very bad decision because quantitative easing might lead to heavily increasing inflation rates which would be devastating for the European economy. In contrary to the American Federal Reserve (Fed), the ECB has always been very wary of inflation and has therefore chosen the battle against high inflation rates as its primary objective. The main reason for this conscious approach is Germany’s careful stance in the inflation debate, caused by the catastrophic Weimar hyperinflation during the interwar
Words: 1064 - Pages: 5
the financial sector when inflation is high can lead to high interest rates and even higher inflation. Thereafter. when inflation is fought, a period of low inflation and high real interest rates follow. Since Kenya experienced this sequence, it appears that prices were unstable before and during the financial liberalisation. This paper argues that this was not the case as evidenced by cointegration between the involved variables and the abliltv to estimate a stable inflation model over the period 1970-91
Words: 6159 - Pages: 25
The Developing Economies, XLI-4 (December 2003): 401–35 401 EFFECTS OF THE REAL EXCHANGE RATE ON OUTPUT AND INFLATION: EVIDENCE FROM TURKEY HAKAN BERUMENT MEHMET PASAOGULLARI This paper assesses the effects of real depreciation on the economic performance of Turkey by considering quarterly data from 1987:I to 2001:III. The empirical evidence suggests that, contrary to classical wisdom, the real depreciations are contractionary, even when external factors like world interest rates, international
Words: 16182 - Pages: 65
over the time. Inflation – situation when total cost of goods and services increases. In this way expenditures of the average family increase in order to maintain the same standard of living. Inflation rate – changes in price level from the earlier terms in percentages. The better way to measure the inflation rate is to use the CPI (consumer price index) with statistics. The former shows the cost of living over the time. The Consumer Price Index (CPI) The CPI and inflation rate are calculated
Words: 1426 - Pages: 6
INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE EXECUTIVE EDUCATION PROGRAMME – EEPSM 04 MFSA – PROJECT B; GROUP-2 |Prepared by |Jyothy Subashchandra Bose - EEPSM-04-019 | | |Flex Rajan - EEPSM-04-012 | | |Godavarma C K - EEPSM-04-014
Words: 3448 - Pages: 14
much they invest, what types of investments they choose, etc. The Principal Financial Group is not immune to these variables. Some of the macroeconomic variables that directly affect the products and services Principal offers are unemployment, inflation, government regulation, interest rates, and consumer income. Unemployment will affect the services and products that are provided by the Principal because those individuals who are not making a steady income will most likely not be customers
Words: 897 - Pages: 4
Introduction Indonesia rely its economy through various activities. The resources and commodities includes agricultural i.e. tea, coffee, beans, etc.; Mining i.e. coal, crude oil, valuable stones, etc.; Plantation i.e. palm oil, and many others. There are some tourism attraction spots that contribute in the GDP, such as Bali, Lombok, Yogyakarta, etc. Although, the maximum value of the resources have not achieved yet, the GDP of Indonesia is already top 5 in Asia. Indonesia has made a positive
Words: 1417 - Pages: 6
TOPIC 2 – Explain the various factors that may cause fluctuations in foreign exchange rates. In the case of Australia, what industries are vulnerable when the foreign exchange rate is high? Explain your answer fully. An exchange rate is the measure of value of one currency against another currency; for example, AUD $1 = USD $1.03 (indirect quotation). Exchange rates are dynamic in that they are changing throughout every trading day. Basically, fluctuation is caused by demand and supply of the currency
Words: 1195 - Pages: 5
Inflation refers to the rise in the price of goods and fall in the value of money. Inflation refers to the problem of rising prices. The problem has been with us for a long time now. The trend of rising prices in India has, in time, aroused dismay, consternation and anger. It has been witnessed that with the passage of time, the rich have become richer and the poor still poorer. In spite of a bad agricultural year, it is not scarcity that is troubling people so much as the continuing erosion
Words: 362 - Pages: 2
due to any number of reasons – economic fundamentals, interest rate differentials, political instability, risk aversion among investors and so on. Countries with weak economic fundamentals such as chronic current account deficits and high rates of inflation generally have depreciating currencies. Currency depreciation, if orderly and gradual, improves a nation’s export competitiveness and may improve its trade deficit over time. But abrupt and sizeable currency depreciation may scare foreign investors
Words: 321 - Pages: 2
