All Questions
Tagged with central-banking inflation
33 questions
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51
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What would happend if the total quantity of money get fixed?
I was wondering what would happend if the total amount of money get fixed in an scenario were there is not exchange of good and services between countries markets. I think maybe the fact that prices ...
- 109
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3
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99
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Why do central banks feel the need to do something about the current inflation levels
We hear in so many places that the current high levels of inflation are mainly due to supply side problems, like the war in Ukraine. Given that there is currently less supply then we are all ...
- 1,046
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1
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68
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Why do central banks want to decrease inflation?
Inflation is a result of increased demand with same supply (in worst case. in best case, supply also increases), due to more money on people's hand. As far as I understand it, inflated market is still ...
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61
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Why don't central banks regulate inflation by stimulating supply, rather than arresting demand?
During an inflation spiral central banks will reduce the demand for goods by increasing the cost of money, thereby halting inflation but negatively impacting growth.
Rather than putting a brake on ...
- 111
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1
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149
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Why is there increased speculation that America might go into a recession ? If they do will the rest of the world also face downturn?
Recently there has been increasing speculation regarding USA going into recession (since rate hikes can cause recessions):
https://www.washingtonpost.com/business/2022/05/19/recession-economy-markets/
...
- 153
2
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47
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Why has the Yen weakened despite lower inflation?
I have recently wondered about the depreciation of the Japanese Yen against the USD (or any other major currency).
Currently, a thousand Yen is at around USD 7,75. This is about about a twenty-year ...
- 351
1
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1
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397
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Savings = Investment. High interest rates stifle investment. High interest rate encourage savings. Isn't this a contradiction?
If savings = investment, then by definition, higher interest rates encourage savings and hence more investment. But when it comes to monetary policy, central banks increase interest rates in order to ...
- 405
2
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1
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85
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How effective are economic sanctions on Russia?
Things like "banning Russia from SWIFT" sound devastating, but then we find out that actually it is a ban on some (not all) Russian banks. So, do the sanctions imposed by the West and the ...
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1
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86
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If interest rates rise, the cost of paying off existing debt for companies will increase, won't this be inflationary?
I am fully aware of the standard logic that interest rate rises lower inflation by slowing investment.
However, isn't it the case that any debt that companies have becomes a larger cost and hence puts ...
- 405
1
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4
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709
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How does inflation erode away debt in a practical sense?
Intuitively it makes sense that if inflation is above nominal interest rates, businesses/central banks can erode away their debt. I wanted to understand how it would work practically such as in some ...
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2
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130
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Can we replace the central bank with a well-programmed cryptocurrency?
Imagine an economy that everyone uses (a single) cryptocurrency as a mean of payment. You could program a cryptocurrency such that the money supply grows at a fixed amount per year, etc. but that ...
- 2,800
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578
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Did Capitalism and Adam Smith Support a Central Bank?
Does Adam Smith and Capitalism support a Central Bank/Federal Reserve?
I am trying to read through the book "Wealth of Nations" to understand. Having a central/regulatory figure dictate ...
- 97
3
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1
answer
44
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Data on inflation target on different countries around the world
Does someone know if there's a page, like a "global bank" online page, where one could see the inflation target for different countries?
For example, in x country, for x' year, the inflation ...
- 215
4
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2
answers
373
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Is modern monetary theory sustainable?
I am looking around at a lot of the central banks around the world (primarily ECB, Fed, and BOJ) and they all seem to be simply printing their way out of any issues with their economies. As far as I ...
- 191
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2
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86
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What is the point of monetary policy if most monetary variables are determined by non-monetary factors?
Monetary policy today is largely focused on setting interest rates in order to reach an inflation target / value of the currency. Interest rates are used to affect inflation by changing the demand and ...
- 335
4
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1
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136
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How buying bonds indirectly from the government prevents the central bank from financing government deficit?
From Krugman's macroeconomic textbook (highlighting is mine):
"In an open-market operation the Federal Reserve buys or sells some of
the exist- ing stock of U.S. Treasury bills, normally through ...
- 1,135
2
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21
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Does a rate hike by the Central Bank increase or decrease inflation?
