Implikace Rakouské teorie cyklu pro strategie cílování inflace

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Title in English Implications of Austrian Business Cycle Theory for Inflation Targeting


Year of publication 2007
Type Article in Periodical
Magazine / Source Národohospodářský obzor
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords inflation targeting austrian business cycle
Description Austrian Business Cycle Theory created by Mises and Hayek shows how a manipulation with a credit and interest rate affects the time structure of production, and causes a business cycle. Whenever the interest rate is below its equilibrium level, new credit not supported by voluntary savings is created, which both rises the price level at an accelerated speed, and shifts factors of production to production stages of a higher order. When the expansion stops, voluntary savings are not big enough to support the lengthened production: factors of production are shifted back, and the specific ones are spoiled. The process may or may not to manifest itself in aggregate data--it may be hidden in the structure of the aggregate product. Implications for inflation targeting are straightforward: Since in a growing economy, the positive inflation is always associated with the interest rate below its equilibrium level, the goal of a !small positive stable inflation" may be quite undesirable. Moreover, it is not obvious how a stable positive inflation rate can be maintained. If it is done by lowering and rising the interest rate, it forces the economy to shift factors of production to the lengthier production processes and then back, wasting the capital. Inflation targeting is then a fair improvement comparing to the older inflationistic policies with no commitment but it still need not to be a sufficient one: A step to zero-inflation goal, or even deflation may be desirable.
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