StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

3 faces of low inflation: U.S., Japan and the Euro Area - Essay Example

Cite this document
Summary
In the past, large economies have experienced inflations, but they have taken different aspects and forms from the ones experienced by the United…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.8% of users find it useful
3 faces of low inflation: U.S., Japan and the Euro Area
Read Text Preview

Extract of sample "3 faces of low inflation: U.S., Japan and the Euro Area"

Three Faces of Inflation: U.S., Japan and the Eurozone I support the arguments raised Contessi and Li over the three faces of inflation in the United States, Japan and the Eurozone. In the past, large economies have experienced inflations, but they have taken different aspects and forms from the ones experienced by the United States, Japan and the Eurozone.The experience examined by Contessi regarding inflation was accurate because they yearly inflation experienced due to personal consumption expenditure lie, for example in the month of April was found to be 1.

98 percent in 2012 before dropping in October and rising back in April 2014. Moreover, for the Eurozone the yearly inflation measured or examined by reputable agencies has been found to record a drop between the period of 2012 and 2014 placing Japan’s inflation risk in 2012 to be negative . However, over the years, inflation has taken a totally different dimension recording a higher rise since the early 90s. According to Contessi and Li, the trends which shape, inflation rates on the positive and negative sides have taken on a different dimension as the trends appears to be quite different and the low inflation rates in the three areas , United States, Japan and the Eurozone both holds different explanation.

A good example is that between the countries, energy and food prices have been behaving differently as some charge extra while some experience reduction of the standard prices. Energy prices in the United States and Japan increased as compared to the Eurozone where a decrease was measured. However, this was not the case of food prices as it was the opposite. Food prices in the United States and Japan decreased while indicating an increase in the Eurozone area. Therefore, the three different directions taken by the three regions only suggest that the changes were caused based on the domestic conditions as compared to outside conditions (Laxton, Igor & Charles 29).

I also believe that the difference in inflation rates between the three countries is as a result of the slow increase in prices, which positively affects purchasing parity of customers and increases the actual costs of repaying debt incurred both publicly and privately. It is also true that there are important lessons to be learned for past occurances or happenings because whenever there is a speculation of price reductions in the markets, the speculations will be difficult to reverse as most individuals trading in the market will feel deceived when prices of commodities are not reduced for them in the market.

The relevance for current and future policy imposed on the three faces of low inflation in the United States, Japan and Euro area is that it allow the countries to produce the plausible dynamics and sensible forecasting necessary for driving their countries into inflation challenges or problems again. Works CitedContessi, Silvio, and Li Li - Federal Reserve Bank of St. Louis. "Three Faces of Low Inflation: U.S., Japan and the Euro Area." Three Faces of Low Inflation: U.S., Japan and the Euro Area. Web. 1 Dec. 2014. .

Laxton, Jared, Igor Ermolaev, and Charles Freedman. A Small Quarterly Multi-Country Projection Model. Washington: International Monetary Fund, 2008. Internet resource.World Economic Outlook, October 2007: Globalization and Inequality. Washington: International Monetary Fund, 2007. Internet resource.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“3 faces of low inflation: U.S., Japan and the Euro Area Essay”, n.d.)
3 faces of low inflation: U.S., Japan and the Euro Area Essay. Retrieved from https://studentshare.org/business/1669618-3-faces-of-low-inflation-us-japan-and-the-euro-area
(3 Faces of Low Inflation: U.S., Japan and the Euro Area Essay)
3 Faces of Low Inflation: U.S., Japan and the Euro Area Essay. https://studentshare.org/business/1669618-3-faces-of-low-inflation-us-japan-and-the-euro-area.
“3 Faces of Low Inflation: U.S., Japan and the Euro Area Essay”, n.d. https://studentshare.org/business/1669618-3-faces-of-low-inflation-us-japan-and-the-euro-area.
  • Cited: 0 times

CHECK THESE SAMPLES OF 3 faces of low inflation: U.S., Japan and the Euro Area

Are We Heading for a World Currency

zone, euro zone and the Yen zone (Volcker 8).... Name: Instructor: Course: Date: Are We Heading For a World Currency Yes, we could be heading for a world currency, but the possibility of getting one anytime soon is minimal.... The growth of globalization, a process that has been going on for over 5,000 years, necessitates the need for a single global currency (SGC) (Bonpasse 89)....
12 Pages (3000 words) Essay

