Econ 102

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[Katherine Dau]

In the article “Mario Draghi defends ECB’s monetary easing policy” James Shotter and Claire Jones outline the president’s actions on easing. The EU, like the rest of the world, is suffering from a bit of a downturn. In fact, the GDP of the United States displayed only marginal growth in the final quarter of 2015.
Most nations attempt to keep their inflation rate around 2%. This both stimulates producers to continue expanding, producing, and investing in capital, and consumers to continue to purchase goods and services, which in turn allows the economy to grow. Furthermore, with inflation at a low point the unemployment rate increases. This is particularly problematic for Europe in a time where millions are migrating to the continent, jobless. Thus, Draghi is trying to stem the tide of unemployment and stimulate the economy by raising inflation. A conflict has emerged between those who support Draghi’s proactive position and those who prefer a more laisse-faire approach. This is a constant debate of macroeconomic policy: what actions need to be taken and will those actions have the desired effect. Although it is impossible to know exactly what will happen if Draghi’s policies continue to be implemented, his goal in raising the inflation rate is well founded.