It has been embraced in emerging-market finance ministries, threatening trouble
This chaos reflects the upside-down monetary policy pursued by Mr Erdogan. He insists that lowering interest rates is the key to fighting inflation, rather than tightening the screws, which is the solution favoured by generations of orthodox economists. To explain how this could be the case, Turkish officials invoke names ranging from Irving Fisher to God .
Some reasons for supporting ultra-loose policy when inflation is out of control are much older than Turkey’s experiment. Inflation eats away at the value of official debts, which weigh down developing countries. Letting prices run wild is an appealing option when a government has borrowed too much, even if it is also the surest path to hyperinflation and a currency crash.
It is nevertheless true that monetary policy works differently in emerging economies. Foreign investment matters more for market rates; aggregate demand matters less. In a recent paper Gita Gopinath, the’s chief economist, and co-authors find that emerging markets’ policy rates have next to no impact on their real economies.
Nor are international markets the only force with which policy must contend. Poor countries are also home to big informal sectors, where firms do not borrow from banks. Thegdp
Belgique Dernières Nouvelles, Belgique Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
Statue unveiled in honour of Polish World War Two hero in NewarkGeneral Wladyslaw Sikorski was buried in Newark before his body was returned to Poland in 1993.
Lire la suite »
Unsung Bridgnorth pub footballer hailed as one of world's 'coolest goalkeepers'A little-known goalkeeper who used to play for a pub team in Bridgnorth has been recognised as on of the 'coolest goalkeepers of all time' by a leading sports magazine.
Lire la suite »
China says local semiconductor manufacturing not world classChina admits local semiconductor industry can't match world class reliability
Lire la suite »
Injured Wightman will not defend world 1500m titleBritain's Jake Wightman will not defend his 1500m title at the World Championships in Budapest in August after an injury-disrupted season.
Lire la suite »
Gaza - The Latest News from the UK and Around the World | Sky NewsThe activity over Gaza comes less than a day after Israel began to scale back an operation in the West Bank which led to the deaths of several Palestinians and an Israeli soldier. Read more:
Lire la suite »