Macroeconomic and Financial Risks

High levels of pension and social security have been blamed for the euro zone crisis which is again an unproductive spending (Sanderatne).... he euro zone is already suffering from the debt crisis and no immediate solution to the problem seems to be in sight.... here are some developed countries like Greece , Italy and Portugal and japan which have had historically higher level of debt.... Macroeconomic & Financial Risks Your Name 11th April 2013 Contents Contents 2 Introduction 3 List of Risks 3 Discussions 4 Public Debt 4 Nature of the risk 4 Causes of the risk 4 Consequences of High Public Debt 5 Solutions 6 Economic Stagnation 7 Nature of the Risk 7 Causes of the risk 8 Consequences of the Risk 9 Solutions to the risk 10 Balance of Trade & Competitiveness 11 Nature of Crisis 11 Consequences of the crisis 11 Solutions 13 Interest Rate risks 14 Nature of Risk 14 Consequences of Increasing Interest rates 14 Solutions 16 inflation Risk 17 Nature of the Risk 17 Consequences of the risk 17 Works cited 20 Introduction This paper considers some of the mac… roeconomic and financial risks which are faced by the developed countries ....
17 Pages (4250 words) Research Paper

The Euro's challenge to the dollar

The ongoing crisis has eliminated the possibility of the UK entering into the Euroland for at least couple of years until the crisis gets resolved and the euro gets stabilized with an international perception that the euro will be able to maintain its value.... Currently, Euro is the official currency of the 17 euro area countries with a population of 330 million.... Currently, Euro is the official currency of the 17 euro area countries with a population of 330 million....
3 Pages (750 words) Essay

The international banking market

Nevertheless, international bank flows to non-banks in the euro area more than halved to $20 billion, Banks resident in the United Kingdom and the euro area, which had provided massive sums to non-bank borrowers in Banks' cross-border claims on non-banks in the United States have increased since late 1999.... To some extent, banks in the reporting area unwound the large interbank positions that they had built up during the first quarter, with funds moving from banking centres in the euro area to London and then being passed on to Tokyo, Zurich, the Bahamas and the Cayman Islands....
13 Pages (3250 words) Essay

Fiscal Measures of the Central Bank of Japan

Naturally, the introduction is followed by the description of the intended area of study, the primary tools of correction, their effect in countering deflation, and finally, the conclusion transgress in a clear and coherent way.... The paper is a popular article looking to presenting the fiscal measures undertaken by the Central Bank of japan to countries the deflation faced by japan during the 2000 - 2006 periods.... hellip; The paper also discusses the topic of deflation as a whole and finally the impact of the financial measures of the Central Bank of japan on in the Japanese economy. The author approaches the paper with a clear statement of objective in his introduction....
7 Pages (1750 words) Essay

Is the US Banking Crisis Likely to Lead to a Similar Experience as the Japanese Lost Decade

After the Lost Decade only four national banks of japan remained.... The Japanese banking sector was in crisis and many banks were bailed by the government or the whole banking sector of japan would have been destroyed.... The economic situation in japan is now not as bad as the Lost Decade when the economic expansion had just come to an abrupt stop.... It is argued by many economists that the economic situation in America is on the path of economic crisis like the Lost Decade in japan....
12 Pages (3000 words) Essay

Eurozone Deflation Danger

Based on the contribution that Germany makes to the Eurozone, this means that the euro area will head towards its third recession.... Unlike Japan's case, whose society is enduring and homogenous, it is not possible for the euro area to cope with this issue after witnessing years of falling prices and economic sclerosis.... As a result, the euro will head towards failure sooner (Eichengreen, 2014).... espite the effect being felt in Europe, several optimists both outside and inside Europe refer to the example of japan....
5 Pages (1250 words) Assignment

Fluctuations in the Value of Sterling with Respect to the Yen

On the other hand, the economy has stability in japan.... The demand for Japanese goods might have gone up during this period as compared to European goods in japan.... The social and economic factors include the cost of labor, labor reports, consumer price index, producer price index, demands of goods and services in the market, productivity, inflation rate....
20 Pages (5000 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us