Reflation is used to describe a return of prices to a previous rate of inflation. One usage describes an act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically the price level) back up to the long-term trend, following a dip in the business cycle. It is the opposite of disinflation, which seeks to return the economy back down to the long-term trend.[1][2]
In this perspective, reflation, is contrasted with inflation (narrowly speaking) above the some long-term trend line, while reflation is a recovery of the price level when it has fallen below the trend line.[3][4] For example, if inflation had been running at a 3% rate, but for one year it falls to 0%, the following year would need 6% inflation (actually 6.09% due to compounding) to catch back up to the long-term trend. This higher than normal inflation is considered reflation, since it is a return to trend, not exceeding the long-term trend.
This distinction is predicated on a theory that economic growth, where there is long-term growth in the economy and price level, is both sustainable and desirable. Just as disinflation is considered an acceptable antidote to high inflation, reflation is considered to be an antidote to deflation (which, unlike inflation, is considered bad regardless of its magnitude).
Reflation has also found usage in forensic economics to describe a return to monopolistic (exorbitant) price paths following correction. Inflation can be regarded as expansion of prices beyond previous levels, while reflation can describe return to a previous pricing strategy.
The term "reflation" can also refer to an economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output. This can possibly be achieved by methods that include reducing tax, changing the money supply, or even adjusting interest rates.[5]
Originally, it was used to describe a recovery of price to a previous desirable level after a fall caused by a recession. Today it also (in addition to the above) describes the first phase in the recovery of an economy which is beginning to experience increasing prices at the end of a slump. With rising prices, employment, output and income also increase till the economy reaches the level of full employment.[6]
reflation, used, describe, return, prices, previous, rate, inflation, usage, describes, stimulating, economy, increasing, money, supply, reducing, taxes, seeking, bring, economy, specifically, price, level, back, long, term, trend, following, business, cycle, . Reflation is used to describe a return of prices to a previous rate of inflation One usage describes an act of stimulating the economy by increasing the money supply or by reducing taxes seeking to bring the economy specifically the price level back up to the long term trend following a dip in the business cycle It is the opposite of disinflation which seeks to return the economy back down to the long term trend 1 2 Contents 1 Overview 2 Policy 3 See also 4 References 5 External linksOverview EditIn this perspective reflation is contrasted with inflation narrowly speaking above the some long term trend line while reflation is a recovery of the price level when it has fallen below the trend line 3 4 For example if inflation had been running at a 3 rate but for one year it falls to 0 the following year would need 6 inflation actually 6 09 due to compounding to catch back up to the long term trend This higher than normal inflation is considered reflation since it is a return to trend not exceeding the long term trend This distinction is predicated on a theory that economic growth where there is long term growth in the economy and price level is both sustainable and desirable Just as disinflation is considered an acceptable antidote to high inflation reflation is considered to be an antidote to deflation which unlike inflation is considered bad regardless of its magnitude Reflation has also found usage in forensic economics to describe a return to monopolistic exorbitant price paths following correction Inflation can be regarded as expansion of prices beyond previous levels while reflation can describe return to a previous pricing strategy Policy EditFurther information Economic stimulus The term reflation can also refer to an economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country s output This can possibly be achieved by methods that include reducing tax changing the money supply or even adjusting interest rates 5 Originally it was used to describe a recovery of price to a previous desirable level after a fall caused by a recession Today it also in addition to the above describes the first phase in the recovery of an economy which is beginning to experience increasing prices at the end of a slump With rising prices employment output and income also increase till the economy reaches the level of full employment 6 See also EditEconomic bubble InflationismReferences Edit Report Reflation Risk Goldman Sachs 7 April 2021 Retrieved 8 June 2021 What is reflation Definition and meaning Market Business News Retrieved 8 June 2021 Position for reflation UBS Retrieved 8 June 2021 Parkes Graham 2021 02 23 What is a reflation trade and why is it important to investing The Sydney Morning Herald Retrieved 8 June 2021 Global Reflation Continues PDF Morgan Stanley March 2017 Retrieved 8 June 2021 Baker Jonathan 14 January 2021 The Reflation Trade What Is It BDF LLC BDF Retrieved 8 June 2021 External links EditDalio Ray September 22 2013 How The Economic Machine Works Archived from the original on 2021 12 13 via YouTube nbsp This article related to macroeconomics is a stub You can help Wikipedia by expanding it vte Retrieved from https en wikipedia org w index php title Reflation amp oldid 1102880569, wikipedia, wiki, book, books, library,
