Tuesday, March 31, 2009

Inflation, Deflation and Best Way to Measure it

Recent posts on the other economics blog include:

Which is best method of inflation to use? - Many have been highlighting the zeroflation of RPI showing 0%. Yet, for many people zero inflation doesn't apply. The price of many items is still rising which is why CPI inflation is 3%. The 0% RPI reflects the fall in interest rates and lower mortgage payments. But, David Blanchflower in a recent speech on - The future of monetary policy was suggesting we could use RPIX as the main method of inflation and give a higher priority to housing costs in targetting inflation

Difference Between Recession and Deflation. A recession usually doesn't caused deflation. Deflation is a sign of a 'great recession or depression.

The effects of weak sterling on the economy

Bond Yields on EU debt
. The credit crisis has seen a sharp rise in bond yields on Greece and Italian government debt - reflecting the high levels of government borrowing. Why this poses problems should EU seek to pursue Quantitative easing

Why Euro is harming competitiveness when it's needed most

Increased chance of Euro becoming world's reserve currency
(A Mixed blessing for EU)

Zimbabwe's hyperinflation has been ended by switching to the US dollar.


Sicarius said...

Rather than a comment I have a question: can you explain how tariffs and other forms of protection can harm recovery through their impact on global supply chains?

Lawrence Low said...

We have many other forms of protectionist measure like tariffs, import quota & export subsidies etc. If a country, and normally a big one impose such stance in period of difficulty like recession, it will likely trigger a trade war.

We have seen the devastating effect of Smoot-Hawley Tariff Act 1930, which was retaliated by most countries around the world.

Rather than protecting local industries & securing jobs, it actually destroyed them. In such situation, all countries will retaliate against one another, resulting in falling world trade

Villette said...

I don't really care much about inflation, deflation, and other relative stats. They are fallible as everything else. My basis for economic growth is always the changes in the quality of life I enjoy.

Greets feed in tariff consultant