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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When inflation expectations cause inflation, where does the corresponding money supply come from?
One cause given for inflation is inflation expectations. When firms expect inflation, they raise prices and employees demand increased wages
However, this additional money in the economy must come ...
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Does indexing prices to inflation not simply reinforce inflation?
I'm no expert, but my salary is indexed to inflation, and so is the legal limit my rent can be increased, and my parents' pensions. Doesn't forcing all these payments and prices to grow simply ensure ...
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If inflation/cost of living is such a complex difficult problem, then why has the price of drugs been absoultly perfectly stable my whole life?
The prices of all the different drugs that I use have not changed at all, in the 46 years I have been alive. (Which means, that the price has consistently gone down, if adjusted).
Please explain how ...
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CPI: Why is the inflation rate of "commodities less food" greater than both "Energy commodities" and "Commodities less food and energy commodities"?
The latest CPI report shows inflation for these line items (12 month unadjusted change to July 2024):
Commodities less food: -1.7%
Commodities less food and energy commodities: -1.9%
Energy ...
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How does inflation impact long-term economic growth?
I’ve been studying economic growth models and am curious about the role of inflation. I understand that moderate inflation is often considered normal in a growing economy,
Are there any models or ...
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Do prices just increase forever?
For decades, it seems money just keeps increasing. What do I mean? Everything grows more expensive, but incomes also seem to increase. Back in the 70s, a few dollars for a paycheck seems to have been ...
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Calculate CPI of multiple price indexes
I need to calculate the composite CPI of a basket of products. Each product is measured as its own standalone price index.
Note how 2016 = 100
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Calculating the present value of a payment in installments
So I was doing some online shopping and had the chance to buy an item now for a 20% discount or pay in 6 interest-free installments using my credit card. Given that inflation goes crazy in my country (...
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Relation between price dispersion and inflation volatility in NK model
In the standard New Keynesian model (e.g. Gali textbook), how are defined "inflation volatility" and "price dispersion?"
Is there a correlation / relation between the two?
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Relationship between drop in inflation rate vs. increase in unemployment rate (and vice versa)
I've read that inflation has historically had an inverse relationship with unemployment. This means that when inflation rises, unemployment drops. Higher unemployment, on the other hand, equates to ...
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Would Prices start dropping , say 50% if the government took back 50% of the trillions of dollars printed the last several years in the US economy?
If printing trillions of dollars causes prices to go up, would taking those trillions back cause prices to drop?
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5000 crore spent on Anant Ambani wedding versus rise in recharge packs by Jio
Around 5000 crore INR (598 172 000 USD) spent on Anant Ambani's wedding, who is son of the richest Indian entrepreneur Mukesh Ambani. While doing a recharge today, I noted that the price has been ...
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Methods to equalize gifts+inheritance, considering inflation
Someone created a living trust. Originally, the three beneficiaries would receive equal shares of her estate. Later, she gave (at different times) large unequal gifts to two of the beneficiaries, ...
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Hyperinflation of debt/taxes
I assume that if you owed a large amount of money (including back taxes) in say 1920s Germany, the hyperinflation they experienced made paying off the debt very easy.
Or did Germany (or other ...
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Can global real GDP be calculated using nominal GDP and inflation rate? If so what is the error?
I am attempting to calculate (in R) the global real GDP using what I assume is the nominal GDP from the World Bank and what I can only identify as the inflation rate, also from the World bank.
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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 ...
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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 ...
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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 ...
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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, ...
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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'...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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Exchange rate and Inflation: Conclusions
The value of $100 in 2000 in German Currency increased to $155.82 due to inflation (refer: Value of 2000 Euro (Germany) today - ...
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Question on the nature of debasement
I have a question concerning how exactly debasement works in terms of coins becoming reduced in value. I am aware that debasement is when the amount of a precious metal in a coin is reduced, the value ...
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Why has the price of laser eye surgery not changed?
Within the USA, I have long heard rumors that since laser eye corrective surgery is not often included in insurance plans or subsidized by governments, the price of laser eye has remained relatively ...
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What are the ways to take account of inflation?
If one wants to analyze the influence of inflation on other macro economic indicators, what are the best/standard way of how to use it?
I've found 3 variants:
As is (yearly values).
To take ...
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Does emerge of cryptocurrency cause inflation?
I'm very newbie at economics, so the question may does not sound a good question.
I define value, any type of goods and services I can acquire in an economic deal. If I assume whole amount of value ...
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How much do gas prices impact in other product prices?
In my country, they are considering stop funding gas prices so prices would raises from 0,30 U$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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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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