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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How much of gas prices can be tied to refinery profit margins?

US President Biden wrote a letter (widely reported, but I can't find an official' copy; see here for full text) blaming fat refinery profit margins for the recent (January-June) rise in gasoline ...
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Real Income and a Fixed Money Supply

What would happen to nominal income and wages if the money supply were fixed (100% reserve banking). Would real wages increase, even though nominal wages would stay the same or even decrease?
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How could the Roman sestertii/sesterces be converted into modern terms (say 2017 US$)?

Of course, the value of the sesterti must itself have fluctuated over the centuries it was in use. And so if I must narrow it down, I am particularly interested in its value during the time of ...
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Did a similar property boom take place in another country or throughout history like we have seen in London? If so how did it effect the economy?

The London property market has seen a sharp increase in the average house price. If we go back to the 70's the average UK and average London price were almost the same, however since than the gap has ...
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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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Inflation index and longevity of modern household appliances

The cost of household appliances and TVs are part of the Inflation Index. It is well known fact that modern appliances and TVs last 1/3 -1/2 time as comparing to 10-20 years ago and every time we buy ...
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Does Economic Growth Lead to Inflation?

As an answer to this question, it was stated that Economists believe that higher growth rates tend to also mean higher inflation rates. As a non macro-economist, I am wondering if this is true? ...
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Equal Payment Series

The question is: A man is planning to retire in 20 years. Money can be deposited at 8%, compounded monthly. It is estimated that the future general inflation rate will be 3% compounded annually. What ...
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Does anyone have any references relating to supermarkets pricing goods to keep CPI down?

On BBC Radio 4's Today programme during the Business News on the 31st August 22, I heard an ex-buyer for a major UK supermarket saying that they always kept a list of CPI goods and they made sure that ...
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Are interest rates increases fighting inflation?

Central banks are stubbornly increasing rates to fight current spike of inflation. Inflation, especially in Europe but also in the USA, is mainly supply driven and, killing demand to try to tame an ...
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If developed countries go through an economic depression, what happens to developing & underdeveloped countries?

With the historical inflation data throughout 2022 from the US & England, also with the hawkish view from the Federal Reserve, Bank of England & other analysts of the possibility of an ...
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Is there alternative to the monetary tighetning when the inflation is caused by scarcity (supply-side shocks)?

Current economic crisis is created by sharp reducing shocks to the supply side - bad economic weather, political restrictions to the trade, service availability reduction in the transportation sector. ...
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Do foreign donations raise inflation?

This is a hypothetical scenario that I have been thinking about for a while. I have been reading about it, but I can not come up with a definitive answer. If USA decides to donate 10b USD yearly for 5 ...
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Why has the Yen weakened despite lower inflation?

I have recently wondered about the depreciation of the Japanese Yen against the USD (or any other major currency). Currently, a thousand Yen is at around USD 7,75. This is about about a twenty-year ...
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Unemployment only differs from its natural rate if expected inflation is different from actual inflation - why?

This is a quote from Mankiw. No further explaination is given and I'm having trouble working through the logic behind this statement. Could someone explain the process behind this assertion?
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Is there a response to Stagflation that isn't austerity?

A reason why Keynesian economics got discredited and replaced by the now dominant Washington Consensus, was because of the 1970's stagflaysh according to David Harvey: https://newlearningonline.com/...
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Does raising rates lead to lower wages?

You sent https://www.cp24.com/news/bank-of-canada-raises-key-rate-half-a-point-to-1-and-warns-of-further-hikes-to-come-1.5859951 Since companies that make stuff rely mostly on credit to do that. Now ...
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Solution Check on Problem about expected inflation and Philips Curve relation (from Blanchard's Macroeconomics book)

Consider a country with two political parties, Democrats and Republicans. Democrats care more about unemployment than Republicans, and Republicans care more about inflation than Democrats. When ...
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How will inflation affect foreclosure rates?

I should preface this by saying that I am not really familiar with or educated in economics. I have a hypothesis however, and I would like to know if there is research out there that supports or ...
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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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Is there a complete picture of Inflation?

Is there a book, or a broad study, that explains inflation thoroughly? I've read so many articles, and there are multiple school of thoughts that approach inflation from different point of views. ...
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Micro foundations of the Phillips Curve

In a typical NKPC: $Inflation_t = \alpha_1 Inflation_{t-1} + (1-\alpha_1) \mathbb{E}_tInflation_{t+1} + \alpha_2 RealMarginalCost + \epsilon_t$ From a micro-foundations perspective, does the ...
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Does a rate hike by the Central Bank increase or decrease inflation?

Mainstream economic theory tells us that, in order to decrease inflation, the CB increases its rates so as to decrease loan creation which should decrease Aggregate Demand and thus lower inflation. ...
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Cagan Model of Hyper Inflation: Zimbabwe Data Request

Cagan Model of Hyperinflation Could anyone guide me where I could find the data for Zimbabwe that would allow me to estimate the Beta parameters. Also, what regression method would be most suitable (...
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Linking creeping inflation to industrial revolution

The russian wiki on price revolution says Ползучая инфляция стала тем стимулом, который привёл в конечном итоге к промышленной революции, which translates to in the end result, the creeping inflation ...
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Why would expanding fiat paper issue lead to decreased exports?

