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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224 views

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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173 views

Can PPP adjusted values be compared over time?

I'm a little baffled about this: Let's say I want to compare the average income of 2 countries, A and B. Of course I'm interested in the real income so I adjust to PPP using the big mac index of that ...
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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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99 views

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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164 views

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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44 views

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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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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134 views

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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66 views

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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44 views

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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58 views

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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189 views

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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34 views

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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1answer
117 views

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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79 views

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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Why is the current WDI missing CPI data for some countries (including the UK and China)?

I'm downloading data on inflation in different countries, and using the World Bank's World Development Indicators (WDI). Specifically, the Consumer Price Index series (CPI). (http://data.worldbank.org/...
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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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343 views

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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112 views

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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89 views

inflation rate vs interest rate on calculating present value of future money

i use the formula 100/(1+r)^T to calculate the present value of my future money while r is interest rate and T is year. However , for my country , interest rate (...
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Real Effective Exchange Rates Based on Manufacturing Consumer Price Index for India

This question is from here What does "Real Effective Exchange Rates Based on Manufacturing Consumer Price Index for India " this mean? Does it mean the value of exports adjusted for ...
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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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New Keynesian Model Output Gap and Calibration

I am trying to solve following problem regarding the New Keynesian Model: So, I have calculated following equations by using the Taylor Rule, Phillips Curve and IS Curve: $$\pi=\frac{\kappa\phi_y}{(1-...
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What problems arise when the minimum wage is directly linked to the inflation rate?

For example if the minimum wage is 10, and the inflation for the year is 3%, then next year the minimum wage is 10*1.03 =10.30. the next year, inflation is 5%, so the minimum wage becomes 10.82. The ...
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58 views

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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How do major global events interact with debt cycles?

I recently watched Ray Dalio's video on how the economy runs on short/long term debt cycles. However I was wondering how other major events impact economic growth: How does the short and long term ...
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Impact of healthcare and college tuition on inflation

For as long as I can remember people in the US have complained about the high cost and trajectory of college tuition and healthcare expenditures. I've also read that inflation has been low for awhile ...
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15 views

Does the contractionary monetary effect of tax conpensate for its deadweight loss?

We all know that if the government impose a tax on a product, then tax revenue is less than loss in consumer and producer surplus. This is known as deadweight loss. We also know that taxing is a ...
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Are corporate savings deflationary?

Example: Apple. People "overpay" for their products, money that ends up in corporate savings and not in their competitors' coffers, sort of a black hole because Apple doesn't see enough investment ...
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The Crisis of Argentina

newbie here. Q1 - What needs to be done by the Argentinian government for their currency to regain back its strength? Q2 - Why has the Argentine Peso depreciated against the U.S Dollar for more than ...
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Why is the measured year 2018 inflation rate low despite rounds of quantitative easing?

Is it correct to state year 2018 inflation rate of 2.2% is very low? Is it correct to state that even though the commodity prices have not increased, the increased money supply coming from the ...
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57 views

Cost-push inflation and labour shortage

Is it possible for there to be a shortage of labour in an economy when there is cost-push inflation?
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How would a “one-way” fixed exchange rate backed by destroying foreign currency work?

Note: This question may seem really pointless, but it's actually in the context of a cryptocurrency idea I am developing, but I posed it this way as the question is not really about cryptocurrencies ...
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21 views

Can the CPIH be used to find the real terms rise in price of a component of the basket of goods?

I want to calculate the real terms rise in UK private rent prices since 2011 using the CPIH measure. The indexes of nominal rent prices and the CPIH rose by 14.7% and 13.5% respectively, so I can say ...
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136 views

Does accumulation of fiat currency cause instability?

If the value of fiat currency is a function of the supply of money and it's velocity, is the accumulation of that currency detrimental to its stability? I may be wrong in my understanding of the ...
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Could the inflation following the Gold Rush have been avoided, are we any “wiser” on inflation now?

Quoting Milton Friedman on the inflationary period shortly following the American Gold Rush in California: "Because there was more gold, they had to pay a little more gold to buy goods and ...
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Why does US jobs and inflation have an affect on European equities?

There are articles such as 'European shares crawl higher as investors eye US inflation data'. Is this just put down to Americans may have more money to spend overseas so investors speculate higher ...
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81 views

Can real wages increase (practically) without inflation?

It has been suggested that a strong economy will raise wages for all. However, I suspect that this can occur in only a few ways. First, assume that the wealth distribution in the U.S. is such that a ...
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230 views

Dynamic factor model for inflation (UIG)

I'm trying to replicate some results of Fed Underlying Inflation Gauge (UIG) model, which is a dynamic factor model to capture inflation trend. https://www.newyorkfed.org/research/policy/underlying-...
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93 views

Why does a reduction in regional differences in unemployment shift the Phillips curve?

According to this question below, apparently a reduction in the regional differences in the level of unemployment would shift the short run Phillips curve SRPC leftwards. The answer to the question is ...
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77 views

Increased inflation rate on borrowers and lenders

I'm trying to understand a concept in microeconomics. So if inflation increases while nominal interest rate stays the same, what are the substitution effects and income effects on borrowers and ...
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28 views

Relationship between changes in Currency against basket of currencies and inflation

Sorry I'm not an economist, but I was wondering if there was a general country by country guide to how inflation there changes with response to a change in the currency's value against a basket of ...
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449 views

Difference between a fixed pricing system and a two tier system regarding inflation onset through illegal transactions

I hope this layman's question is not off topic. I was not able to find guide lines as to how professional questions have to be. I am trying to qualitatively understand the origins of the Tiananmen ...
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66 views

Core inflation, QE and credibility of ECB

In macro we learn that credibility is very important for a Central Bank (CB), since it allows for less onerous adjustments for the economy. In the recent(?) past, the newspapers have becoming ...
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635 views

Equal payment series compound interest problem

I am stuck on a textbook question for a long time now. What is the amount of quarterly deposits A, such that you will be able to withdraw the amounts in cash flow diagram if the interest rate is 8% ...
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75 views

Why is inflation rate so low in euro zone?

Inflation rate for Eurozone in December 2015 was 0.2%. In November 2015 it was 0.1%. Meanwhile ECBs target is annual 2% and it seems that ECB does everything it can to push the inflation to the target....
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83 views

Inflation - Output Trade-off in the Adaptive and Rational Expectations Philips Curve

In the Adaptive Philips Curve, $E(\pi_t|I_{t-1})=\pi_{t-1}$. I'm reading a macro book, and the authors state that there is no long-term trade-off, i.e., when making the economy run at a level other ...