A Goldilocks economy refers to a stable state in the economy. The term has been taken from the famous children’s book which states ‘not too hot, not too cold’. The state of the economy is such that there is no unemployment or instability. What is to be kept in mind is that the economy is not moving in extreme stages, meaning that the economy is not too hot that it would cause inflation nor too cold that it may cause a recession. It is a balanced state.
The country’s GDP may be taken into account while assessing a Goldilocks economy. When the GDP growth is too low it may cause a recession and when the GDP growth is too high, an increase in prices may be caused leading to inflation. The growth in GDP must be balanced in order to achieve a Goldilocks economy.
When the RBI issued its monetary statement policy for the fiscal year 2018-2019 it was considered that India is moving towards a Goldilocks economy. The reason for this was that interest rates were steady with lower forecasts of inflation. The growth of the economy was consistent at the rate of 7.4 % for the fiscal year 2018-2019 making India the fastest growing economy in the world.
Comments