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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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MMT suggests that taxation can be used to fight inflation. What would be an argument against this suggestion?

Yesterday, I watched the MMT documentary Finding the Money. Modern monetary theory (MMT) provides an alternative viewpoint that sounds to me consistent with standard economic theory. Deficit spending ...
Larry Freeman's user avatar
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What are exported inflation and imported inflation?

I read in some articles that there are such notions as "exported inflation" and "imported inflation". But it was not written about in detail. What are exported inflation and ...
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How is it possible for a country to have both deflation and a weak currency?

As of early 2024, China has lower inflation than America, if not deflation. But the Chinese yuan is also weak right now, requiring Chinese central bank intervention in favor of the yuan to maintain ...
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What is the formula for price

how to calculate price? Is price just = to demand/supply? I wanted to understand an inflation and wiki says that it is a general increase in the prices. Then we need some assumptions / axioms abut the ...
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Is inflation a result of covid and are the interest rate levels helpful for curbing inflation?

Is covid the reason for inflation? Is jerome powell correct with the interest rates? Can inflation be curved quicker or is this a normal rate?
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Why didn't M1 grow much during 1970s inflation?

One of the most widely cited reasons for the '70s stagflation was expansionary monetary policy employed by the central bank. Below is M1 during this time period (source), and it does not look like ...
A. Shultz's user avatar
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1 answer
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What's the best measure of liquidity or money inside the market?

What's the best measure of liquidity or money inside the market? Often times, the Federal Reserve prints money or buy stocks or give emergency loans, and all these actions cause money to increase in ...
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Possibility of recession with high interest rates

From this plot, it seems that every time there is a recession, the Federal Reserve Bank cuts interest rates. This is because money circulation slowing down will lead to a downward spiral and lower ...
Max's user avatar
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Spillovers as test of purchasing power parity

Transformed coefficients of a vector autoregressive model (VAR) with up to p lags or VAR(p) yield impulse responses that can be used to produce forecast error variance decompositions, or spillovers, ...
Pavel Filip's user avatar
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What are the root causes of inflation, other than cost-pull/push inflation? [duplicate]

What I have found so far: Apparently, increases in regulatory costs lead to reduced competition an therefore to inflation. However, in normal economic circumstances, as long as competition exists, ...
Marc's user avatar
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1 answer
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Calculating annual inflation rates confusion

Im surprised as to why im finding this question so complicated , I'm assuming its due to the miscommunication and misuse of the term in inflation without explaining the context they are using it in . ...
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Methods of calculating 12 month Inflation rates

I was trying to understand inflation calculations when i came across this Scenario, they are trying to calculating the 12 month inflation rate , but the weighted figures given(essentially percentage ...
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Have governments ever defaulted on its public domestic debt or treasury bonds?

Recently, some countries have experienced hyperinflation such as Lebanon, Zimbabwe, and Venezuela. Has there ever been a time when a government defaulted on its treasure bond payments due to a country'...
Jude Zambarakji's user avatar
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What were the biggest events in terms of Monetary Policy in May 1975?

Take a look at this plot, which is the daily American zero-coupon yield curve from 1975, as reconstructed by Liu and Wu (JFE, 2021): One can see a major change of shape in May, 1975. It seems that ...
Raul Guarini Riva's user avatar
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Ending the Economic Spiral (USA) [duplicate]

In the US, there is the following spiral: Workers get mandated wage increases. Businesses, retail and service industry raise prices to account for the wage hike. Workers can't afford stuff because of ...
Thomas Matthews's user avatar
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About the Phillips curve

We know that the Phillips curve takes into account demand shocks, but it's totally susceptible to supply shocks. Are there other types of curves/representations of the unemployment-inflation ...
Ion Padilla Méndez's user avatar
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1 answer
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If high interest rates cause strong currencies what do Argentina and Zimbabwe have currency collapse?

