Nominal
in sentence
688 examples of Nominal in a sentence
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.
If
nominal
and real depreciation (appreciation) of the deficit (surplus) countries fails to occur, the deficit countries’ falling domestic demand and the surplus countries’ failure to reduce savings and increase consumption will lead to a global shortfall in aggregate demand in the face of a capacity glut.
There is a further reason why deflation is such a threat, and why policymakers setting out to eliminate it have a much tougher task than inflation fighters: all prices do not move down; in particular debts do not adjust because they are fixed in
nominal
terms.
The problem now is that the natural interest rate – that is, the liquid safe
nominal
interest rate on short-term US Treasury securities – is less than zero.
But, while the worldwide recession of 1981-2 brought inflation down rapidly,
nominal
long-term interest rates did not fall immediately, for the world’s markets were still not convinced.
In fact, if one takes a longer view of real interest rates in the US, calculated by subtracting the previous year’s inflation from the
nominal
government bond yield, one finds that, while they are much lower than 20 years ago, they are not low by historical standards.
Indeed, these reforms seem to be the only force driving the (nominal) recovery that the plan projects after 2022.
My Cass lecture argued, however, that in a fiat money system, the authorities never run out of ammunition with which to stimulate
nominal
demand.
Quite rightly, he starts with the same fundamental question I posed in my Cass lecture: Do we need more stimulative policies of any sort to engender a faster rate of
nominal
GDP growth than is currently being achieved?
As I argued in my Cass lecture, the disappointing division of UK
nominal
GDP growth between inflation and real output over the last five years casts doubt on whether more stimulus is the most appropriate policy.
That said, across the major advanced economies – Japan, the eurozone, the UK, and the US –
nominal
GDP growth rates over the last five years have been well below those compatible with low inflation and attainable real output growth.
More rapid
nominal
GDP growth would almost certainly have resulted in higher real growth and would have made it easier to achieve necessary deleveraging.
But the experience of Japan over the last 20 years shows that without moderately positive
nominal
GDP growth, aggregate leverage (private and public combined) tends to increase relentlessly.
But, in terms of the immediate impact on
nominal
GDP, they would almost certainly be significantly different.
The case for OMF does not rely on any assumed mechanical relationship between the monetary base, the money supply, and
nominal
GDP.
Indeed, it rests quite explicitly on the belief that in some circumstances increases in the monetary base per se will be wholly ineffective in stimulating
nominal
demand because of liquidity-trap effects.
In a fiat-money world without fractional reserve banks, OMF is an obvious strategy: indeed, without it, positive
nominal
GDP growth might be difficult to achieve, and optimal real growth might therefore require an unattainable downward flexibility in
nominal
wages and prices.
If more
nominal
demand is desirable, it would make sense to skew it toward investment, not consumption.
Nominal
interest rates – quoted in terms of dollars, euros, renminbi, etc. – are difficult to interpret, since the real cost of borrowing at these rates depends on the future course of inflation, which is always unknown.
Economists like to subtract the
nominal
government bond yield from the inflation-indexed bond yield of the same maturity to get a market estimate of the inflation rate from now to that maturity date.
One can never have negative
nominal
interest rates (except through some oddity of taxes or regulations), since lenders would rather hold their cash than effectively pay borrowers.
This would be an opportune time for governments to issue more inflation-indexed debt, to begin issuing it, or to issue
nominal
GDP-linked debt, which is analogous to it.
Economists begin by summing up everyone’s money incomes to derive
nominal
Gross Domestic Product – or, for the sake of simplicity, the country’s total money income (N).
A second area of consensus has emerged from frequent debates on the potential conflict between
nominal
and real economic convergence between the EU accession countries and the current member states.
But most accession countries have already achieved substantial progress in lowering inflation and
nominal
interest rates.
Considering the advanced stage of the economic cycle, forecasts for
nominal
growth of more than 4%, and low unemployment – not to mention the risk of overheating – the Fed is behind the curve.
In this sense, the ECB’s Governing Council is, consciously or unconsciously, following the Nobel laureate economist Paul Krugman’s 1998 advice that the Bank of Japan “credibly promise to be irresponsible” when
nominal
interest rates are already at zero and monetary policy is in danger of becoming ineffective.
Clearly, this was not the case with the European Central Bank, which kept running up against the now infamous zero lower bound on
nominal
interest rates.
The Fed can maintain
nominal
prices,
nominal
wages, and growth if it acts heroically, as it did in 2008.
Collectively, the N-11 comprises some 1.5 billion people, and its current
nominal
GDP is around $6.5 trillion.
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