Deflation
in sentence
696 examples of Deflation in a sentence
Moreover, Europe lacks the governance institutions needed to choose the easiest path to manage economic rebalancing: moderate inflation in the north, rather than grinding
deflation
and universal bankruptcy in the south.
And lower inflation in Germany means that, to close the inflation differential, peripheral countries will need a bout of outright
deflation.
In the late 1990’s, both economies were growing (rapidly in the Spanish case), whereas now they face hard times and a mounting risk of
deflation.
While the goal – to prevent
deflation
and spur growth – is clear, the policies themselves are setting the stage for severe instability.
Deflation, not inflation, has been the problem.
Optimizing the EurozoneTOKYO – The eurozone is facing a bleak economic outlook, with growth remaining stagnant and the threat of
deflation
looming large.
Indeed, excessive wage
deflation
is likely to have negative effects on productivity.
For all of these reasons, excessive austerity and
deflation
could defeat its own purpose and make the “reforms” to improve the southern European countries’ competitiveness impossible to implement.
But it would not require falling wages or significant price deflation: annual wage growth of 1.7% and productivity growth of 2% would be compatible with inflation close to zero.
In short, internal adjustment in the eurozone is achievable without serious
deflation
in the south, provided that productivity growth there accelerates, and that the north does its part by encouraging modestly faster wage gains.
If the north insists on maintaining the low wage growth of the 2000-2010 period, internal adjustment would require significant unemployment and
deflation
in the south, making it more difficult and perhaps politically impossible to achieve.
While the decline in aggregate demand led to reduced imports, the combination of higher interest rates, lower public expenditure, tax increases, and wage
deflation
boosted unemployment and triggered recession.
The US, in an effort to prevent
deflation
and stem rising unemployment, initiated a massive QE program, with the United Kingdom following suit.
If inflation in the eurozone as a whole is below 1%, the periphery countries are condemned to suffer painful
deflation.
This property boom resembled Japan's in the late 1980s, which ended in a bust that led to a protracted period of anemic growth and
deflation
from which the country is still struggling to escape.
Some observers have argued for a higher stable inflation target in the eurozone to facilitate the “relative deflation” process in countries that need it, and to put the “zero bound” on interest rates further away, thereby enhancing the potential impact of monetary policy.
But, in the event of a crisis, the tools available to central banks to prevent
deflation
and a collapse of the real economy are severely constrained, especially today.
In the early twentieth century, central banks could all devalue their currencies against gold, thereby raising the price level and escaping debt
deflation.
In the inter-war period, capitalism seemed doomed by intolerable inequalities, deflation, and mass unemployment.
The prevailing strategy in Europe remains simply to force internal devaluation on the southern countries, with excessive austerity aimed at causing severe wage and price
deflation.
Japan’s economy has swung from negative to positive growth and is on the verge of breaking free from chronic
deflation.
This willingness to accept a situation, however bad, as long as it affects everyone equally is what enabled Japan to endure two decades of deflation, without a public outcry over the authorities' repeated failure to redress it.
The government, the central bank, the media, and companies wasted far too much time simply enduring
deflation
– time that they should have spent working actively to address it.
Japan finally has a government, led by Prime Minister Shinzo Abe, that is committed to ending
deflation
and reinvigorating economic growth, using a combination of expansionary monetary policy, active fiscal policy, and deregulation.
For example, though the recent reduction in the corporate-tax rate was necessary to encourage economic growth and attract investment, it seems to many Japanese to be a questionable move at a time when the consumption-tax rate has been increased and measures to address
deflation
are pushing up prices.
These expenditures could simultaneously stimulate the economy in ways that would finally pull it out of
deflation.
Perhaps it is
deflation.
Perhaps, but most students of monetary policy view quantitative easing as the textbook policy for pulling an economy out of a zero-interest-rate “liquidity trap,” thereby preventing the onset of a sustained deflation, which would exacerbate debt burdens.
But that is a phantom risk, because it is the risk of deflation, not inflation, that haunts the PIIGS.
If China, emerging markets, and other surplus countries prevent nominal currency appreciation via intervention – and prevent real appreciation via sterilization of such intervention – the only way deficit countries can achieve real depreciation is via
deflation.
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