Mainstream economic theory tells us that, in order to decrease inflation, the CB increases its rates so as to decrease loan creation which should decrease Aggregate Demand and thus lower inflation.
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1
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83
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Ambiguity on a relation between inflation, interest rates, and central banks
When working on inflation, central banks, interest rates etc., I summarized the info in various sources as follows:
When there is not enough money in the economy system, the money in circulation ...
- 103
1
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1
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198
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How does the Federal Reserve unwind the asset purchasing scheme announced in response to the 2020 Coronavirus Pandemic?
On Monday, 06 April, 2020 the Financial Times reported that the Federal Reserve balance sheet could increase to $9 trillion. This is partly due to the myriad of initiatives, some new, to protect the ...
- 81
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2
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1k
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Question on Central bank loss function interpretation
How do you interpret this central bank’s loss function:
$$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$
where $\alpha >0$ and $\hat x$ is output gap.
Phillips curve is $\pi = \theta \hat{x}+\...
- 192
4
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2
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492
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Why are the Fed's goals often described as the "dual mandate" and not the "triple mandate"?
The Federal Reserve Act Section 2A states:
The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit ...
user14083
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1
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777
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Why do central banks print money? [duplicate]
If a country's central bank prints money, it causes inflation. However, apparently, small amounts of inflation is a good thing.
Why is the case? What would happen if central banks stopped printing ...
- 101
0
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1
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469
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Isn't the liquidity trap about real interest rates?
Here is a so-called thought experiment. Suppose the inflation rate is negative, the nominal interest rate slightly negative, and the real interest rate positive (call it $r$). I think people would ...
- 1,295
2
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79
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Can the central bank interest rate policy still control inflation?
Historically, central banks have been using interest rate policy to control inflation.
In current times, most rates have been going ever lower, but it seems to be incapable of driving inflation up.
...
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2
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2
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75
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Can a government or central bank work to reduce inflation without hiking interest rates and causing the currency to appreciate?
Since trying to lower inflation will have some undesirable consequences, such as currency appreciation, which hurts exports, should governments and central banks keep hands off on inflation?
But ...
- 131
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2
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85
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British inflation up again, but crisis might come. What should the BoE do?
According to the latest ONS report, inflation is rising as a consequence of the (pre/post) Brexit devaluation. This graph about the Input PPI is pretty revealing (taken from here):
Yet, with the risk ...
- 8,631
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4
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11k
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Why does the European Central Bank use the 5y5y rate to measure inflation
I cannot understand why the 5y5y swap rate measures inflation. I can see how the floating rate somewhat measures the rate of interest rates which are related to inflation. However I cannot understand ...
- 649
3
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1
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8k
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Why did the Fed raise interest rates between 2004 and 2006?
Between June 2004 and August 2006, the Fed raised interest rates again and again, because they were "...growing more uncomfortable about inflation".
Looking at the graph below, inflation did increase,...
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7
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2k
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Why didn't the money printing by the US Federal Reserve since 2008 lead to inflation?
http://www.telegraph.co.uk/finance/comment/liamhalligan/8484530/Americas-reckless-money-printing-could-put-the-world-back-into-crisis.html
America's reckless money-printing could put the world back ...
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3
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2
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171
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With inflation so low, why is it so hard to stimulate the economy?
Usually the limiting factor in stimulating an economy is how much inflation can a currency handle before the money being spent has a negative effect overall. But now we seem to have the opposite ...
- 346
7
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1
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185
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Differing Inflation Rates for Separate Income Groups; Literature?
So here's a few ideas that have been floating around my head since undergraduate university. It seems that money owned by the highest net wealth owners is always moving around and making a return, but ...
- 6,678
4
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2
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4k
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What effect would raising reserve requirements while printing money have?
It is generally accepted, that printing money will be inflationary, as it increases the money supply without a corresponding real growth of the economy.
At the same time, if the central bank ...
- 2,036
3
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1
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134
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Central Banks and Price Stability
Are there any empirical studies on the question of whether independent central banks cause price stability?
I am seeking to understand if independence (of the central monitory authority) is part of ...
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