Questions tagged [inflation]

Inflation is generalized increase of prices of goods and services in an economy, along with a corresponding fall in the purchasing value of money. The rate of inflation refers to the increase of the price of goods and services over time.

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24 views

Is there a term to refer to the point at which an actor updates a "price"?

Examples of what I mean: A company increases the price of their product to match increasing COGS (e.g. a restaurant increasing their prices because the cost of ingredients has increased significantly)...
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34 views

Why does absolute price inflation depend on interest rate while relative price inflation does not?

This is a follow-up of my previous question: How come there is inflation in a model with no money? I have answered my own question with an example. To briefly recap the example, consider a closed ...
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Venezuela Hyperinflation in 2014 on an IS LM FX model

In 2014 Venezuela began experiencing some of the worst hyperinflation. I wanted to know how this situation would be represented on a IS LM FX model, and the consequences of the hyperinflation.
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How come there is inflation in a model with no money?

I'm watching the video lectures of Financial Theory (ECON 251) by John Geanakoplos, Yale University. In Lesson 5, Chapter 4 at 33:41, Geanakoplos defined inflation as the ratio of prices between two ...
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How to measure if inflation is due to demand pull or cost push? [closed]

How does one measure if inflation is due to demand pull or cost push? Is this related to PPI vs CPI?
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What is the longest lasting hyperinflation period in history?

I guess hyperinflation periods depend on the definition of hyperinflation, which makes it hard to define and find comparative data. I could find which has been the worse in terms of percentages (...
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What are the characteristics of private sector workers' household savings in Argentina or Brazil

The point of this question is to get a sense of what is it like to earn more than needed for consumption in a middle income, high inflation economy. Specifically consider large middle income South ...
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How would inflation in the U.S. affect dolarized countries

Today I was reading about climbing inflation in the United States, so it got me wondering how would that affect (if at all) an small economy with the U.S dollar as its official currency. As a bit of ...
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Why did Germany not suffer from Great Inflation in the 1970s/80s?

Comparing the inflation rate of some of the industrial countries around 1975 (Great Inflation) in between the two oil shocks of 1973 and 1979/80, it seems odd that most countries' inflation rate was ...
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Why are the gas prices so high in the US and why does it depend on OPEC+?

I've been reading these days a lot of discussions between people on the internet concerning the hikes in gas prices. I then read many articles about this, and the opinions are really different, and ...
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How do you calculate the effect of inflation on the value of money?

If the US govt prints X amount of money per year is there a way to find out how the value of the dollar will change. Essentially if the value of the dollar is solely a function of how much money is ...
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How does exchange rate affect the degree of local firms competitiveness?

It's written in my textbook that: Inflation causes exports to become less internationally competitive as their prices increase. So, demand for exports decreases. It's written in another lesson in my ...
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Does the ECB provide a daily Inflation Expectations series for the Euro area?

I've been searching for market indicators for Inflation Expectations. The FED provides at least two, one of those being the T5YIFR from the FRED database. Regarding the ECB I couldn't find anything... ...
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Research about the sufficiency of food in the light of transition to green and biological agriculture?

There are many articles (e.g. from "The Economist" news magazine 07.10.2021) that establish partial links among the high gas/electricity prices, lack of supply of energy resources and the ...
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What are the causes of negative real interest rates?

I am familiar with the real interest rates equation which states that real interest rate = nominal interest rate - expected inflation rate. What I am failing to fully grasp, however, is why would ...
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How could real house prices tend to rise in the long-term?

It makes sense that house prices increase above the risk-free rate due to their risky nature and historical evidence and conventional wisdom seems to back up the idea that real house prices tend to ...
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How could house prices tend to rise in the long-term? [duplicate]

It makes sense that house prices increase above the risk-free rate due to their risky nature and historical evidence and conventional wisdom seems to back up the idea that real house prices tend to ...
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Confusion regarding the definition of inflation premium

'Inflation premium' is defined here as the higher return that investors demand in exchange for investing in a long-term security, where inflation has a greater potential to reduce the real return. In ...
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If return rises by same % as inflation rate rises, then perfect inflation hedge?

I read somewhere (Ang, Brière, Signori: Inflation and Individual Equities, 2012) that in a given period if the inflation rate rises by 1% point (say from 1% to 2%), and the return of Asset A rises ...
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Determinants of inflation expectation

What are the most important factors that determine inflation expectation in a country, both based on theoretical models and on empirical evidence? If an answer is too lengthy for the site, reference ...
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1answer
121 views

Can making everyone in a country rich be detrimental to the economy?

Let's say that everyone in the nation of Tigerville is given US$1,000,000. People would want to buy more goods since they have become considerably more wealthy. However, the sellers of the goods may ...
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1answer
32 views

The link between economic growth, inflation, interest rates and fiscal deficit

I want to ask a question about how economic growth, inflation, interest rates is linked to fiscal deficit. I was reading a book on introductory economics and the following passage came up: If a ...
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Relation between budget deficit and inflation?

In Iran we have had a high inflation rate for several decades (usually above 20 percent). Some of the top economists of the country say that it is mainly because the government spending is ...
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Percentage increase of the price of a good if there is a pay raise

I have a question about the percentage increase of the price of a good if there is a pay raise given to the firm's workers. I am reading economics for my own personal interest so I apologise if there ...
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Why was Friedman so wrong about inflation?