I'm reading "A History of Money and Banking in the United States" by Murray Rothbard, and I'm having trouble understanding this one piece of history. Basically, the Massachusetts government issues ...
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Calculating the amount paid for a loan in today's dollars

So I was trying to figure out the amount paid for a loan in today's dollars using two different methods but they give me different results. I was hoping that someone could explain which method is ...
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Are there empirical studies that quantify shoe-leather or menu costs?

Two theoretical arguments why a high level of inflation is bad (e.g. for growth) are: shoe-leather cost: keeping lower money balances when inflation is high (implying more frequent trips to the bank/...
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Roosevelt’s Price Fixing in The Great Depression

Why didn’t Roosevelt’s method of fixing prices on labour and produce help the depression? If everyone was receiving a wage that allowed them to afford produce, wouldn’t that create a new equilibrium ...
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Creative destruction and quality-adjusted inflation rate.

I'm reading this article in VoxEU.org, and there's the following paragraph: If the statistical office is correct to assume that the quality-adjusted inflation rate is the same for creatively ...
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What could cause the spike in the Venezuelan unofficial currency exchange?

In November last year the unofficial currency exchange rate in Venezuela skyrocketed. It was only one month later that the government was able to slow the increase rate to “normal” values. The ...
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Printing money to put into a Superannuation or UBI fund

It is fiscal policy to keep inflation at between 1-2% (in New Zealand at least) Various tools are used to keep inflation in this range. Let's say the average inflation rate is 1.25% What would ...
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Can the central bank interest rate policy still control inflation?

Historically, central banks have been using interest rate policy to control inflation. In current times, most rates have been going ever lower, but it seems to be incapable of driving inflation up. ...
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When considering the wealth of the 19th century American moguls, is it more correct to think in terms of inflation or percentage of GDP?

I generally see the wealth of Rockefeller and Carnegie variously estimated between \$150 billion and $400 billion when translated into modern terms. However, when only taking inflation into account, ...
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Supply-side economics: reduction in tax

In a nutshell Supply-side economists support reductions in tax, because government revenue can increase (according to the Laffer curve) and businesses and consumers will be incentivised to invest (...
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Using the CPI to inflate real estate prices

I got my hands on an interesting dataset of property transfers covering four decades and I'm unsure of how to properly inflate prior-year sale prices. I typically use the 'bushel basket' metro CPI-U ...
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Central bank use of interest to combat inflation

I continue being puzzled by the interest rate rises being used as a lever to lower inflation in the present climate. If I understand correctly, the rationale of higher interest is to dampen demand ...
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Simple DCF model with inflation and taxes - Why do inflation and taxes only matter jointly?

I'm putting together a simple discounted cashflow (DCF) model for a theoretical real estate investment. I think the model is correct, but I can't understand some of the results. The model is simply: $...
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United States - Is it the case that cost-push inflation is debunked?

While cost-push inflation makes intuitive sense for explaining the inflation uptrend in recent years: disruptions to the supply chain and volatile energy markets lead companies to pass on price hikes ...
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What is the effect on shelter costs of raising interest rates?

In the UK, a rise in rates causes a rise in mortgage repayments. It can lead to landlords raising rents due to margin pressure, if their mortgage is not fixed or is close to the end of its fixed ...
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Is it correct to distinguish between "monetary" and "price" inflation?

As the questions says. Should we distinguish between both. Or are they the same thing?
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Why is the Correlation between Interest Rates and Inflation positive?

I regressed quarterly CPI on lagged quarterly (from 1 to 8 quarters) 10-year Treasuries, and found that with data from roughly 1990, the coefficient of the lagged rates tends to be positive. This ...
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Value added at current price and deflation

I am currently working with Value Added at current price per industry per country per year (VALU variable available on OECD stats) and I'm trying to use the Value Added for all the European Countries (...
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How does US inflation impact dollarized nations?

For instance, would a high inflation rate on the US have any impact on countries that use the US dollar as their only legal tender, eg Ecuador or El Salvador? I often hear that high US inflation will ...
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Why does the wage-price spiral of inflation exist, why do high wages/high prices not balance out?

Today's NYTimes newsletter wrote the below Consider wages: If people expect high inflation, they will demand higher pay. But to pay higher wages, employers are likely to pass that cost to consumers ...
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Where is all the cash in an economy where saving is high?

Where is all the cash in an economy where saving is high, today inflation in Argentina hit a monthly rate for march of ~7.6%, what this means for me is that I try to move away from the peso as soon as ...
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Data on historical, cross-country nominal and real yield curves

Various central banks publish their fitted nominal yield curve estimates: the Fed, BOE, SNB, BOC, ECB (cf: Bundesbank), RBA, Russia, RBI. (I couldn't find for BOJ; Brazil; BOK; or PBOC. Links for ...
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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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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 ...