Perma-slump and Project | 114 comments (114 topical, 0 editorial, 0 hidden)

Re: Perma-slump and Project (4.00 / 4)

The dominant mantra is that the ECB is there to fight inflation, not to target any particular percentage. There isn't even the pretence of an effort to hit 2%.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed May 28th, 2014 at 02:47:05 PM EST
[ Parent ]

Re: Perma-slump and Project (none / 1)

Deflation is the sign of virtue.

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by A swedish kind of death on Thu May 29th, 2014 at 05:02:28 AM EST
[ Parent ]

Re: Perma-slump and Project (none / 1)

Deflation combined with growth.

And jobs.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu May 29th, 2014 at 07:49:17 AM EST
[ Parent ]

Re: Perma-slump and Project (none / 0)

Remember: strictly speaking 2.0% isn't the target but the ceiling.

by IM on Thu May 29th, 2014 at 12:32:36 PM EST
[ Parent ]

Re: Perma-slump and Project (none / 0)

So -2% is OK?

by afew (afew(a in a circle)eurotrib_dot_com) on Thu May 29th, 2014 at 12:41:10 PM EST
[ Parent ]

Re: Perma-slump and Project (4.00 / 3)

ECB: Monetary Policy

The primary objective of the ECB's monetary policy is to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term.

I'd say target is more accurate.

by generic on Thu May 29th, 2014 at 12:46:35 PM EST
[ Parent ]

Re: Perma-slump and Project (none / 0)

true but "below". 1.8% is good, 2.3% not.

by IM on Thu May 29th, 2014 at 12:47:43 PM EST
[ Parent ]

Re: Perma-slump and Project (none / 0)

Even to replace the 2% "target/ceiling" with a 2% 5 year moving average would be a major advance, as it would force more reflationary policy after consistently undershooting the target for some years.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu May 29th, 2014 at 04:02:36 PM EST
[ Parent ]

Re: Perma-slump and Project (4.00 / 3)

No, that would be a bad idea, as it would force meritless contractionary policy after overshooting.

Last year's inflation is water under the bridge.

Now, if your inflation rate systematically undershoots during slumps, and systematically overshoots during booms, then it would indicate that you need more fiscal policy in your policy mix - because fiscal policy works directly on the real economy, while interest rate policy works only at one remove, if at all.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri May 30th, 2014 at 05:53:14 AM EST
[ Parent ]

Re: Perma-slump and Project (4.00 / 2)

1.8% is good, 2.3% not.

And when you get 0.8% you redefine "the medium term" to mean "the medium to long term".

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Carrie (migeru at eurotrib dot com) on Thu May 29th, 2014 at 04:05:34 PM EST
[ Parent ]

Re: Perma-slump and Project (none / 0)

I don't agree. Below but close to 2% means 1.9999...%. And then you have a band around that where you want to be, the closer to the middle of the band the better, say 0.9999...% to 2.9999...%.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Fri May 30th, 2014 at 02:40:56 AM EST
[ Parent ]

Perma-slump and Project | 114 comments (114 topical, 0 editorial, 0 hidden)

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