Government Budgets on Inflation :: Economics Economy Essays

Government Budgets on Inflation Problems with format ?Since Greece and Italy are in the European Union and have both joined the European Monetary Union, one might think that they would have fairly stable economies, and Turkey would be the unstable one of the three.? But that is not necessarily true.? Although Turkey does have more of an unsteady economy, Italy and Greece?s were not doing so well in the recent past.? Looking at each country separately then comparing the three is the best way to see how the government budgets affect the inflation rates of Greece, Italy and Turkey.? Greece Greece joined the European Union (EU) in 1981, but that did not solve all of its internal problems.? They still had a high inflation rate through the 1980s and into the early 90s.? ?The average annual rate of price inflation was 17.4% in 1984-93.?[1]? There were many reasons for this elevated rate, like the public sector dominating the economy, the informal Greek economy, and the weak political leadership, but Greece knew they had to lower their inflation rate to join the European Monetary Union (EMU) and in turn converting their currency over to euros. In 1994, the EU along with Greece?s ruling government PASOK (Panellinion Socialistikon Kinima) set goals for Greece?s journey towards entering the EMU.? Along with many other objectives, the inflation rate had to be lowered before entering in to the monetary union.? Greece reduced it public spending, restricted the public sector wage increases, and attempted to increase their budget revenues by setting a minimum level of income tax payable by all employees.[2]? By doing these things, ?in April of 1995 the annual rate of inflation was less than 10% for the first time since 1973.?[3]? Also during this time of gradual progress to lower the inflation rate, the gross domestic product (GDP) rose.? The economy grew by an average of 2.8 percent per year between 1994 and 1999 and there was a recorded real growth in GDP of 4.1% in 2000.[4]By the middle of 2000, Greece?s inflation rate had reached a stable level at 2.0%, which was the requirement for entry into the EMU. ?In January [2001] Greece became the twelfth member of the European Monetary Union after a sustained effort to reduce inflation and the budget deficit to levels required for adopting the Euro. Government Budgets on Inflation :: Economics Economy Essays Government Budgets on Inflation Problems with format ?Since Greece and Italy are in the European Union and have both joined the European Monetary Union, one might think that they would have fairly stable economies, and Turkey would be the unstable one of the three.? But that is not necessarily true.? Although Turkey does have more of an unsteady economy, Italy and Greece?s were not doing so well in the recent past.? Looking at each country separately then comparing the three is the best way to see how the government budgets affect the inflation rates of Greece, Italy and Turkey.? Greece Greece joined the European Union (EU) in 1981, but that did not solve all of its internal problems.? They still had a high inflation rate through the 1980s and into the early 90s.? ?The average annual rate of price inflation was 17.4% in 1984-93.?[1]? There were many reasons for this elevated rate, like the public sector dominating the economy, the informal Greek economy, and the weak political leadership, but Greece knew they had to lower their inflation rate to join the European Monetary Union (EMU) and in turn converting their currency over to euros. In 1994, the EU along with Greece?s ruling government PASOK (Panellinion Socialistikon Kinima) set goals for Greece?s journey towards entering the EMU.? Along with many other objectives, the inflation rate had to be lowered before entering in to the monetary union.? Greece reduced it public spending, restricted the public sector wage increases, and attempted to increase their budget revenues by setting a minimum level of income tax payable by all employees.[2]? By doing these things, ?in April of 1995 the annual rate of inflation was less than 10% for the first time since 1973.?[3]? Also during this time of gradual progress to lower the inflation rate, the gross domestic product (GDP) rose.? The economy grew by an average of 2.8 percent per year between 1994 and 1999 and there was a recorded real growth in GDP of 4.1% in 2000.[4]By the middle of 2000, Greece?s inflation rate had reached a stable level at 2.0%, which was the requirement for entry into the EMU. ?In January [2001] Greece became the twelfth member of the European Monetary Union after a sustained effort to reduce inflation and the budget deficit to levels required for adopting the Euro.