Iceland Overall Economic Activity

https://docs.google.com/spreadsheets/d/1nZ4jNzD9bZzCHMf3Wd1bGaChQjduVDjnm2L37GAtkCE/edit?usp=sharing

I believe that Iceland is in a neutral position in its business cycle, and is going into an upswing. In the past ten years, unemployment has declined significantly, indicating economic progress. In this same window, the government has gone from a negative to a positive account balance, and inflation has declined as well. The fact that inflation has yet to increase significantly indicates that Iceland is not yet at or near the peak of its business cycle. But in 2018, the last year of the data, there is a small uptick, which may hint at an increase in inflation in years to come. It is likely that the decrease in inflation since 2009 is a result of less deficit spending by the government, since there is no longer such high unemployment that it needs to combat.

Comments

  1. Dr. Q April 7, 2020 at 12:34 PM

    I'm interested to know why you think it's position is neutral, when GDP has been steadily rising and unemployment falling ever since 2011?

    ReplyDelete

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