Zero Inflation Policy

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Major Debates Over Macroeconomic Policy
Zero-inflation target
Zero inflation refers to a situation when the economy reaches a state where there is no inflation. From a state of inflation, the government can aim to reduce it to a level where there is no inflation. This target is, however, ambitious for the government since, in the present economic situation, it is hard to establish a zero inflation. The government has the role of controlling the price of goods and services in the country, the stability of consumer goods are key to ensuring that citizens of all income brackets can access the products.
Proponents of a zero budget target have various reasons that they use to support the move to have no inflation in the economy. One major push for …show more content…
In a situation where prices of goods are at a stable state, the market forces will not operate in an efficient manner. Government regulation is necessary for the market to function in an expected manner; however, if certain stringencies such as zero inflation are imposed on the economy, then there will be an unnecessary distortion in the income structures of various stakeholders. The economy requires some minimal amount of inflation to be able to drive certain factors such as speculative spending among …show more content…
The claim here is that even though a balanced budget is good, it may seem difficult to achieve. One reason behind the argument for a non-balanced budget is that enforcing a balanced budget is difficult (O'Sullivan, & Sheffrin, 2003). It may be easy for Congress to pass a proposed budget, however, the revenue collected in the previous year may be the same amount in the proposed budget. Amending the constitution to provide for the making of a balanced budget, will need to work hand in hand with budget projections for the federal government (O'Sullivan, & Sheffrin, 2003). Since the revenue realized in one fiscal year may not be similar to the next
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