Articles on Issue Theme
Lucian CROITORU
Banca Naţională a României
When governments are over-indebted, it is mainly the role of monetary policy to focus on re-inflating the economy in order to release it from the liquidity trap. The following problems may arise in this context: linking inflation expectations to base money developments; increased uncertainty regarding central bank`s possibility to revers quantitative easing operation in line with banks’ lower liquidity preference after escaping the liquidity trap; higher inflation when central banks fail to reverse the quantitative easing at an adequate pace for a long period; losses reported by central banks once economies exit the liquidity trap and yields go up. Given the recurrence of the instability cycle and the higher probability of the economy to avoid falling into the liquidity trap if inflation is higher when a bubble bursts, then higher inflation is preferable. This paper suggests the monetary policy objective can be enhanced by shifting it from explicit or implicit targeting of low and stable inflation to explicit targeting of moderate and stable inflation.
ŒCONOMICA no. 1/2012
Keywords: monetary policy, central bank, liquidity trap, inflation
JEL: E31, E32, E41, E43, E51, E58
La ce e bună o inflaţie mai mare? Să eviţi capcana lichidităţii sau să scapi din ea
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Octavian-Dragomir JORA
Academia de Studii Economice din Bucureşti
Mara Andreea TUDOR
University of Chicago
Cătălin MURARAŞU
Academia de Studii Economice din Bucureşti
Ramona Iulia DIEACONESCU
Academia de Studii Economice din Bucureşti
Maria GHEORGHE (NIŢU)
Academia de Studii Economice din Bucureşti
Sorin-Nicolae CURCĂ
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