Germany And The European Central Bank Essay

Germany And The European Central Bank Essay

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While in general the European Central Bank was in ‘wait and see mode,” Germany needed to take action. Germany is an interesting economic case because internally the economy has shown strong domestic demand and low unemployment but because of the German ties to the European economic crisis these are offsetting. So while everything points to a relatively strong German economy there is still the issue of the 2014 inflation rate drop to 2.9%. The German economy grew some 1.5 percent in 2014 and continued to show strong growth indicators. With all this growth the inflation rate still decreased because of the falling oil and heating costs that began during the summer of 2014.
In comparison to the United States, Germany has a very similar infrastructure, productivity, and overall policy structure. The key difference is the US economy is less dependent on other economies and is not directly tied to them by policy. The European Central Bank at times works in contradiction with individual countries as its goal is overall European economic growth but other member nations may have other concerns.
When studying Angola’s inflation rates and economy structure it is important to understand the inherent challenges faced. Unlike the US, Angola has a poorly developed infrastructure that makes moving goods and equipment difficult and costly. Most of Angola’s industrial sector is underdeveloped and reports of corruption are high (Barros). Also Angola suffers from an inefficient trading system with her African neighbors. Each side is required to first exchange their currencies into a third party foreign currency, like the US dollar, then they can conduct business. This makes transactions complex, time consuming, and expensive. Examples like...

... middle of paper ... and social continuity. On the other side, both Uruguay and Angola are developing countries and have poor infrastructures that have been prone to political corruption and social unrest. While these conditions play a part in high or low inflation rates they are not the only factors. Each country is dealing with unique circumstances that are helping or hindering their economies and impact inflation rates. Inflation rates are a byproduct of an economy and in some ways can give an indication if the economy is healthy. Inflation rates adjust over longer periods of time allowing any number of factors to change. So trying to take direct action against inflation may not be the best policy. Instead working on issues of infrastructure, trade restrictions and tariffs, and efficient productivity may have a greater impact on the lowing and stabilizing of inflation rates.

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