Is Price Stability Enough?
Bank for International Settlements, Monetary and Economic Department, 2006 - Economic policy - 18 pages
No one in the industrial countries should now question the substantial economic benefits associated with reducing inflation from earlier, high levels. At the same time, history also teaches that the stability of consumer prices might not be sufficient to ensure macroeconomic stability. Past experience is replete with examples of major economic and financial crises that were not preceded by inflationary pressures. Conversely, history shows that many periods of deflation, based on rising productivity, were simultaneously characterised by rapid growth. Recent structural changes in the global economy imply that this history might have more contemporaneous relevance than is commonly thought. If so, the implication is that policies directed to the pursuit of price stability might have to be applied more flexibly and with a longer-run focus than has recently been the case.
What people are saying - Write a review
We haven't found any reviews in the usual places.
aggregate aggregate demand asset prices associated Austrian beneﬁts Bordo Borio business cycle C E V capital cent central banks concerns conduct of monetary conducting monetary policy conventional wisdom costs countercyclical credit spreads crisis cumulative debt levels deﬁned deﬁnition difﬁcult domestic inﬂation effects event excessive exchange rate Filardo ﬁnancial markets ﬁnancial sector ﬁnancial stability ﬁnancial system ﬁnancing ﬁrst ﬁxed investment framework for conducting Glahe global economy historical implies increases industrial countries inﬂation process inﬂationary expectations inﬂationary pressures inﬂuence irrational exuberance Japan Keynes Keynesian Keynesian economics liberalisation lower mild deﬂation monetary authorities monetary easing Moreover nominal objective output growth overt inﬂation Papers period Phillips curve policy framework policy rates policymakers positive supply shocks positive supply side potential price movements price stability prior to World problems Procyclicality productivity quantitative easing real economy reﬂecting resistance rising Romer signiﬁcantly subsequent sufﬁcient supply side shocks Swiss National Bank transmission mechanism unemployment