Nominal
in sentence
688 examples of Nominal in a sentence
Indeed, inflation was finally crushed in the early 1980s, when central banks raised interest rates to whatever level was required to constrain
nominal
demand, even if it led to high transitional unemployment.
The result in many countries has been stagnant real wages, increased inequality, and a potential structural bias toward deficient
nominal
demand.
Just as determined monetary restraint 30 years ago ultimately overwhelmed cost-push pressures, an equally determined policy in the other direction could, in theory, boost
nominal
demand growth today.
But policymakers always have another option for creating
nominal
demand: printing money to finance their fiscal deficits.
The permanent availability of this approach – what Friedman called “helicopter” money – makes deficient
nominal
demand one of the very few economic problems for which there is always an answer.
While cash hoarding pushes down
nominal
interest rates by reducing currency in circulation, the rapid decline in inflation will drive up the actual interest rate, thereby aggravating the debt burden.
Instead, central banks should focus on the rate of revenue increase, measured in
nominal
GDP growth; that is, after all, what matters for highly indebted governments and enterprises.
Moreover,
nominal
GDP growth exceeds the long-term interest rate.
But today,
nominal
GDP growth far exceeds average long-term interest rates (which, in some countries, include risk premia of up to 100 basis points) – even in the eurozone, where
nominal
GDP growth is expected to reach about 3% this year.
In fact,
nominal
interest rates are at zero, while the broadest price indices are increasing, albeit gently.
But if the best way to reduce sovereign over-indebtedness is to achieve higher
nominal
GDP growth (the combination of real growth and inflation), cutting investment – a key ingredient in a pro-growth-strategy – is not a sound approach.
They would be compensated for inflation and currency depreciation in the US and Europe, since the payout would depend on these economies’ nominal, not real, GDP.
And the CPC’s single-minded focus on spurring GDP growth over the last few decades has delivered an “economic miracle,” with
nominal
per capita income skyrocketing from $333 in 1991 to $7,329 last year.
Yes, the financial system is insolvent, but it has
nominal
liabilities and either it or its borrowers have some real assets.
Given the low base, and the Fed’s obvious caution,
nominal
interest rates are unlikely to climb too far by the next US recession.
With a lack of traditional rate-cutting firepower, the next downturn could be longer than usual, compelling further reliance on unconventional monetary policy – even beyond the negative
nominal
interest rates now being pursued in Europe and Japan.
A higher target is essential in order to have enough room to make the cuts in short-term safe
nominal
interest rates of five percentage points or more that are usually called for to cushion the effects of a recession when it hits the economy.
Even an economy with an overall budget deficit will have a declining government debt/GDP ratio if the growth rate of its
nominal
GDP exceeds that of its debt.
Stated differently, now that Greece has achieved a zero primary budget deficit, its debt burden will decline if its
nominal
growth rate exceeds the average interest that it pays on its government debt.
Given increased dollar revenues and easy access to dollars, the government was able to maintain a fixed
nominal
exchange rate.
Negative
nominal
policy interest rates are a more recent phase of these policies.
Although the Fed expanded its balance sheet from less than $1 trillion in late 2008 to $4.5 trillion by the fall of 2014,
nominal
GDP increased by only $2.7 trillion.
More importantly, the exit path would restore growth right away, via
nominal
and real depreciation, avoiding a decade-long depression.
The experience of Iceland and many emerging markets over the past 20 years shows that
nominal
depreciation and orderly restructuring and reduction of foreign debts can restore debt sustainability, competitiveness, and growth.
Cuba has one of the world’s longest-lasting dual-exchange-rate systems: the dollar’s market value is 25 times the official rate of
nominal
parity (one peso equals one dollar).
Strictly speaking, zero rates are observed only for nominal, medium-term debt that is perceived to be riskless.
Here, one must consider not only the
nominal
interest rate, but also the real (inflation-adjusted) interest rate.
A very low – or even negative –
nominal
interest rate could produce a positive real return for a saver, if prices fall sufficiently.
In fact, Japanese savers have been benefiting from this phenomenon for more than a decade, reaping higher real returns than their counterparts in the US, even though Japan’s near-zero
nominal
interest rates are much lower than America’s.
Nonetheless,
nominal
rates do matter.
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