Read this in Arab News
Wouldn’t giving everyone (citizens) more money, and since everyone has more money, businesses will increase prices and people will have to pay more to buy the same things they were buying before. Atleast that is what my basic Economics college class taught me. I know the inflation wont rise by that much, but it will still rise, cancelling out some of the gains.
Re: Don't things like these cause inflation? Kuwait giving $30K handout.
Damn...
I'm of to Dubai.
Re: Don't things like these cause inflation? Kuwait giving $30K handout.
I dont know how well versed you are in the language of economics, but i will dumb this down for you.
Cash grants (part of fiscal policy) to citizens will increase demand for goods and push up the price and inflation. But the central banks (monetary policy), guided by Taylor's principle, will increase nominal interest rate --and in proess raise the real interest rate--to curb that demand and stave off expected inflation (people will save now, cuz interest rates are high >> more interest income).
But this creates a problem if there is permanent demand. Central banks cannot control fiscal policy that leads to demand shocks that are otherwise temporary.
Re: Don't things like these cause inflation? Kuwait giving $30K handout.
But realistically, as soon as people hear free money they think big screen TVs, merseeedesss and European vacations (or Thai ;) ). So most will just spend their money on luxury goods, rather than saving it.
The money is also being given per family. So the family of 2 will benefit more, as compared to a family of 8.
The only people I see getting hurt from this are the foreign workers whose wages will remain the same, but everything will become more expensive.