In a famous 1977 lecture, Milton Friedman claims that inflation depends purely on the monetary policy and he proves it with a convincing chart (youtube video here) I have reproduced his chart using ...
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1answer
28 views

Market Measures for Inflation Expectations for Euro zone

If I were to use a market measure for inflation expectations for the USA, I would look at the differential of yields between the conventional and inflation-indexed Treasuries. However, in the Euro ...
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Is there a “runaway” threshold for Debt-to-GDP Ratio in the U.S.?

Last year, when Congress was debating the stimulus/relief packages, one Senator made a comment about the debt-to-GDP ratio and how we are approaching a point in that ratio that will have some major ...
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Did Capitalism and Adam Smith Support a Central Bank?

Does Adam Smith and Capitalism support a Central Bank/Federal Reserve? I am trying to read through the book "Wealth of Nations" to understand. Having a central/regulatory figure dictate ...
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Is there research on the level of individuals regarding the origins of hyperinflation? [closed]

I am interested in inflation, specifically hyperinflation. Can anybody point me to research (papers, books) done on the individual origins and mechanisms at work at the very beginning of ...
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Has anyone developed a good methodology for high-frequency inflation nowcasting?

Let's say I want to know what happened to the value of the U.S. dollar between three minutes and two minutes back from ... NOW. I have given myself a two minute slack period for data collection and ...
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Puzzled by proposed inflation mechanisms

There are some explanations for long term inflation that completely baffle me in that they seem so deeply flawed that I wonder how come they are taken seriously. So take for example the idea of a &...
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Impact of new IMF SDR allocations on currencies

I understand that IMF is currently contemplating printing money via new allocation of SDR, and thereby attempting to help increase global liquidity in period after covid. What impact, if any, can ...
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3answers
139 views

What causes inflation?

Given the recent increases in the price of many things in the US (lumber, used cars, gasoline, etc…) I have begun thinking about what is going on at a macroeconomic level. My first thought is “it’s ...
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Differentiation in a inflation tax calculation

everyone. I am studying Advanced Macroeconomics, by Derek Leslie, and I am having some troubles in understanding the result of a differentiation in the Chapter 1, section 5. This section approaches ...
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43 views

Inflation rate of a country vs. currency

The way I understand, inflation rate is the change of Consumer Price Index per given period of time. Is this correct? What's the different between inflation rate of the economy of a country vs. ...
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How can money have a value? [duplicate]

The value of money can be the value to produce it. It costs, say, 1, to produce 10 000 000, in the mean (coins and paper, though digital money costs virtually nothing). This is called the extrinsic ...
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US Reserve Currency Status Impact on Inflation

Since US dollar has global reserve currency status meaning that other countries need to keep a certain amount of US dollar as reserves. There's a narrative that being a reserve currency, if US prints ...
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Why is hyper inflation not a concern with huge rise in M2? [duplicate]

According to quantity theory of money, with velocity and production being relatively stable, we would expect the amount of inflation to be proportional to the amount of money circulating in the ...
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1answer
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Does it make sense to talk about Bitcoin 'inflation' when little to no goods and services are listed in Bitcoin currency?

I think of inflation as a generalized increase in the price levels of a basket of goods and services. I should add that my understanding presumes that inflation should be measured in the same currency ...
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1answer
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Does Russia have higher inflation than US and Canada? If so, why in this particular case does money supply increase doesn't lead to higher prices? [duplicate]

My understanding is that Russian inflation in recent years is considered to be running in the 5-6 % range, while US and Canada - in the 2-3% range (as measured by price increases/CPI). But I'd expect ...
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Having difficultly to understand two indices with regard to inflation

What are these terms "provisional headline inflation" and "imputed index" used to predict in terms of inflation?
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Data on inflation target on different countries around the world

Does someone know if there's a page, like a "global bank" online page, where one could see the inflation target for different countries? For example, in x country, for x' year, the inflation ...
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What was the annual real growth rate in the US from 2010 to 2015?

If we look at the US M0 money supply after the global financial crisis (GFC): we see that it doubled from 2010 to 2015. If we look at the Consumer Price Index in the same period: it rose by 8%. So ...
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Is modern monetary theory sustainable?

I am looking around at a lot of the central banks around the world (primarily ECB, Fed, and BOJ) and they all seem to be simply printing their way out of any issues with their economies. As far as I ...
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Can inflation show up in assets without necessarily being reflected in classic inflation indexes?

I have been having an argument with a friend of mine who obtained an economics degree in college. I have been arguing that increased money supply from the fed has led to inflation in asset prices, ...
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Classical Theory of Inflation - Money Supply, Money Demand and Prices

In every textbook, website I read when talking about the classical theory of inflation, I see the diagram below which depicts the value of money, prices etc. This one below is from Spark notes (https:...
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Why high levels of inflation doesn't leads to high levels of employment?

According to the original Phillips curve $\pi=(\mu+z)-u$ there's a negative relation between inflation and unemployment. That being said, if there were a really high level of inflation, then there ...
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105 views

Why in the quantitative equation: $MV=PY$, $V$ and $Y$ can be taken as fixed?

To equation is \begin{align} MV=PY \end{align} where $V=\frac{1}{k}$. Why $V$ and $Y$ can be taken as fixed or constant? Why can $V=\frac{1}{k}$ too? Thanks in advance
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Why does central banks lowering interest rate incentivize more borrowing?

I'm a layman trying to understand how the US monetary system works. I'm particularly interested in how the Federal Reserve can create inflation without printing new dollars and putting them in M1. My ...
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Deriving the New Keynesian Phillips Curve (NKPC)

I have a question regarding the NKPC. I would like to know if it is possible to derive the NKPC from a sticky prices model, without making assumptions regarding the production function firms face. I ...

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