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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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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Research about the sufficiency of food in the light of transition to green and biological agriculture?

There are many articles (e.g. from "The Economist" news magazine 07.10.2021) that establish partial links among the high gas/electricity prices, lack of supply of energy resources and the ...
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What are the causes of negative real interest rates?

I am familiar with the real interest rates equation which states that real interest rate = nominal interest rate - expected inflation rate. What I am failing to fully grasp, however, is why would ...
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How could real house prices tend to rise in the long-term?

It makes sense that house prices increase above the risk-free rate due to their risky nature and historical evidence and conventional wisdom seems to back up the idea that real house prices tend to ...
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How could house prices tend to rise in the long-term? [duplicate]

It makes sense that house prices increase above the risk-free rate due to their risky nature and historical evidence and conventional wisdom seems to back up the idea that real house prices tend to ...
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Confusion regarding the definition of inflation premium

'Inflation premium' is defined here as the higher return that investors demand in exchange for investing in a long-term security, where inflation has a greater potential to reduce the real return. In ...
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If return rises by same % as inflation rate rises, then perfect inflation hedge?

I read somewhere (Ang, Brière, Signori: Inflation and Individual Equities, 2012) that in a given period if the inflation rate rises by 1% point (say from 1% to 2%), and the return of Asset A rises ...
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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 ...
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1answer
119 views

Can making everyone in a country rich be detrimental to the economy?

Let's say that everyone in the nation of Tigerville is given US$1,000,000. People would want to buy more goods since they have become considerably more wealthy. However, the sellers of the goods may ...
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The link between economic growth, inflation, interest rates and fiscal deficit

I want to ask a question about how economic growth, inflation, interest rates is linked to fiscal deficit. I was reading a book on introductory economics and the following passage came up: If a ...
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Relation between budget deficit and inflation?

In Iran we have had a high inflation rate for several decades (usually above 20 percent). Some of the top economists of the country say that it is mainly because the government spending is ...
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Percentage increase of the price of a good if there is a pay raise

I have a question about the percentage increase of the price of a good if there is a pay raise given to the firm's workers. I am reading economics for my own personal interest so I apologise if there ...
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146 views

Why was Friedman so wrong about inflation?

In a famous 1977 lecture, Milton Friedman claims that inflation depends purely on the monetary policy and he proves it with a convincing chart (youtube video here) I have reproduced his chart using ...
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Market Measures for Inflation Expectations for Euro zone

If I were to use a market measure for inflation expectations for the USA, I would look at the differential of yields between the conventional and inflation-indexed Treasuries. However, in the Euro ...
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Is there a “runaway” threshold for Debt-to-GDP Ratio in the U.S.?

Last year, when Congress was debating the stimulus/relief packages, one Senator made a comment about the debt-to-GDP ratio and how we are approaching a point in that ratio that will have some major ...
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Did Capitalism and Adam Smith Support a Central Bank?

Does Adam Smith and Capitalism support a Central Bank/Federal Reserve? I am trying to read through the book "Wealth of Nations" to understand. Having a central/regulatory figure dictate ...
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Is there research on the level of individuals regarding the origins of hyperinflation? [closed]

I am interested in inflation, specifically hyperinflation. Can anybody point me to research (papers, books) done on the individual origins and mechanisms at work at the very beginning of ...
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Has anyone developed a good methodology for high-frequency inflation nowcasting?

Let's say I want to know what happened to the value of the U.S. dollar between three minutes and two minutes back from ... NOW. I have given myself a two minute slack period for data collection and ...
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Puzzled by proposed inflation mechanisms

There are some explanations for long term inflation that completely baffle me in that they seem so deeply flawed that I wonder how come they are taken seriously. So take for example the idea of a &...
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Impact of new IMF SDR allocations on currencies

I understand that IMF is currently contemplating printing money via new allocation of SDR, and thereby attempting to help increase global liquidity in period after covid. What impact, if any, can ...
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What causes inflation?

Given the recent increases in the price of many things in the US (lumber, used cars, gasoline, etc…) I have begun thinking about what is going on at a macroeconomic level. My first thought is “it’s ...
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Differentiation in a inflation tax calculation

everyone. I am studying Advanced Macroeconomics, by Derek Leslie, and I am having some troubles in understanding the result of a differentiation in the Chapter 1, section 5. This section approaches ...
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1answer
39 views

Inflation rate of a country vs. currency

The way I understand, inflation rate is the change of Consumer Price Index per given period of time. Is this correct? What's the different between inflation rate of the economy of a country vs. ...
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How can money have a value? [duplicate]

The value of money can be the value to produce it. It costs, say, 1, to produce 10 000 000, in the mean (coins and paper, though digital money costs virtually nothing). This is called the extrinsic ...
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US Reserve Currency Status Impact on Inflation

Since US dollar has global reserve currency status meaning that other countries need to keep a certain amount of US dollar as reserves. There's a narrative that being a reserve currency, if US prints ...
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Why is hyper inflation not a concern with huge rise in M2? [duplicate]

According to quantity theory of money, with velocity and production being relatively stable, we would expect the amount of inflation to be proportional to the amount of money circulating in the ...
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1answer
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Does it make sense to talk about Bitcoin 'inflation' when little to no goods and services are listed in Bitcoin currency?

