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Measures to Contain Inflation and the Trade Deficit

Countries around the world - from Vietnam to Kazakhstan - have adopted these measures to reduce their burgeoning inflation and trade deficit:  Hedging (fixing the future prices of foodstuffs, oil, and...

Countries around the world - from Vietnam to Kazakhstan - have adopted these measures to reduce their burgeoning inflation and trade deficit:  Hedging (fixing the future prices of foodstuffs, oil, and commodities by purchasing forward contracts in the global markets)  Removal of import duties, excise taxes, VAT, and other taxes and fees on all energy products and foodstuffs  Subsidizing the consumption of the poorest 10% of the population  Introducing price controls and freezing the prices of essential products  Banning the export of foodstuffs (or introducing customs duties and quotas on such exports)  Raising interest rates and reserve requirements in the banking system to prevent new credit formation  Forcing banks to purchase government bonds to reduce liquidity in the market  Administratively capping credit growth and tightening lending to consumers and for real-estate transactions  Freezing, reducing or waiving public sector fees and charges  Releasing commodities, oil, and minerals from strategic reserves  Capping interest rates on deposits (to prevent credit formation using money from new deposits)  Reclaiming agricultural lands and modernizing farms and agriculture (long-term measures)  Declaring a World Trade Organization (WTO) emergency and introducing import quotas and duties on non-essentials and luxury goods  Introducing an inflation target Allowing for a gradual devaluation of the currency, within a band or range or as a crawling peg. A strong currency has anti-inflationary effects, so any devaluation must be minimal, slow, and subject to market forces.

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ABOUT THE AUTHOR


Sam Vaknin ( http://samvak.tripod.com/ ) is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East.He served as a columnist for Central Europe Review, Global Politician, PopMatters, eBookWeb , and Bellaonline, and as a United Press International (UPI) Senior Business Correspondent. He was the editor of mental health and Central East Europe categories in The Open Directory and Suite101.



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