Macroeconomics Group Assignment

Macroeconomics Group Assignment

Introduction

This study seeks to investigate the relationship between inflation and inflation uncertainty in Finland 198-2008. The comparison should take into account the fact that in June last year had a smaller value added tax and energy taxes had not struck yet at full power. Statistics calculates that the changes introduced during the commodity taxes on consumer prices increased by 0.5 percentage points. Sweden is leading the Finnish at the moment in clear figures, economic indicators during the match, says Helsingin Sanomat .

The Swedish economy is growing faster than Finnish (gross domestic product growth of 5.5 per cent in 2010, Finland by 3.1 per cent), the unemployment rate is lower (7.7 per cent in Sweden, Finland 8.2 per cent) and a higher employment rate (72.7 and 68.1) . In addition, Sweden will not take more debt (general government deficit of 0.0 per cent in 2010), while Finland indebtedness increases every year (deficit of 2.5 per cent in 2010).

Inflation

It is the general increase in prices, but this is relative because there is constantly rising inflation is the progressive, constant general price increase on the basis of the above. Further increase generates an increase that is what is called "the inflationary spiral. (Tsay 2001)" The concept of inflation is difficult interpretation as a symptom of the state of deterioration of the economy, a bad political economy, the country's economic mess.

Whereas in Sweden, In the autumn of 2008, inflation was at its highest in 15 years, but the economic crisis, it fell significantly at the 2009 summer even negative. As the economy recovers, inflation has also gone to a moderate increase. The Swedish central bank Riksbank cut the policy rate, repo rate, on several occasions during 2008-2009. At the higher interest rate was 4.25 per cent in the autumn of 2008.

The decrease began in October 2008 and July 2009 rate was down to 0.25 percent. Sweden's central bank began to raise its key interest rate again in the summer of 2010. October 2010 rate decision, the repo rate was raised to 1.0 per cent. Repo rate was 1.75 per cent in March 2011 and is expected to rise 2 percent in 2013.

. It provides an overview of the phenomenon called inflation and economic imbalance characterized by a general rise in prices and that comes from the increase of paper money, damage or mishandling of the economy of a country, bringing as a result there is no adjustment in the contract of jobs, loans, etc. It also describes the causes, types and proposed recommendations to combat economic mess this country for the general increase in prices, among other aspects of the subject (Tsay 2001).

Causes of inflation

EU countries, the lowest inflation rate in Sweden (1.5 percent) and highest in Romania (8%) and Estonia (4.9%). Estonia joined the euro at the beginning of the year, Sweden and Romania have a common currency area. In Finland, consumer prices rose in June rest of the eurozone more. In the euro area inflation rate was ...