By Zimbabwean Economists.
Due to a plethora, multitude, and various microeconomic and macroeconomic challenges the in domestic and global economy, prices of goods and services have been rising whilst wages are stagnant or increasing at a rate below consumer price index levels. This has resulted in falling Economic agents real disposable incomes and consumption in most places.
Inflation is a sustained increase in the cost of living or the general price level leading to a fall in the purchasing power of money.
The rate of inflation is measured by the annual percentage change in consumer prices.
Inflation is measured by the consumer price index in most economies globally.
How is the rate of inflation calculated?
The cost of living (consumer price index) is a measure of changes in the average cost of buying a basket of different goods and services for a typical household.
Please remember that a fall in the rate of inflation is not the same thing as a fall in prices
A slowdown in inflation is not the same as deflation.
There are some social and main stream media reports currently circulating regarding rising prices in Zimbabwe and other countries. As part of good citizenship and positive contributions in society, *Zimbabwe Economists* have deliberated on the pertinent causes of rising consumer price index and have shared their different views. The following are some of the key points suggested to improve Zimbabwe’s macroeconomic outcomes:
What’s the solutions to these macroeconomic problems nhai Economists, that’s your positive externalities role in the economy?
Just describing problems without offering solutions is not very helpful mostly ?
1. From my Microeconomics and macroeconomics perspective, I strongly believe *removal of long standing sanctions overhang* is the first step towards improvement of our production capacity.
2. God willing a return to ZW$ for all domestic transactions and forex only for capital stock additions imports.
3. Deliberate quantitative easing and fiscal stimulus earmarked for boosting Supply Side Economics (production production).
4. Public and private sector rationalisations.
5. Industry retooling and labour productivity improvement, some ppl are paid for producing nothing whilst they moonlight or gallivanting.
6. Macro prudential monetary policy. Central Bank to shift from using Short term debt instruments (TBs) to more sustainable long term debt instrument 5-15 year bonds
7. Hey current Gov Debt is being paid by issuing new debt plus revenue from seigniorage. It is the gov priority to see what to use mainly since inflation will be controlled by either allow the deficit to be paid by issuing new debt or by printing money at a constant rate. If they chose to pick a higher inflation today they will prolong the catastrophe point where the Central bank will not be in a position to pick an inflation rate since they would have attained the highest possible debt level to be attained. If they chose low inflation today and focus on financing their deficit through borrowing to the public they will quickly arrive at the catastrophe date in time and from that point the monetary policy will ballon to cushion all the government deficit thus lead to hyperinflation. So if you don’t have monetary sovereignty how are they going to play arums with the fiscal-monetary policy arithmetic. I think they should go and read the paper of Sargent and Wallace, titled ‘ Some unpleasant monetary arithmetic’
President ED has already started macroeconomic stabilisation progressive policies, I hope we understand *time lags* to realise the full impact of these great initiatives.
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