According to the analysis of this article, inflation could be a solution of the recession. Different from prosperous phases, policy makers usually advises that the inflation rate should be controlled in a moderate degree. It said that a relative higher growth rate of inflation will help alleviate the debt burden of people, and, therefore, stimulate investment. Moreover, the growth of inflation could avoid the decrease of nominal wages, which often arouse complaint from workers. That is, it might be that the real wage is decreased without an awareness of the majority of workers.
In this article, it gives an example of the Britain who probably agrees with the idea of increasing the inflation rate. Britain might use inflation as a tool to transfer wealth from savers to debtors which may help boost the spending. Nevertheless, it points out that although a higher inflation rate will probably solve the problems of recession, policy makers should also pay attention on how much the inflation rate should be increased, since it would have a certain impact on the interest rate of Britain.
More inflation would mean lower real wages which after time would mean a decrease in the unemployment rate and that is partially the solution needed. Inflation can get out of control when growth happens too fast so it would be important to use taxes and other economy factors to keep inflation from getting too high.
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