Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Inflation’

Low Inflation and Government Debt

Posted by hkarner - 15. März 2016

By on March 14, 2016  RGE EconoMonitor

Government debt typically refers to nominal GDP, generally rising in postwar Oecd countries. Last crisis was an exception, firstly displaying in 2009 a nominal recession affecting 27 out of 34 countries. To understand reasons and implications, I evaluate in Table 2 for six Oecd countries (US, UK, Germany, France, Italy and Spain) how in last crisis the Debt-to-GDP components changed their weight with respect to previous 2000-07 evidence.

Table 1- Cumulated % Changes in the 2008-13 Crisis

Screen Shot 2016-03-14 at 2.36.47 PM

United States

The Deficit/GDP share almost doubles in the 2008-13 years in which the average Debt-to-GDP ratio, about constant before, rises more than 50% with respect to the 2000-07 data. Thus, the deficit contribution to the debt increase jumps from 47% to a massive 87% share.

Looking at annual episodes, the deficit weight is very large in 2002-3 when the debt ratio starts to increase after the 2001 events. However, it is only during the Great Recession that the deficit weight deeply rises because of  expansionary policies, maintained until recovery is achieved. Den Rest des Beitrags lesen »

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Inflation Target Draws Fire From All Sides

Posted by hkarner - 15. März 2016

Date: 14-03-2016
Source: The Wall Street Journal

Economists disagree on whether a 2% goal is too high or too low, while some say adjusting it in either direction would hurt central banks’ credibility

FRANKFURT—Central bankers over the past two decades pursued 2% inflation
as a Goldilocks standard—neither too hot nor too cold. After years of undershooting in advanced economies, some economists now say that target should be adjusted.

Trouble is, they can’t agree whether it should be higher or lower.

One faction says ultralow inflation rates are the result of long-term economic trends like globalization and aging populations that are reducing prices everywhere and that central banks fight at their peril.

Another takes the opposite view, arguing the inflation target should be raised to help central bankers avoid their current fix: With interest rates at or near zero and inflation rates low, they can’t cut the real interest rate—after subtracting inflation—as far below zero as they would like to stimulate the economy. Den Rest des Beitrags lesen »

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Wie man ganz effizient Inflation erzeugt

Posted by hkarner - 7. März 2016

07.03.2016 | 18:26 | Josef Urschitz (Die Presse)

Österreich braut derzeit einen ziemlich giftigen Konjunkturmix.

Die EZB wird diese Woche noch ein paar (wahrscheinlich vergebliche) Verzweiflungsmaßnahmen setzen, um den Absturz der Eurozone in die Deflation zu verhindern. Weit ist dieses Szenario ja nicht mehr entfernt: Die Eurozonen-Inflationsrate betrug im Jänner gerade noch 0,3 Prozent. Österreich ist erfolgreicher: Bei uns war die Teuerung genau viermal so hoch. Besonders stark in den Bereichen Tourismus und Kulturdienstleistungen.

Wie denn das? Das Wifo hat gleich eine Erklärung nachgeliefert: Die florierende Tourismusnachfrage habe für überproportionale Preissteigerungen in oben genannten Gruppen gesorgt. Nachfrageinduzierte Preissteigerungen – genau das, was die EZB so verzweifelt versucht, aber nicht und nicht zusammenbringt. Den Rest des Beitrags lesen »

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Time for Helicopter Money?

Posted by hkarner - 4. März 2016

Photo of Kemal Derviş

Kemal Derviş

Kemal Derviş, former Minister of Economic Affairs of Turkey and former Administrator for the United Nations Development Program (UNDP), is a vice president of the Brookings Institution.

MAR 3, 2016, Project Syndicate

WASHINGTON, DC – “Out of ammo? The Economist recently asked of monetary policymakers. Stephen Roach has called the move by major central banks – including the Bank of Japan, the European Central Bank, and the Bank of Sweden – to negative real (and, in some cases, even nominal) interest rates a “futile” effort that merely sets “the stage for the next crisis.” And, at the February G-20 finance ministers meeting, Bank of England Governor Mark Carney reportedly called these policies “ultimately a zero-sum game.” Have the major advanced economies’ central banks – which have borne the burden of sustaining anemic post-2008 recoveries – really run out of options?