These two countries like Argentina have massive interest rate, over 50%, yet nobody can claim the argentinian peso is stronger. In fact its like 1000 to the dollar and was much stronger before. So do ...
Mike Hampel's user avatar
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Does anyone have the Hallman Article about the P-star analysis from 1989

I'm currently studying the P-star Analysis for the prediction of inflation. I want to read some articles about it and i found some on Jstor, especially the Hallman-Porter-Small article (1991). But in ...
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If inflation rate drops, what happens to Feds Fund rate?

I know the Fed Funds rate has been increasing to lower the inflation rate, but what happens to the Feds Fund rate (will it increase, decrease, or stays constant?) after the inflation rate has been ...
HelloDarkWorld's user avatar
2 votes
0 answers
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How does CPI respond to change in shipping costs?

Is there any quality research that already attempted to quantify the effect of shipping costs on CPI or inflation? Preferably I am looking for an estimate relevant to EU (however, I understand there ...
Lorenzo Pozzi's user avatar
13 votes
3 answers
6k views

Is an "arms race" between wages and inflation inevitable?

If an employer were to ensure wages kept parity with or outpaced inflation, there's an argument that this would cause runaway inflation. That is, employees would have more capital to play with, so the ...
Xophmeister's user avatar
1 vote
1 answer
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Owner's rent or Rent?

Would you please explain the difference between these?As I know somewhat what their meaning, I can't understand what the second concept. In addition, I wonder the second one is more important ...
Alen Alenn's user avatar
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Unexpected effect of adding a variable to a multivariate regression. How to interpret it?

I'm trying to estimate the effect of a treatment on prices. I have a panel dataset on which I'm using a DiD to estimate treatment effect through a dummy variable that identifies the period during ...
Sam's user avatar
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Exchange rate and Inflation: Conclusions

The value of $100 in 2000 in German Currency increased to $155.82 due to inflation (refer: Value of 2000 Euro (Germany) today - ...
Porcupine's user avatar
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1 answer
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Question on the nature of debasement

I have a question concerning how exactly debasement works in terms of coins becoming reduced in value. I am aware that debasement is when the amount of a precious metal in a coin is reduced, the value ...
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Why has the price of laser eye surgery not changed?

Within the USA, I have long heard rumors that since laser eye corrective surgery is not often included in insurance plans or subsidized by governments, the price of laser eye has remained relatively ...
stats_noob's user avatar
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What are the ways to take account of inflation?

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 ...
Andrew's user avatar
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Does emerge of cryptocurrency cause inflation?

I'm very newbie at economics, so the question may does not sound a good question. I define value, any type of goods and services I can acquire in an economic deal. If I assume whole amount of value ...
Amir reza Riahi's user avatar
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How much do gas prices impact in other product prices?

In my country, they are considering stop funding gas prices so prices would raises from 0,30 U$S to 1 or 2 dollars per liter. Some people argues this would impact heavily in inflation, which is ...
Pablo's user avatar
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What downside is there to making the USD the national currency for your country?

I get that for huge countries like China, you can't have the US controlling your currency. But for some smaller countries, or new fledgling countries, why not have the USD be your national currency? ...
chausies's user avatar
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2 answers
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Would it work? A tax that automatically toggles on-off

Could we create a tax that automatically toggles on or off depending on the state of the economy taking into consideration that the revenues would be saved for further use, either to stimulate the ...
Denis Pageau-Sociétalogue's user avatar
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1 answer
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Could a single large retail chain by its own actions contribute significantly to inflation?

Typically well-known chains defend raising prices because of their costs which they might link to inflation. But without mentioning names, I can recall paying maybe (years ago) a quarter for a ...
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Is Steve Forbes factually correct when he says that all of our economics problems are made worse by leaving the gold standard?

When I started reading Steve Forbes book Inflation I was surprised by his confidence in making statements about the impact of leaving the gold standard. The book is clearly written and goes against ...
Larry Freeman's user avatar
2 votes
2 answers
68 views

What is the argument that suggests to the Federal Reserve that it is reasonable to cause a recession in order to prevent inflation?

