Nominal
in sentence
688 examples of Nominal in a sentence
Rescue Helicopters for Stranded EconomiesBERKELEY – For countries where
nominal
interest rates are at or near zero, fiscal stimulus should be a no-brainer.
Since there had been inflation between the two rounds of the PPP computation, in 2005 and 2011, we would obviously have to raise the
nominal
poverty line to keep the real line constant.
Nor can policymakers afford to ignore the fourth mismatch – between ultra-low
nominal
interest rates and the relatively higher risk-adjusted return on equity (ROE) for investors – which has contributed to speculative investment and widening wealth and income inequality.
China could create a system in which broad equity stakes – held by pension, social security, or sovereign wealth funds – are professionally managed, thereby guaranteeing not only that the long-term risk-adjusted ROE is higher than the real (inflation-adjusted) GDP growth rate and the
nominal
interest rate, but also that the gains are shared widely among the population.
With
nominal
GDP in these same economies increasing by just $2.1 trillion over the same period, the remaining $6.2 trillion of excess liquidity has distorted asset prices around the world.
It also needs a higher inflation target (to reduce the need for
nominal
wage and price reductions); debt relief, where appropriate; a proper banking union with an adequate, centralized fiscal backstop; and a “safe” eurozone asset that national banks could hold, thereby breaking the sovereign-bank doom loop.
The underlying problem remains that, while both central banks and finance ministries are unhappy about the excessive volatility of real and
nominal
exchange rates, they do not understand very well what causes it.
As a consequence, raising
nominal
interest rates would translate into real interest-rate increases that would widen differentials with advanced economies, thereby attracting even more short-term capital.
Absent significant inflation,
nominal
house prices probably need to fall another 15% in the US, and more in Spain, the UK, and many other countries.
If inflation rises,
nominal
house prices don’t need to fall as much.
Three months ago, I argued that all but a tiny and unbalanced fringe of economists approve of expansionary open-market operations to keep total
nominal
spending constant in a downturn, and I was right.
The mechanisms currently on offer are treaty-based, constitutional, and statutory debt ceilings, pegged as a ratio of GDP, or, as in the US, established in
nominal
terms.
The balance between saving and investment could be achieved, Summers argues, only with a
nominal
interest rate that is below the zero lower bound.
The candidate countries also display greater flexibility of
nominal
prices and wages.
By eliminating
nominal
exchange rate uncertainty, a common currency area has the additional benefit of lowering transaction costs and investment risks.
Past experience implies that the real rate will rise to at least 2%, taking the total
nominal
interest rate to more than 4%, even if expected inflation remains at just 2%.
A higher rate of expected inflation would also cause the total
nominal
rate to be greater than 5%.
History shows that rising inflation is eventually followed by higher
nominal
interest rates.
Fear over the growth effects of the European Central Bank’s 2006 rate increases is based on confusion between real and
nominal
interest rates.
The truth of the matter is that interest rates – both
nominal
and real – are too low in Europe, not too high.
Housing construction and exports are the obvious candidates, and both can be boosted somewhat by more aggressive balance-sheet operations by the Fed, together with promises of continued low
nominal
interest rates and higher inflation in the medium term.
A second, related lesson is that it is difficult to cut
nominal
wages, and that they are certainly not flexible enough to eliminate unemployment.
But the more important figure is China’s
nominal
GDP growth translated into US dollars.
China’s staggering $1.5 trillion expansion in 2017 means that, in
nominal
terms, it essentially created a new economy the size of South Korea, twice the size of Switzerland, and three times the size of Sweden.
The latest data suggest that China could catch up to the US, in
nominal
terms, sometime around 2027, if not before.
And now that Brazil and Russia have put their recent recessions behind them, the BRICs will likely make a large contribution to
nominal
global GDP in 2018.
Bohemia and Moravia became a Reich protectorate, and Slovakia was given
nominal
independence under a puppet regime.
Investors remain willing to finance the US at rock-bottom interest rates, and the
nominal
trade-weighted index of the dollar has not collapsed.
After all, bank depositors regularly lose more when unexpected inflation erodes their savings’ real purchasing power (only the
nominal
value of those deposits is insured).
It took almost six years after the crisis for the US Securities and Exchange Commission to reduce money market funds’ vulnerability, by requiring in 2014 a “floating NAV” (net asset value), which means that prime money market funds no longer promise to pay out a dollar for a dollar’s
nominal
value.
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