It certainly seems so. Central-bank balance sheets have swelled, and policy rates have reached their “near zero” lower bounds. There is plenty of cheap water, it seems, but the horse refuses to drink. With no signs of inflation, and growth still tepid and fragile, many anticipate chronic slow growth, with some even fearing another global recession. Den Rest des Beitrags lesen »

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„Die Überkapazitäten bei Banken gehören abgebaut“

Posted by hkarner - 29. Februar 2016

 Interview Alexander Hahn28. Februar 2016, 12:00, derstandard.at

 Wie es um den Bankensektor bestellt ist und welche Lehren die EZB aus der Stagnation in Japan gezogen hat, erklärt ihr Vertreter Luc Coene. Zudem erläutert er, wie er einen Austritt der Briten aus der EU einstuft.

STANDARD: Haben Sie sich zu Beginn Ihrer Karriere im Jahr 1973 vorstellen können, in einer Welt mit negativen Zinsen zu leben?

Coene: Nein, das habe ich nicht erwartet. Ich habe nicht einmal gedacht, dass so etwas überhaupt möglich ist.

STANDARD: Wodurch ist es möglich geworden?

Coene: Das ist ein Nebeneffekt der extrem niedrigen Inflation. Was soll man tun, wenn man bei null angekommen ist? Daher haben wir entschieden, mit den Zinsen in den negativen Bereich zu gehen. Die Banken horten viel Geld, das wir in der Wirtschaft sehen wollen. Daher drängen wir die Banken auf diese Weise, etwas mit dem Geld zu machen. Den Rest des Beitrags lesen »

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Japan’s Wrong Way Out

Posted by hkarner - 6. Februar 2016

Photo of Adair Turner

Adair Turner

Adair Turner, a former chairman of the United Kingdom’s Financial Services Authority and former member of the UK’s Financial Policy Committee, is Chairman of the Institute for New Economic Thinking. His latest book is Between Debt and the Devil.

FEB 5, 2016, Project Syndicate

LONDON – Financial markets were surprised by the Bank of Japan’s recent introduction of negative interest rates on some commercial bank reserves. They shouldn’t have been. The BOJ clearly needed to take some new policy action to achieve its target of 2% inflation. But neither negative interest rates nor further expansion of the BOJ’s already huge program of quantitative easing (QE) will be sufficient to offset the strong deflationary forces that Japan now faces.

In 2013 the BOJ predicted that its QE operations would deliver 2% inflation within two years. But in 2015, core inflation (excluding volatile items such as food) was only 0.5%. With consumer spending and average earnings falling in December, the 2% target increasingly looks out of reach. Den Rest des Beitrags lesen »

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What are market inflation expectations and why do they matter?

Posted by hkarner - 22. Januar 2016

Date: 21-01-2016
Source: The Economist

WITH stockmarkets tumbling and the oil price below $30, some economists are once again worrying about global deflationary pressure. Low inflation can be toxic for economies when interest rates are also low (see a previous Explains). One warning light that is flashing red in America is market expectations of inflation, which have plummeted to lows not seen since the financial crisis. How are market inflation expectations measured, and why do they matter?

There are two popular measures of how much inflation markets expect. One is the difference between the return investors make on government bonds which are indexed to rise with inflation, and the return they make on bonds with no such protection. This gap—known as the treasury inflation protected securities (TIPS) spread—should rise and fall with investors’ reckoning of how much inflation is in the pipeline. Today, the five-year TIPS spread stands at around 1.1%—well below the Fed’s 2% inflation target. The second method relies on the market for interest-rate swaps. These are contracts where one party agrees to pay a fixed interest rate over a given period, in exchange for the other paying the inflation rate. Den Rest des Beitrags lesen »

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Distributional consequences of asset price inflation in the Eurozone

Posted by hkarner - 4. Dezember 2015

Klaus Adam, Panagiota Tzamourani 03 December 2015, voxeu

Professor of Economics, University of Mannheim; Research Professor, Deutsche Bundesbank; Vice Chair, EABCN; Research Fellow, CFS and CEPR

Statistician in the Research Centre, Deutsche Bundesbank

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A Hard Look at a Soft Global Economy

Posted by hkarner - 24. November 2015

Photo of Michael Spence

Michael Spence

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Academic Board Chairman of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

NOV 23, 2015, Project Syndicate

MILAN – The global economy is settling into a slow-growth rut, steered there by policymakers’ inability or unwillingness to address major impediments at a global level. Indeed, even the current anemic pace of growth is probably unsustainable. The question is whether an honest assessment of the impediments to economic performance worldwide will spur policymakers into action.

Since 2008, real (inflation-adjusted) cumulative growth in the developed economies has amounted to a mere 5-6%. While China’s GDP has risen by about 70%, making it the largest contributor to global growth, this was aided substantially by debt-fueled investment. And, indeed, as that stimulus wanes, the impact of inadequate advanced-country demand on Chinese growth is becoming increasingly apparent. Den Rest des Beitrags lesen »

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