the tendency for the general lever of prices in an economy to increase over time.

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3
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19 views

Do heterogeneity in consumption baskets lead to very different inflation rates for different consumers?

CPI is measured against a single consumption basket. In reality, consumers each have their own set of consumption goods, so each face their own "individualized CPI" rates. But how different are ...
2
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0answers
23 views

On official bank rate of Sweden

I been hearing that the actions of the ECB greatly influence the swedish offical bank rate, what possible "actions" would that be, theoretically?
0
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0answers
15 views

Is the average of the mean and median of inflation a meaningful metric?

I am very comfortable with the definitions of median and mean; I don't need that explained to me. However, I just came across a chart from an economist which compares the "Headline inflation" rate ...
1
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1answer
15 views

Venezuelan black market exchange

EDIT: for future reference, I found out that many businesses price accordingly to the black market rate. Trading at the official Venezuelan exchange rate is, at time of writing, about 1:10 USD:VEF. ...
0
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0answers
15 views

Why is the current WDI missing CPI data for some countries (including the UK and China)?

I'm downloading data on inflation in different countries, and using the World Bank's World Development Indicators (WDI). Specifically, the Consumer Price Index series (CPI). ...
0
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1answer
18 views

How much inflation will changes to official wage benchmarks cause?

For example, right now Livable Wage hovers around $20 an hour. That's around 40,000 a year. Let's say the US somehow will give $50,000 a year as a "Guaranteed basic income". How high will the ...
1
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1answer
38 views

How do I adjust for inflation?

I will begin by saying that I have very little knowledge about economics, so don't make any presumptions. My problem is that I want to calculate the actual value of gold in Swedish Krona(SEK) for the ...
0
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0answers
9 views

Superlative and Cost-of-Living Indexes: how are they related?

I was reading about the Boskin Commission for CPI in the United States and the topic of finding formulas to have the inflation index number be a true cost-of-living index came up. From what I ...
3
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1answer
31 views

Ln differenced price level times 400, why 400?

I am replicating a 2001 Journal of Economic Perspectives methodology paper on Vector Autoregression by James H. Stock and Adam Watson. The paper can be found here: ...
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1answer
35 views

Why did the Fed raise interest rates between 2004 and 2006?

Between June 2004 and August 2006, the Fed raised interest rates again and again, because they were "...growing more uncomfortable about inflation". Looking at the graph below, inflation did ...
5
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1answer
64 views

Why is deflation not considered the opposite of inflation?

In this article from 2013 on bitcoin, the author casually states the importance of knowing that "deflation is not the opposite of inflation", without expanding or elaborating. I'm sure that there are ...
0
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0answers
13 views

Calculating minimum wage relative to CPI

I don't have much economincs knowledge, but am working on a project that involves me needing to calculate for every dollar increase in minimum wage from 1972, how much has the price of an average item ...
0
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2answers
41 views

Monetary Policy - How can increasing interest rates cause higher inflation in the short term?

My understanding of the interest rates part of monetary policy is the follows: Borrower's point of view: An increase in interest rates, increases the cost of borrowing, which may reduce disposable ...
1
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1answer
41 views

Is inflation good? [duplicate]

I was reading that the Spanish received so much gold from their occupation of the Americas, that they had a steep rise in inflation. This caused a rapid increase in investment, as the rich felt that ...
-1
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1answer
28 views

Why do Latin American countries fare among the worst at managing inflation

Does it have to do with cultural factors? Ex: they were colonies of Spain and Portugal who themselves are not that great at managing their economies relative to other western European countries.
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0answers
19 views

Core inflation, QE and credibility of ECB

In macro we learn that credibility is very important for a Central Bank (CB), since it allows for less onerous adjustments for the economy. In the recent(?) past, the newspapers have becoming ...
3
votes
1answer
23 views

Is there an economic term that means the same thing as “personal inflation”

I don't have anything even close to what would be considered formal education in terms of economics, so the term "personal inflation," is just something I completely made up. What I mean by personal ...
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0answers
17 views

Currency and Inflation : Nominal rate

The inflation rate in USA is 3% and the inflation rate in Germany is 1%. The US dollar has appreciated by 2% in real terms. What must have happened to dollar in nominal terms? I cannot wrap my head ...
0
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1answer
31 views

Effect of positive inflation shock on the exchange rate

How does a positive inflation shock affect the exchange rate? Does the exchange rate appreciate or depreciate? I am looking for an intuitive explanation.
3
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2answers
38 views

Can changes in the value of money be measured via interest rates and future contracts?

