Tag: EconomicGrowth

Money and Inflation

We often hear the term ‘inflation’ to describe a general increase in prices, this rise is typically caused by one of two factors. First, it can occur due to a change in the purchasing power of what the money symbolizes, often triggered by a deliberate reduction in the quantity of wealth it represents. This is the essence of monetary manipulation. Second, prices may rise due to a fall in purchasing power without any change in the quantity of the money itself. For instance, if gold becomes naturally cheaper because of a new supply, an Islamic Dinar made of 4.25 grams of gold will naturally buy less.

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Measuring What Truly Matters: A Maqasid al Shariah Approach to Reforming Gross Domestic Product

When economic policy is guided solely by GDP, these ethical imperatives may be undermined. For example, a country may pursue industrial expansion that increases GDP but harms public health, violating hifz al nafs. Liberalization of entertainment sectors may boost GDP but erode moral and family values, violating hifz al din and hifz al nasl. Financial expansion through interest-based lending may raise GDP but undermine fairness and risk sharing, violating hifz al mal.

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Debt Dominance Vs Risk-Sharing Ideals: How Sukuk Reshape the Debate

Using a contract-theoretic model, Khan compares two financial arrangements: the Fixed Return Scheme (FRS), which mirrors conventional debt, and the Variable Return Scheme (VRS), which represents profit-and-loss sharing (PLS) contracts such as Mudarabah or Musharakah. His analysis assumes a single lender allocating a fixed pool of funds across many independent projects, with symmetric information and costless observability.

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