Globalization and Inflation Dynamics
... main themes: that globalization has contributed to bring down US inflation, and that it has affected the sensitivity of inflation to output fluctuations. Several recent policymakers speeches have addressed the issue of whether more intense competition, generated by the increase in trade experienced s ...
... main themes: that globalization has contributed to bring down US inflation, and that it has affected the sensitivity of inflation to output fluctuations. Several recent policymakers speeches have addressed the issue of whether more intense competition, generated by the increase in trade experienced s ...
Strategies for Controlling Inflation
... price stability is the appropriate long-term goal for monetary policy. The answer is that price stability promotes an economic system that functions more efficiently. If price stability does not persist, that is, inflation occurs, there are several economic costs to the society. While these costs te ...
... price stability is the appropriate long-term goal for monetary policy. The answer is that price stability promotes an economic system that functions more efficiently. If price stability does not persist, that is, inflation occurs, there are several economic costs to the society. While these costs te ...
NBER WORKING PAPER SERIES CAN CENTRAL BANK TRANSPARENCY GO TOO FAR?
... as McCallum (1995) has proposed.2 Another way to deal with the time-inconsistency problem is to appoint conservative central bankers, as suggested by Rogoff (1985), who put more weight on controlling inflation relative to output than does the general public and thus will resist inflationary policie ...
... as McCallum (1995) has proposed.2 Another way to deal with the time-inconsistency problem is to appoint conservative central bankers, as suggested by Rogoff (1985), who put more weight on controlling inflation relative to output than does the general public and thus will resist inflationary policie ...
Monetary Institutions, Partisanship, and Inflation Targeting Bumba
... monetary policies (see Table 1). In addition, the Slovak Republic, Indonesia, and Romania all adopted IT in 2005 (IMF 2006). The group as a whole includes 16 countries that are generally considered “emerging market” countries, and nine developed countries. To be sure, the practice of IT varies acros ...
... monetary policies (see Table 1). In addition, the Slovak Republic, Indonesia, and Romania all adopted IT in 2005 (IMF 2006). The group as a whole includes 16 countries that are generally considered “emerging market” countries, and nine developed countries. To be sure, the practice of IT varies acros ...
price instability, unemployment and economic growth in pakistan
... there is no question of any new investment by local or foreign investors. More significantly, the current government is not serious in solving the problems of deprived people. There are mere slogans of developments by the government officials but ground reality is depicting an opposite anecdote. Thi ...
... there is no question of any new investment by local or foreign investors. More significantly, the current government is not serious in solving the problems of deprived people. There are mere slogans of developments by the government officials but ground reality is depicting an opposite anecdote. Thi ...
algierslessprocyclical
... A second specific example, in the case of monetary policy, is Inflation Targeting. The first countries to adopt IT were rich countries: New Zealand, Canada, Sweden and the United Kingdom. Beginning around 1999, many middle-sized middle-income developing countries followed suit. IT became the new con ...
... A second specific example, in the case of monetary policy, is Inflation Targeting. The first countries to adopt IT were rich countries: New Zealand, Canada, Sweden and the United Kingdom. Beginning around 1999, many middle-sized middle-income developing countries followed suit. IT became the new con ...
As Good As Gold? REP. SUSAN
... surprise monetary expansion and resulting inflation as a temporary stimulus to the economy. When the public knows that the central bank would be tempted to use surprise inflation, the public rationally expects higher-than-optimal inflation. The central bank has to deliver higher-than-optimal inflati ...
... surprise monetary expansion and resulting inflation as a temporary stimulus to the economy. When the public knows that the central bank would be tempted to use surprise inflation, the public rationally expects higher-than-optimal inflation. The central bank has to deliver higher-than-optimal inflati ...
The Discount Rate for Wrongful Death and Injury Cases
... It is generally accepted that the rate of return on conservative investments is to be used to discount future earnings to present value in cases involving injury or wrongful death. In determining the discount rate to use the period from 1953-1990 or some sub-period is usually used. This paper sugges ...
