If one wants to analyze the influence of inflation on other macro economic indicators, what are the best/standard way of how to use it?
I've found 3 variants:
As is (yearly values).
To take logarithm of inflation, because in 1. the extreme values of the series take too much influence on the result.
To take cumulative values, namely, inflation relative to some basic year, since it averages and in a sense smooths out the yearly fluctuations of inflation.
Are there some other approaches? And are there ways to check here that one approach is better than another?