Inflation in latvia. It's Causes,
Consequences and Government reaction.
First, on must define inflation.
According to the Oxford Dictionary of Economics it is defined as:
A persistent tendency for prices and
money wages to increase. Inflation is measured by the proportional
changes over time in some appropriate price index, commonly a
consumer price index or a GDP deflator...
Inflation in latvia:
Causes:
One could argue that the latest rapid
increase in inflation was due to Eu accession or on unfavourable
exchange rate as the law is now pegged to the euro, rather it is as
states in an inflation report which was issues may of 2006 which
stated that:: "...
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Inflation in Latvia: Causes, Consequences and Government Response
Inflation is a phenomenon defined as a persistent rise in prices. There are two major reasons that inflation increases, demand-pull and cost-push. Demand-pull is when the supply of products is low and the increase in demand shifts the aggregate demand curve to the right, thereby raising prices. Cost-push is when the costs of production increase and producers pass these costs onto consumers by raising prices. This causes the short run aggregate supply curve to shift to the left. There are many consequences to high inflation. One of these consequences, according to the Phillip’s Curve, is low unemployment. The theory is that as prices rise and producers make high profits, the demand for workers increases as producers require them to keep up their current levels of output. Another consequence of high inflation is that exports become less competitive, because their prices are so much higher than other countries’ e
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To compare the economic transition for certain country, analyzing the economic factors such as unemployment (Percentage of people who don't have jobs out of total population), GDP per capita (Average income for each person) etc are necessary. Some country like Latvia, they completely finished their economic transition (change of economic system from command economy to free market economy) but they are having some economic depression or recession (when the economic growth rate goes down). If we just look at economic transition, Latvian economic transition is much successful than economic transition of Belarus. Even though progress of Latvian economic transition is faster than economic transition in Belarus, there is a huge problem in Latvian Economy.
When Latvia got an independence from U.S.S.R, Latvia government changed economy to Free Market Economy (There is no government intervention. People can produce and consume the product as much as they want). Unfortunately, this rapid tra
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The Parex Banka is a major Latvian bank in the mostly Scandinavian-controlled banking sector of Latvia. In 2008 the Latvian Government bought 51% of the bank’s shares for a symbolic payment of LVL 2,00. Large sums of money were invested into the bank in order for Parex Banka to be able to keep on working normally. In March of 2010 Latvia’s Government decided to take a new course concerning the case of Parex Banka. It was decided to split up the bank into a new "good” bank and to keep the old Parex Banka. "The existing Parex banka will continue to pursue some of its business activities, focusing primarily on recovering resources” (Artūrs Grants, source: Latvian Institute), however "the old Parex banka will not offer any new products or additional loans to the existing clients"(Matthew French, source: Latvian Institute). The new bank on the other hand will be sold to private investors, once the economic situation improves the bank is expected to make profits and should be able to repay t
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Welcome to the ISL Economics Blog that will be a significant part of your learning experience this year.
ISL Economics Blog is a platform to express your opinions and explain your unique views about what is happening around us in economic terms. This is your chance to be heard in a wider audience and to discuss economic issues with your peers, teachers and even parents. Active participation in Blog post discussions (reading the blog posts of other students and responding through your comments) will make your learning process more dynamic and fun.
Your blog posts and commentaries will be instrumental assessing your abilities to apply/analyze various economic terms, concepts and theories learned in class to/through real-world situations.
Possible themes (topics) for your blog posts will be given to you during Economics classes and will be linked to current units.