... It is generally accepted that the rate of return on conservative investments is to be used to discount future earnings to present value in cases involving injury or wrongful death. In determining the discount rate to use the period from 1953-1990 or some sub-period is usually used. This paper sugges ...
Monetary Policy Statement March 2008 Contents
... There are also likely to be indirect price effects from the scheme as higher fuel and electricity production costs are passed through to other retail goods and services – particularly those with high transport and energy intensities, including transport and manufactured consumer goods. We have assum ...
... There are also likely to be indirect price effects from the scheme as higher fuel and electricity production costs are passed through to other retail goods and services – particularly those with high transport and energy intensities, including transport and manufactured consumer goods. We have assum ...
Monetary Policy Statement September 2007 Contents
... previous increases in the OCR are starting to dampen domestic spending, which will help to reduce those pressures. In particular, household borrowing growth is beginning to slow and turnover in the housing market continues to fall. We expect the effects of stronger export revenues on activity and in ...
... previous increases in the OCR are starting to dampen domestic spending, which will help to reduce those pressures. In particular, household borrowing growth is beginning to slow and turnover in the housing market continues to fall. We expect the effects of stronger export revenues on activity and in ...
The Aggregate Demand- Aggregate Supply (AD
... economy is between the two ranges, both the price level and real output will rise. The ratio between the two increases is determined by how close the economy is to its potential income. In the intermediate range, the price/output path of the economy is upward sloping. The economy is usually in this ...
... economy is between the two ranges, both the price level and real output will rise. The ratio between the two increases is determined by how close the economy is to its potential income. In the intermediate range, the price/output path of the economy is upward sloping. The economy is usually in this ...
Making sense of international interest rate movements ARTICLES
... results from applying this approach. Our framework disaggregates movements in nominal rates into estimated changes in real interest rates and inflation expectations. In addition, we discuss a measure of interest rate uncertainty, a factor which will often influence movements in these components. Sin ...
... results from applying this approach. Our framework disaggregates movements in nominal rates into estimated changes in real interest rates and inflation expectations. In addition, we discuss a measure of interest rate uncertainty, a factor which will often influence movements in these components. Sin ...
This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: Currency Crises
... have been expected, so would faster inflation. Yet “surprisingly, the European experience failed to reveal almost any inflationary response to devaluation” (Dornbusch et al. 1995,254). Similarly, “according to the evidence presented, depreciating countries also did better in decelerating inflation” ...
... have been expected, so would faster inflation. Yet “surprisingly, the European experience failed to reveal almost any inflationary response to devaluation” (Dornbusch et al. 1995,254). Similarly, “according to the evidence presented, depreciating countries also did better in decelerating inflation” ...
Chapter 9
... interest rates on the bond • If market interest rates are 5%, you will pay 1050/1.05 = $1000; gain of $50 = 5% • If market interest rates are 6%, you will pay 1050/1.06 = $990.57; gain of $59.43 = 6% • If market interest rates are 4%, you will pay 1050/1.04 = $1009.62; gain of $40.38 = 4% ...
... interest rates on the bond • If market interest rates are 5%, you will pay 1050/1.05 = $1000; gain of $50 = 5% • If market interest rates are 6%, you will pay 1050/1.06 = $990.57; gain of $59.43 = 6% • If market interest rates are 4%, you will pay 1050/1.04 = $1009.62; gain of $40.38 = 4% ...
Unit 5 Inflation - ICAI Knowledge Gateway
... The average inflation rate during the seventies was still higher at 9 per cent. The decade was the most tumultuous as far as the price situation was concerned as undue hike in oil prices in this decade, once in 1972-73 and again in 1979-80 led to overall rise in prices. During the eighties, the dec ...
... The average inflation rate during the seventies was still higher at 9 per cent. The decade was the most tumultuous as far as the price situation was concerned as undue hike in oil prices in this decade, once in 1972-73 and again in 1979-80 led to overall rise in prices. During the eighties, the dec ...
Chapter 40: Aggregate demand (2.2)
... that the price level falls. This will lead to a fall in interest rates, as explained above. The lower the interest rate, the lower the opportunity cost of consumption and investment since households and firms forgo less interest on their savings. Households and firms will now be inclined to increase ...
