As the questions says.
Should we distinguish between both. Or are they the same thing?
$\begingroup$
$\endgroup$
3
-
2$\begingroup$ What is your definition of monetary and price inflation? $\endgroup$– 1muflon1 ♦Commented Jul 29, 2022 at 21:30
-
$\begingroup$ @1muflon1, not entirely sure, but I take it to mean 'growth of money in circulation' $\endgroup$– StatsScaredCommented Jul 29, 2022 at 22:56
-
$\begingroup$ I assumed you have your own definitions otherwise what is the point of your question? If you google the terms in their current use you can clear see there is difference $\endgroup$– 1muflon1 ♦Commented Jul 29, 2022 at 23:08
Add a comment
|
1 Answer
$\begingroup$
$\endgroup$
4
Of course it is correct to distinguish between them.
Monetary inflation, by definition, is increase in money supply.
Price inflation, by definition, is increase in price level.
There are two completely distinct quantities. Money supply is not price level and vice versa. The two variables have relationship between each other, however, just because variables are related does not mean they are same. Nutrition of pregnant woman is related to size of a newborn baby that would not make size equivalent to nutrition.
answered Jul 29, 2022 at 23:24
-
1$\begingroup$ I don't think it's as obvious as you're making it seem. For instance, for instance I've never heard of any reference to the Fed [price or monetary] inflation target. Just 'inflation target'. The news always mentions 'rising inflation' with no specification. Specifying 'monetary' or 'price' before the word inflation is uncommon. Hence the doubt. $\endgroup$ Commented Jul 29, 2022 at 23:36
-
1$\begingroup$ @StatsScared inflation without qualifier means price inflation, same way when economists talk about output by default they mean real output as opposed to nominal one. $\endgroup$– 1muflon1 ♦Commented Jul 29, 2022 at 23:41
-
1$\begingroup$ However, your discretion is not uncalled for:
For many years, the word inflation was not a statement about prices but a condi- tion of paper money—a specific de- scription of a monetary policy. Today, inflation is synonymous with a rise in prices, and its connection to money is often overlooked.- Cleveland Fed. Price changes - exclusion from revelation (Phillips/misery) = monies added. $\endgroup$ Commented Jul 30, 2022 at 16:11 -
$\begingroup$ @NickCarducci yes but that’s ancient history for almost last 100 years inflation was used as synonymous for price inflation $\endgroup$– 1muflon1 ♦Commented Jul 30, 2022 at 16:30