For most goods, we can compare the value of them by how people trade them. If in a free market, 10 apples can be traded for 20 oranges, then apples are twice as valuable as oranges. Likewise, if 10 ...
1
vote
0answers
19 views

Equal payment series compound interest problem

I am stuck on a textbook question for a long time now. What is the amount of quarterly deposits A, such that you will be able to withdraw the amounts in cash flow diagram if the interest rate is 8% ...
1
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1answer
20 views

Inflation and daily items

I was a document released by our Central Bank and I came across this line. Finally, inflation in the items of daily use was much lower as compared to other items. The contribution of essential ...
8
votes
1answer
798 views

Does a strong US Dollar hurt American Manufacturing?

I am reading this article about the strengthening of the US Dollar when I came across this paragraph: "But there are reasons to be cautious. A strong dollar will squeeze American manufacturers, ...
3
votes
1answer
57 views

Will a Guaranteed minimum income not eventually just be crowded out by inflation?

That is, if we implement a guaranteed minimum income, would inflation not eventually rise to a point where it is essentially useless? I would expect prices to be adjusted knowing people have a certain ...
0
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1answer
21 views

Why do increase in firms profit margins cause cost push inflation?

I read somewhere that this was the case. I get what profit margins and cost-push inflation are, but don't see how increase in marginal profit causes cost-push inflation? Also, how does increase in ...
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0answers
37 views

Why is inflation rate so low in euro zone?

Inflation rate for Eurozone in December 2015 was 0.2%. In November 2015 it was 0.1%. Meanwhile ECBs target is annual 2% and it seems that ECB does everything it can to push the inflation to the ...
1
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1answer
31 views

Using web scraped data for consumer price indices

Is there information and literature regarding comparative consumer price index methods? Specifically, the web scraping method of index construction?
0
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2answers
42 views

How come that the “right” inflation is positive?

I'm sorry if this question is too naive or too basic, but this is puzzling me for some time. I have read in several places that inflation should be positive, at about 2%-3%. The most recent example ...
3
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0answers
24 views

When considering the wealth of the 19th century American moguls, is it more correct to think in terms of inflation or percentage of GDP?

I generally see the wealth of Rockefeller and Carnegie variously estimated between \$150 billion and $400 billion when translated into modern terms. However, when only taking inflation into account, ...
0
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0answers
21 views

When nominal interest rates reach zero bound,why inflation will turn to have a positive relation with output gap?

From the graph, inflation has a negative relation with output gap when interest rates are higher than zero but turn to a positive relation when reach zero. I cannot understand why the relationship ...
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2answers
116 views

How do excessive foreign reserves cause inflation?

I have studied that accumulation of foreign reserve has the potential to raise inflation levels in economy as the money base increases (= domestic currency + foreign reserve increases) and if it ...
3
votes
1answer
35 views

How rate rise by the Fed, higher than market expectation will lead to strengthening of Dollar?

If the Fed follows through on its forecasts, though, and raises rates faster than markets expect in 2016, the dollar may well rise further, dampening inflation quickly From : ...
4
votes
2answers
94 views

Inflation without Increase in Money Supply?

Is it possible to have inflation without increase in the supply of money? For example, if workers demanded higher wages, and goods went up in price, but the money supply in circulation did not ...
2
votes
2answers
55 views

Do house prices increases affect inflation?

