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 would cause the velocity of money (V) to increase / accelerate (or at least stop falling)
Given that:
MV=PY
Or
P = (M)(V) / Y
Where M is the money supply, V velocity of money, P price level and Y real GDP
Considering that the current rate of M2 is increasing at 7% per year over the ...
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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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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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Why doesn't the government create money, spend it for free without interest, and recollect it with taxes?
I was thinking of a better monetary system, and here is what I came up with. I'd like to know if this would work, as I see if offers many advantages over our debt-based monetary system today.
A new ...
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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 $1.7 trillion, I was ...
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Does emerge of cryptocurrency cause inflation?
I'm very newbie at economics, so the question may does not sound a good question.
I define value, any type of goods and services I can acquire in an economic deal. If I assume whole amount of value ...
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What downside is there to making the USD the national currency for your country?
I get that for huge countries like China, you can't have the US controlling your currency.
But for some smaller countries, or new fledgling countries, why not have the USD be your national currency? ...
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How much do gas prices impact in other product prices?
In my country, they are considering stop funding gas prices so prices would raises from 0,30 U$S to 1 or 2 dollars per liter. Some people argues this would impact heavily in inflation, which is ...
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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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Real debt burden
Many economists believe real interest payments-to-GDP is a superior measure of debt service burden than nominal interest payments-to-GDP. My question is why we divide real interest payments by nominal ...
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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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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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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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Calculating Real Budget Deficit, given Nominal Deficit and Inflation
I am doing this course on Coursera. In the context of explaining what Budget Deficits are, the professor puts up the following formula:
Real Deficit = Nominal Deficit - (Inflation*Total Debt)
My ...
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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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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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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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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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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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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 were the factors that caused the Philips curve to stop working during the 1970s?
Philips curve says that inflation and unemployment were inversely correlated. In the 1970s, stagflation happened. If Philips curve hold true, stagflation is impossible.
What were the factors that ...
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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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MMT and bond sales
Proponents of Modern Monetary Theory claim that bond sales are unnecessary and only help central banks set interest rates (which should be 0% anyway according to theory) and to provide safe interest-...
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Why are the YTMs of TIPS of longer maturities more sensitive to current interest rates and inflation rates?
According to this website, the yields of TIPS of longer maturities are greater than that of TIPS of shorter maturities. It seems counterintuitive since yields of longer-maturity bonds, which are based ...
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How has decreasing quality (or the need to pay more for the same quality) tracked with inflation?
I'm trying to identity a missing variable that could affect poor and middle class consumers more than more wealthy/resourceful individuals.
Assuming that there are decisions regarding cost reductions ...
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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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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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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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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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How to calculate inter-annual variation of inflation for a 3 months period?
I have the monthly indexes taken from the National Institute of Statistics of my country (below), then I can calculate its inter-annual variation easily:
((index month year - index same month year - ...
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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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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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In what ways will taxing corporations reduce inflation?
President Biden Tweeted to the effect that taxing corporations will reduce inflation. When I look at what goods are experiencing the most inflation it seems to be things like groceries and rent. What ...
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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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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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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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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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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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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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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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Why is the rouble collapsing?
What are the reasons why the rouble (RUB) is collapsing? Which one is the main one?
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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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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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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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What does THO, as in "USD THO", stand for in export statistics?
I've noticed that some online sources use "USD THO" as a unit to express rates of transfer of value. Specifically, I saw it in measuring Chinese exports to Russia in this video at 21:20 ...
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