A threat of deflation in Europe

//A threat of deflation in Europe

A threat of deflation in Europe

Hollande and Draghi

Reuters: Hollande, Draghi agree on threat of deflation: official

Article published: Sep 1, 2014 – out of date: no longer suitable for your IB Economics commentary

IB Economics syllabus: Section 2, Macroeconomics

As deflation is threatening Europe, Mario Draghi, the president of the European Central Bank (ECB) calls for expansionary fiscal policy over contractionary measures, having had a discussion the French president. The problem is that France’s budget deficits have recently been very high, so there is a trade-off here: further increases in the form of a fiscal stimulus would add to the already large deficits – something France does not want. An interesting article, where you can make use of the AD/AS diagram.

Source of photograph: Reuters/Philippe Wojazer

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By | 2017-08-23T11:03:55+00:00 September 1st, 2014|Macro|Comments Off on A threat of deflation in Europe

About the Author:

My name is Daniel Szekely and I work as an IB Economics tutor, examiner and teacher. Having earned an MA degree in Economics at the University of Aberdeen, I started my career as a financial analyst at Morgan Stanley, one of the largest investment banks of the world. Yet, despite the promising career prospects of the banking industry, I decided to make a larger social impact by becoming a teacher. Currently, I teach IB Economics at SEK Budapest International School and have been an examiner for over 8 years. I started EconDaddy as a simple blog to share great articles with my students and others taking IB Economics around the world to use for their commentaries. Being a practicing IB Economics tutor, I have first hand insight into the most common mistakes of students, so the EconDaddy blog now also provides exam and commentary writing tips.

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