The Search for Inflation on a Constant Basis at 2%
Volume 7, Issue 4, August 2018, Pages: 165-181
Received: Jun. 7, 2018;
Accepted: Jul. 2, 2018;
Published: Jul. 31, 2018
Views 677 Downloads 29
Dott Giovanni Antonio Cossiga, Board of Auditors of “Policlinico Umberto 1”, University “La Sapienza”, Roma, Italy
Follow on us
The major Central Banks consider as more stable the economy horizon, when the base value of inflation close to 2% has been reached. It is assumed that a low inflation is affecting the economy efficiency, while a greater balance between the two variables is an advantage. It must be added that basic inflation close to 2% is an abstract value, undefined, because it defines the healthy global economy evolving within the natural system compatibility. In the current global economy, achieving this level of balance is out of reach. This does not mean that an approach to the inflation basic values shouldn’t be pursued, given that a balanced relationship between price inflation and GDP may indicate a tendency to the economic system rebalance. On the other hand, a correlation between Inflation and GDP is a sign of economic instability. A signal of instability due to the debt excess affecting the world economy. Unfortunately, ten years after the serious post-speculation financial crisis, the debt burden has worsened due to the pervasive use of ultra-Keynesian policies to alleviate the side effects of the severe 2008-2012 recession. In fact the post-speculation recessionary crisis did not mitigate the problem of debt excess, but did worsen it instead due to the consequences produced by the cycle support policies. The “sword of Damocles” of excessive debt, therefore, remains hanging over the global economy. In these circumstances, trying to accelerate the economic cycle could lead to a rerun of the speculative boom already experienced. While a global economy proceeding with the aim of a contained but prolonged growth, could certainly avoid to follow the “sirens” of a growing global indebtedness. Provided that monetary and fiscal policy would not derail from the right path of economy compatible growth.
Central Banks, Inflation Constant Basis, Global Indebtedness, Financial Crisis, Monetary Policy
To cite this article
Dott Giovanni Antonio Cossiga,
The Search for Inflation on a Constant Basis at 2%, Social Sciences.
Vol. 7, No. 4,
2018, pp. 165-181.
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/
) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Bernanke, Ben S. (2015). “The Courage to Act. A Memoir of a Crisis and its Aftermath” - W. W. Norton & Company – New York – London.
Cardoso, E. (1992). “Inflation and Poverty” in NBER Working Paper # 4006.
Cossiga G. A. (2018). “Speculative Bubbles in the Near Future? Not Unlikely Indeed.” - Applied Economics and Finance Vol. 5, No. 2; March 2018.
Cossiga G. A. (2018). “Signals from the World of Economics. The Price Constant and the Democratic Issue.” - International Journal of Social and Administrative Sciences. Vol. 3, no. 1, 1- 21.
Cossiga G. A. (2017). Stability and instability of an economic system. Considerations.” - Review of European studies – vol. 9, n. 3 September.
Geithner, T. F. (2014). “TRESS TEST – Reflections on Financial Crises” – Random House Business Books.
Godby, Robert (2014). “The European Financial Crisis: Debt, Growth, and Economic Policy” – Business Expert Press – New York.
Hausken K., Mthuli Ncube (2013) – “Quantitative Easing and Its Impact in the US, Japan, the UK and Europe” SpringerBriefs in Economics.
Krugman, P. R. (2012). “End This Depression Now” - W. W. Norton & Company, Inc. New York.
Lolo F. W,, Rabbitte, Cathal (2017) “Central Banks and World Markets: How to Detect Early Warning Signals of Financial Distress” – Amazon Kindle Store.
Längin, Cedric (2011) “The European Central Bank and the Federal Reserve System - a general comparison” Seminar paper from Cologne University of Applied Sciences.
Mirrlees, J. A. (2006). “Welfare, Incentives, and Taxation”. Oxford University Press. 1 June.
Roubini, N. Mihm, S. (2011). “Crisis Economics: A crash Course in the Future of Finance”. Paperback April.
Reinhart C., Rogoff K. S. (2009). “The Time Is Different. Eight Centuries of Financial Folly”. Princeton University - Press- Princeton and Oxford.
Schumpeter, J. (1939). “Business Cycles: A theoretical, historical and statistical analysis of the Capitalist process”. New York Toronto London: McGraw-Hill Book Company.
Whyman, P. B. (2018) “Rethinking Economic and Monetary Union in Europe: A Post-Keynesian Alternative” - Routledge Taylor and Francis Group – New York.