The current risk of recession appears to be caused solely by the Federal Reserve's refusal to stop raising interest rates. When making this decision, the FRB seems focused solely on the risk of ...
Larry Freeman's user avatar
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0 answers
18 views

employer - employee contracting in the private sector in Argentina

Argentina has high and volatile inflation and a history of it, so people have had time to adapt. I am interested in particular adaptations around contracts for "permanent" full time workers ...
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Meaning of X month on X month AR inflation rate

Does 6m6m AR inflation rate mean the average of 6m price index, over the average of previous non-overlapping 6m price index, then x 2 to annualize? E.g. if the CPI index is 101,102,...112 over 12 ...
user34829's user avatar
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2 votes
1 answer
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The effects of interest on supply and demand

It is clear to me that increasing the interest rate should make loaning money more expensive, therefore money more scarce, and that that would curb aggregate demand, and that's what I recall I learned....
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Why price always increase?

My question is why price of goods and services always increase Is it a law like (entropy always increases) . But in electronics price always decrease.
quanity's user avatar
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If interest rate policy were to disappear tomorrow, how would we/could we manage inflation?

Inflation has obviously become a big issue over the last couple of years again, and I've read people complaining that the inflation comes from increased prices of energy imports, (namely oil and gas), ...
tvqt's user avatar
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1 vote
1 answer
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Why use Zillow data rather than just BLS rental data?

Housing/Shelter costs constitute around a third of inflation. I've noticed though in many reports people cite official BLS rent inflation data as well as rent data from Zillow and other such sources. ...
cel's user avatar
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1 answer
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When exactly did India change from using WPI to CPI for measuring Inflation?

I am getting conflicting reports about this. India's first-ever CPI-based inflation rate at 7.65% in January 2012 India’s first ever annual inflation rate, based on the consumer price index (CPI), ...
user93353's user avatar
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Real profit after accounting for inflation

A paragraph from Naked Money: Carl … bought a house for \$200,000 and sold it a year later for \$246,000 at a time when inflation was 25 percent … Carl makes a 23 percent gain on paper, but prices ...
jim's user avatar
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383 views

Accounting for inflation when calculating the discount rate

Good afternoon! I am evaluating an investment project and I want to calculate the discount rate based on a risk-adjusted method. Calculation formula: discount rate = risk-free rate + risk adjustment + ...
Veva Viva's user avatar
-3 votes
2 answers
212 views

Why raising the interest rate does not lower the inflation in the short run?

As raising the interest rate immediately effects the mortgages payments, households will have less money to spent on other goods, which will cause lower profitability of manufacturers and businesses. ...
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Ricardo Reis and S&D decompositions of inflation

In this presentation at around 21:20, Ricardo Reis discusses a two-sector New Keynesian model to explain that the supply and demand decompositions of inflation by Adam Shapiro as not as informative as ...
Wittgenstein's Poker's user avatar
1 vote
2 answers
132 views

Where did the money supply go?

The money supply went from about \$4 trillion in 2020 to about $20 trillion today. Where did all that money go? When the money supply went from about \$1.4 trillion to about $1.7 trillion, I was ...
QuietInMontana's user avatar
1 vote
1 answer
42 views

If the interest rate is increased to limit inflation, doesn't that increase the money supply?

If the interest rate is increased to limit inflation, doesn't that increase the money supply? Because one year later, 5% of the total bond will need to be created and put into circulation. This, in ...
Stefanie Gauss's user avatar
1 vote
1 answer
84 views

Why raise UK interest rates to control inflation Now - May 2023?

The usual reason given for raising rates to control inflation is that it reduces consumer spending, increases borrowing costs and slows the economy. However, in an environment where the inflation has ...
Garbonzo's user avatar
1 vote
1 answer
35 views

Change values from nominal to real in LM portion of ISLM?

Given $ M / P = L(Y, i) $, where $M/P$ is the real money supply, and $Y$ is GDP, $i$ being the interest rate, we know that this equation makes demand of money equal to supply of money. Therefore, ...
john's user avatar
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How is QoQ and YoY inflation calculated from data in the table below

I am confused about reference point for both QoQ and YoY. Is for Q1 is it (Q1 - 0)/0 * 100?
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