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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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 ...
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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 ...
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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 ...
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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? ...
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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 ...
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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 ...
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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 ...
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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 ...
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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.
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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), ...
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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.
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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), ...
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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 ...
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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 + ...
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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 ...
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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 ...
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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 ...
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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 ...
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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, ...
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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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Inflation adjustment: CPI less than one
I need help on how to adjust my figures by inflation.
I have two pieces of data. The first one is a company's nominal expenditures during the 2015-2020 period:
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Is the relative price level of two goods equal to the difference of their inflation rates?
So, a professor of mine wrote down in the solution of a problem that the ln(P1/P2) at time t is equal inflation of P1 minus the inflation of P2 at times t. However, I don't understand how that is ...
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Which foreign currency has had the least amount of inflation over the last 50 years?
I found this table that lists currency exchange rates relative to the US dollar. https://fx.sauder.ubc.ca/etc/USDpages.pdf
I noticed some currencies have increased in value relative to the dollar and ...
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Why does increase of national debt of the USA not lead to inflation?
Increase of national debt is increase of money supply.
But why does increase of national debt of the USA not lead to inflation?
Thanks.
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Short-selling domestic currency to hedge against inflation
A person lives in a country with a high risk of inflation. She just started working, so she has little savings. Her goal is to ensure that her future income does not lose value because of inflation. ...
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How to correctly adjust prices using economic indexes?
I need to develop a readjustment index for a set of costs of a given company/product. However, overall price indexes such as CPI do not fit well the expenses.
For example: suppose I have three ...
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How does breaking away from a larger nation effect the economy
I am working on making a fictional world, and I really want to make the economics realistic, so I decided to come here to ask questions. The context is that a large nation went through a large civil ...
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Decreasing Policy Rates but Increasing Banking Rates on Loans
In Turkey, we have been experiencing a chronic problem: Inflation. Since first quarter of 2021 central bank has been decreasing the policy rate, which is related to a political situation. However, ...
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impact of a gradual adjustment of the federal funds rate
Although the Federal Reserve has been raising interest rates for about 1 year, and inflation has slowed down, prices are not going down much. What are the benefits of raising rates slowly? Obviously ...
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Effect of QT and higher bond yields simultaneously
I don't know much detail about how banking is working so you will have to bear with any misinformation or false conjecture I may have.
The US government wants to control inflation in 2023. The Federal ...
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Relationships between several economic concepts, and chatGPT's explanation [closed]
Sadly I have so little knowledge of economics that I can barely read the news these days. Answering my questions the old fashioned way (via Google) tends to confuse me more. So I asked chatGPT, but I ...
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Calculating GDP growth rate between different countries without inflation data
I am working on an assignment to compare the GDP growth rates of different countries over a period of 5 years. Just to be clear, I have 2 sets of GDP data points, one set in Year 1, and another set in ...
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How to assess whether inflation is "well understood"
I was told (correctly) that the ability to forecast something is not the same as understanding it. I was also told that inflation is pretty well understood by macroeconomists nowadays.
How do ...
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Good inflation models
A well-received comment on this site stated:
Pundits might not understand inflation but macroeconomists actually understand inflation well nowadays
What models are currently used to forecast ...
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What tools the central banks and governments can use to tame profit-led inflation and is the monetary tightening one of such tools?
While the central banks and the governments is not acknowledging it, the private bankers and economists are constantly labeling current inflation trend as the profit led inflation. This morning UBS ...
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What would happend if the total quantity of money get fixed?
I was wondering what would happend if the total amount of money get fixed in an scenario were there is not exchange of good and services between countries markets. I think maybe the fact that prices ...
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perfect level of interest rates
The FED in the US has a target inflation rate and target employment. Given that mandate they set the rates which drives the rest of the interest rates on bonds, mortgages etc. Currently they have been ...
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Conceptual question about the zero-inflation steady-state in DSGE-models
As I understand, it is usually common practice, to choose DSGE models in such a way, that the steady-state inflation is freely choose-able and for simplifications it is than usually assumed to be zero....
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Why does decrease in Feds fund rate lead to decrease in core PCE inflation rate?
According to the Fed's own forecasts inflation should reach 2% (as vowed) shortly after 2025 under normal circumstances from the below chart.
I know that generally as Federal funds rate increases, ...
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In the US, if the Fed stops hiking the Fed Fund Rate, how does it affect inflation rate?
I know if the Fed continues to increase the Fed Fund Rate, inflation eventually goes down. But what if the Fed stops hiking the current Fed Fund Rate, how does it affect current inflation rate if the ...
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Alternative metrics to calculate inflation?
I am currently calculating inflation metrics for a retail store. I am simply using their POS data, to calculate the Year-Over-Year price change of each item.
I then weight this on the sales, sum it up,...
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How to estimate a reasonable convergence factor for interim convergence of inflation to long-term mean?
I have to price a future debt payment influenced by the Polish inflation rate at work.
I am trying to figure out a reasonable semi-annual convergence factor for the convergence of Polish Inflation to ...
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Are grains a Giffen good? Also does circumstances make a good - Giffen good?
I was going through microeconomics course and I came across the Giffen good. Now I have a scenario with me. A family only buys grains and chocolate from the shop and the price of grain is increasing. ...
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Why not increase tax instead of interest rate rises?
To control inflation and reduce consumption, the Central Banks increase interest rates (eg UK). Wouldn't it be more beneficial (improved public services and infrastructure) to increase consumption ...
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Expected vs actual inflation and the real debt burden
The real rate of return is given by:
1+r=(1+i)/(1+π)
and it can easily be shown that:
1+r ≈ i-π+1 so that r ≈ i-π
This can be used to calculate real rates of return, or equivalently the real debt ...
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Why does a positive output gap shift the short run AS curve instead the demand curve?
I'm reading through Mishkin "The Economics of Money, Banking, and Financial Markets". In chapter 23 (of the global 13th edition), they introduce the AS/AD framework. What confuses me is the ...
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