In this book, page 202, the authors develop the idea that when the central bank increases the interest rates to get the CPI inflation back to target inflation, it will not necessarily cut off an ...
0
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2answers
48 views

Macroeconomics - Fiscal/Monetary Policy and the Price level

I was studying for my macroeconomics test by solving test banks and I came upon this question which has been really bugging me. To decrease the price level A.the Fed could buy bonds and the ...
2
votes
4answers
168 views

In the short run, why do higher interest rate lower inflation?

A common interpretation is "Higher interest rates put less borrowing power in the hands of consumers and businesses. And when they spend less, firms are not selling everything and prices naturally ...
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0answers
27 views

Inflation - Output Trade-off in the Adaptive and Rational Expectations Philips Curve

In the Adaptive Philips Curve, $E(\pi_t|I_{t-1})=\pi_{t-1}$. I'm reading a macro book, and the authors state that there is no long-term trade-off, i.e., when making the economy run at a level other ...
0
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2answers
73 views

Do rising inequalities create inflation?

When the "richs"* get richers, the "poors"* get poorer... assuming: h1) a constant volume of money, h2) a constant volume of people, h3) a close separation between the two groups of people, h4) a ...
1
vote
2answers
43 views

Why GDP positive growth does not decrease inflation?

My understanding is : If production increases, it would imply the amount of goods increases as well for the same amount of money available in the market. Because of this, we should see prices of goods ...
3
votes
2answers
55 views

Currency and Government

I have written down an explanation to one of the famous questions "why can't government print money to pay its debt"? after researching for some time on google, I need opinions as to whether this is ...
7
votes
4answers
138 views

Can absence of inflation be accounted for by a reconfigured class structure?

A previous and oft-heard question asked why no inflation results from the Fed pumping money into the economy. Are we simply seeing a methodical wage suppression, thus no official "inflation," while ...
4
votes
7answers
169 views

Why didn't the money printing by the US Federal Reserve since 2008 lead to inflation?

http://www.telegraph.co.uk/finance/comment/liamhalligan/8484530/Americas-reckless-money-printing-could-put-the-world-back-into-crisis.html America's reckless money-printing could put the world ...
2
votes
1answer
25 views

Measure of expected inflation

How is expected inflation measured for policy purposes? Is it based on some economic model or some survey?
2
votes
1answer
36 views

Is Quantitative Easing an asset-swapping or money-printing exercise by the Federal Reserve?

Shortly after 2008, there were prominent commentators such as Jim Rogers who called Ben Bernanke an idiot and condemn him for printing money. However, there were also articles that suggest ...
4
votes
1answer
79 views

What were the factors that caused the Philips curve to stop working during the 1970s?

Philips curve says that inflation and unemployment were inversely correlated. In the 1970s, stagflation happened. If Philips curve hold true, stagflation is impossible. What were the factors that ...
3
votes
1answer
19 views

Long run trade off between inflation and output

In "The incredible Volcker Disinflation" by Goodfriend and King (2005) we are presented with the NK Pricing equation $\pi_t = E_t\pi_{t+1} + h(y_t-y_t^*)$ the author then mentions that there is no ...
2
votes
2answers
71 views

Why are they raising interest rates in Brazil?

How does raising interest rates in Brazil (and Russia) help fight inflation and defend their currency? I understand that the basic model is that raising the rates is meant to encourage banks to lend ...
3
votes
2answers
58 views

With inflation so low, why is it so hard to stimulate the economy?

Usually the limiting factor in stimulating an economy is how much inflation can a currency handle before the money being spent has a negative effect overall. But now we seem to have the opposite ...
2
votes
1answer
73 views

Can holding interest rates at zero (ZIRP) for a very long time cause the deflation it is trying to prevent?

The fisher equation is nominal interest rate = real interest rate + inflation rate. If nominal interest rate is kept to zero, and real interest rate remains ...
6
votes
1answer
93 views

Differing Inflation Rates for Separate Income Groups; Literature?

So here's a few ideas that have been floating around my head since undergraduate university. It seems that money owned by the highest net wealth owners is always moving around and making a return, but ...