I think of inflation as a generalized increase in the price levels of a basket of goods and services. I should add that my understanding presumes that inflation should be measured in the same currency ...
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1answer
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Does Russia have higher inflation than US and Canada? If so, why in this particular case does money supply increase doesn't lead to higher prices? [duplicate]

My understanding is that Russian inflation in recent years is considered to be running in the 5-6 % range, while US and Canada - in the 2-3% range (as measured by price increases/CPI). But I'd expect ...
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Having difficultly to understand two indices with regard to inflation

What are these terms "provisional headline inflation" and "imputed index" used to predict in terms of inflation?
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Data on inflation target on different countries around the world

Does someone know if there's a page, like a "global bank" online page, where one could see the inflation target for different countries? For example, in x country, for x' year, the inflation ...
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What was the annual real growth rate in the US from 2010 to 2015?

If we look at the US M0 money supply after the global financial crisis (GFC): we see that it doubled from 2010 to 2015. If we look at the Consumer Price Index in the same period: it rose by 8%. So ...
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Is modern monetary theory sustainable?

I am looking around at a lot of the central banks around the world (primarily ECB, Fed, and BOJ) and they all seem to be simply printing their way out of any issues with their economies. As far as I ...
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Can inflation show up in assets without necessarily being reflected in classic inflation indexes?

I have been having an argument with a friend of mine who obtained an economics degree in college. I have been arguing that increased money supply from the fed has led to inflation in asset prices, ...
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87 views

Classical Theory of Inflation - Money Supply, Money Demand and Prices

In every textbook, website I read when talking about the classical theory of inflation, I see the diagram below which depicts the value of money, prices etc. This one below is from Spark notes (https:...
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Why high levels of inflation doesn't leads to high levels of employment?

According to the original Phillips curve $\pi=(\mu+z)-u$ there's a negative relation between inflation and unemployment. That being said, if there were a really high level of inflation, then there ...
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103 views

Why in the quantitative equation: $MV=PY$, $V$ and $Y$ can be taken as fixed?

To equation is \begin{align} MV=PY \end{align} where $V=\frac{1}{k}$. Why $V$ and $Y$ can be taken as fixed or constant? Why can $V=\frac{1}{k}$ too? Thanks in advance
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Why does central banks lowering interest rate incentivize more borrowing?

I'm a layman trying to understand how the US monetary system works. I'm particularly interested in how the Federal Reserve can create inflation without printing new dollars and putting them in M1. My ...
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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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1answer
28 views

From the aggregate supply equation to the definition of inflation rate

By definition the inflation rate is $$\pi=\dfrac{P-P_{-1}}{P_{-1}}\cdot100\%$$ or could be defined in terms of the consumer price index CPI, but in this case I think the former is the one to consider....
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Why does the inflation not follow the money supply?

To my understanding classical economic theory tells us that inflation occurs when the money supply is increased faster than the economic growth. Lately there has been a sharp rise in the rate of money ...
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1answer
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If I fill a vending machine with \$0.50 sodas and sell them for \$1, am I creating 50 cents of wealth for the economy?

This is a very simplified example. If I fill a vending machine with sodas that cost \$0.50 each and someone comes along and pays \$1 for it, am I creating an extra \$0.50 of wealth for the economy? ...
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rebasing an index with inconsistent ratios between old and new data points?

I have a question about rebasing indices, hoping someone might be able to help. I'm working with two sets of index data for residential property prices from the Australian Bureau of Statistics. the ...
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diverging price indicators

Suppose that PPI is increasing while CPI is decreasing. interpereting this is somewhat tricky because different contexts are at play: CPI is largely domestic driven while PPI has global determinants. ...
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79 views

Why isn't high inflation along with robust welfare a 'good' system?

High inflation, by definition, means that the demand for goods and services is higher compared to the demand for currency. In other words, people are more willing to give up currency for goods and ...
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Is there a book or notes that explain all about inflation? [closed]

Is there a book or notes or papers (but for easy understanding please) that explain all about inflation? Not at a research level but student level. From what is previously needed to define and ...
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251 views

What exactly is "quantity of money per unit of output"?

When making the case about inflation being monetary phenomena, Milton Friedman shows a graph where "quantity of money per unit of output" move together with CPI. What is "quantity of ...
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How is the differential definition of money supply, velocity, and GDP defined?

I was reading: This article on money velocity (see the summary section) Where two formulas are presented: first an equality: $$\text{Quantity of Money} (M) \times \text{Velocity of Money} (V) = \...
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120 views

Calculate average annual inflation

The price index in the year 1993 is 60. The base at 2012 is 100. The annual nominal interest rate between 1993 and 2012 is 66% on average. What is the average annual inflation between 1993 and 2012? I ...
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Why if the economy will produces too much there will be an increase of prices in nearly all goods and services?

I am taking an online Economics course and not understanding why if the economy will produces too much there will be an increase of prices in nearly all goods and services? If for example there will ...
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Meaning of high bond yields [duplicate]

Lately, rising longer-maturity bond yields have been in the news. Many people write as though the rising yields show that "the market" believes that the Federal Reserve will raise interest ...

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