The European Central Bank published an iPhone app last week that allows you to simulate monetary policy decisions and see what happens to the economy.
Here’s the goal, according to the game’s glossary:
€conomia aims to give you an idea of monetary policy and of the European Central Bank’s task of setting the key interest rate. In this game your goal is to keep inflation low at just under 2% and stable by adjusting the key interest rate. The interest rate decisions you take can cause inflation to slow down or rise sharply or ideally to be balanced. Achieving a balance between the two extremes is not easy. In the game, as in the real world, decisions take time to have an effect.
But considering the eurozone is facing the worst and most threatening crisis in its history, we’re sceptical that this single mandate is a good policy to pursue.
So we played the game on our terms—with as much regard to growing the economy as keeping prices relatively stable. We started the game with rather ridiculous policy assumptions (we kind of thought it was a joke) by cutting interest majorly right off the bat.
Even so, the game decided that we fixed the euro area crisis by mid-2014.
Try it for yourself by downloading the app here.