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Exact(16)
Central bankers should ignore such temporary shocks.
However, even temporary shocks to the formal economy have long-lasting impacts.
A finance professor explores the relationship between temporary shocks and CFOs' conservative approach to debt financing.
The Bank says that a lot of recent inflation reflects temporary shocks: As regular readers might guess, I very much agree.
It also glides over the difference between declining industries like telephone makers and those facing temporary shocks, like airlines after 9/11.
If consumers believe the central bank will keep inflation low, then they will not react to temporary shocks (such as high oil prices) by demanding higher wages.
Similar(44)
This is not, alas, a temporary shock.
The original plan was to use the army only as a temporary shock force.
All they achieve with their attacks is our temporary shock and oppression, but then we become stronger and more united.
However, the high unemployment is an unavoidable temporary shock, since a large part of the workforce has to be reallocated away from construction.
So: when is it appropriate to get very concerned about inflation, and when is it OK to assume that a rise in prices is a temporary shock that will pass?
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com