... that the price level falls. This will lead to a fall in interest rates, as explained above. The lower the interest rate, the lower the opportunity cost of consumption and investment since households and firms forgo less interest on their savings. Households and firms will now be inclined to increase ...
grade 12 economics teacher notes
... • Poor people depend on pensions and social grants which does not increase at the same rate as normal wages 2. Income and wealth • The poor suffer most from inflation because their meagre incomes buy continuously less • Price increases affect people whose incomes are relatively fixed (remai ...
... • Poor people depend on pensions and social grants which does not increase at the same rate as normal wages 2. Income and wealth • The poor suffer most from inflation because their meagre incomes buy continuously less • Price increases affect people whose incomes are relatively fixed (remai ...
chapter summary
... an increase in the supply of money reduces the interest rate, which increases investment. This boosts aggregate demand, which increases real output and the price level. The long-run approach focuses on the role of money through the equation of exchange, which states that the quantity of money, M, mu ...
... an increase in the supply of money reduces the interest rate, which increases investment. This boosts aggregate demand, which increases real output and the price level. The long-run approach focuses on the role of money through the equation of exchange, which states that the quantity of money, M, mu ...
Answer
... enhanced control over fiscal policy would allow countries to dismantle their distorting barriers to international payments. B. reduced control over monetary policy would allow countries to dismantle their distorting barriers to international payments. C. enhanced control over monetary policy would a ...
... enhanced control over fiscal policy would allow countries to dismantle their distorting barriers to international payments. B. reduced control over monetary policy would allow countries to dismantle their distorting barriers to international payments. C. enhanced control over monetary policy would a ...
Monetary Policy Responses in Japan - Konstantin Wacker
... Monetary Policy Responses in Japan After tightening monetary policy from 1989 onwards, the BoJ started successive rounds of monetary easing in 1992. Interest rates were gradually reduced, but rather slowly (see Figure 1). As mentioned above, bank credit stagnated, impairing the effectiveness of the ...
... Monetary Policy Responses in Japan After tightening monetary policy from 1989 onwards, the BoJ started successive rounds of monetary easing in 1992. Interest rates were gradually reduced, but rather slowly (see Figure 1). As mentioned above, bank credit stagnated, impairing the effectiveness of the ...
Inflation and Economic Growth in India – An Empirical Analysis
... impact of inflation on growth focusing on the effects of inflation on the steady state equilibrium of capital per capita and output (e.g., Orphanides and Solow, 1990). There are three possible results regarding the impact of inflation on output and growth: i) none; ii) positive; and iii) negative. S ...
... impact of inflation on growth focusing on the effects of inflation on the steady state equilibrium of capital per capita and output (e.g., Orphanides and Solow, 1990). There are three possible results regarding the impact of inflation on output and growth: i) none; ii) positive; and iii) negative. S ...
Inflation
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.Inflation affects an economy in various ways, both positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.Inflation also has positive effects: Fundamentally, inflation gives everyone an incentive to spend and invest, because if they don't, their money will be worth less in the future. This increase in spending and investment can benefit the economy. However it may also lead to sub-optimal use of resources. Inflation reduces the real burden of debt, both public and private. If you have a fixed-rate mortgage on your house, your salary is likely to increase over time due to wage inflation, but your mortgage payment will stay the same. Over time, your mortgage payment will become a smaller percentage of your earnings, which means that you will have more money to spend. Inflation keeps nominal interest rates above zero, so that central banks can reduce interest rates, when necessary, to stimulate the economy. Inflation reduces unemployment to the extent that unemployment is caused by nominal wage rigidity. When demand for labor falls but nominal wages do not, as typically occurs during a recession, the supply and demand for labor cannot reach equilibrium, and unemployment results. By reducing the real value of a given nominal wage, inflation increases the demand for labor, and therefore reduces unemployment.Economists generally believe that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. However, money supply growth does not necessarily cause inflation. Some economists maintain that under the conditions of a liquidity trap, large monetary injections are like ""pushing on a string"". Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.