and Northern Ireland. Comparing the map and cartogram suggests the UK has a significant demographic skew towards London and the South-East.
The current situation is very different, and while the pace of the recovery is yet to be seen, forecasts for the three-year period 20092011 point at the world economy growing by an average of 2.1% per year, 0.8% for the U.S. 11 In the 1930s, U.S. unemployment soared to 25%, much higher than the 10% projected this time. Also, the world faced a severe deflation in the early 1930s, in some cases sinking  8  Although the evidence shows that financial development is good for economic growth, excessive credit expansion can exacerbate a crisis, as happened during the debt crisis in Latin America (De Gregorio and Guidotti, 1995). 9  One example is the new households’ financial survey of the Central Bank of Chile, which seeks to strengthen the analysis of a sector that is becoming ever more important in our financial system. 10  Evidence provided by Eichengreen and O’Rourke (2009) shows that the first few months of the current crisis are pretty similar to the Great Depression, although in recent months they seem to diverge, because the current episode has begun to show signs of recovery while in the Great Depression the fall continued. 11  For the 1930s, the data come from Maddison (2009), while current growth projections come from Consensus Forecast and investment banks. BIS Review 112/2009  5  below -10%. We do not see that today, and while inflation has fallen dramatically around the world, it remains far from the levels seen during the Great Depression.