High Public Debt, Stagnation, Deflation and Unemployment - Article Example

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From the paper "High Public Debt, Stagnation, Deflation and Unemployment" it is clear that when facing a crisis, policy adjustment lead to diversified response among different countries. It depends on the features of a country such as the scale of the economy and the degree of economic freedom…

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High Public Debt, Stagnation, Deflation and Unemployment

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Subject: Macro & Microeconomics
Type: Article
Level: Undergraduate
Pages: 1 (250 words)
Downloads: 3
Author: freemanmiller

Extract of sample "High Public Debt, Stagnation, Deflation and Unemployment"

According to the policymakers, several policy paradigms were adopted to deal with the macroeconomic problems such as bond financing of budget deficits, fiscal and wage austerity, asset purchases by central banks, reliance on bank lending channels and market solutions, ultra-low longer-term interest rates, become less appropriate. They, therefore, needed to adopt new strategies. The article highlights the major mistakes that were witnessed by the policymakers in their bid to revive the economies. Such problems were witnessed in the financing of fiscal stimulus, monetary policy and fiscal austerity.

Analysis
As an important monetary policy instrument, the base rate was used to bring about changes in the entire financial market of various countries. A reduction in the base rate is likely to result in an increase in the stock market owing to the fact that it increases liquidity in the market. Each country adopted its own policy since the implications vary from one country to another. Read More

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