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Risks of Falling of the Åurozone and Some EU Countries in a Deflationary Spiral

Author

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  • Gergana Mihaylova-Borisova

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

The central banks of many countries today are facing a serious problem with the dynamics of the price level. Before the global financial crisis of 2008 the countries faced the inflation problem, while after it the countries faced another serious phenomenon - deflation. The European Central Bank and the central banks of Hungary, Poland and the Czech Republic also faced deflation over the past year by seeking alternative solutions to deal with it, especially in circumstances of low interest rates at which price stability as an objective of the monetary policy was difficult to be achieved. Taking into account the negative effects of the deflation in Japan in the 90s of the last century and the beginning of this century, the monetary authorities should take timely action in order to prevent the entry into deflationary spiral, from which the countries could exit very difficult and slowly. The study aims to analyze whether the Eurozone, the Czech Republic, Poland and Hungary are facing risk of falling into a deflationary spiral, and can economies to deal with this economic problem.

Suggested Citation

  • Gergana Mihaylova-Borisova, 2016. "Risks of Falling of the Åurozone and Some EU Countries in a Deflationary Spiral," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 49-60, June.
    • Handle: RePEc:nwe:iisabg:y:2016:i:3:p:49-60
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    More about this item

    Keywords

    deflation; monetary policy; central bank;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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