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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903 views

Why are interest rates so high in Russia?

In Russia we currently have 11% of Central Bank's interest rate and you can get credit in commercial bank for about 25% in year. Why are interest rates so high?
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What will happen to bank loans in the event of hyper inflation?

Say for example a person gets a home loan of $100,000 in a certain country at an interest rate of 10%. Inflation is normally around 5% in this country. What could happen to that person's loan if the ...
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Taylor Rule: Relationship between interest rate and inflation

Q. According to the Taylor Rule, what should the central bank do to stabilize the economy after an increase in oil price? My points: Increase in oil prices (1970's) raises the price of production ...
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In a hyper-inflated economy, how do vendors know how much to raise their prices?

You regularly see stories about hyper-inflated economies. The common feature is that as prices spiral out of control, stores continually raise their prices to match the level of inflation, leading to ...
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With interest rates and inflation in the U.S. low and growth moderate, where is the money going?

Question is basically in the title. With interest rates so low for such a long period of time, I wonder where are that injected cash has gone? I realize that the economy has definetly grown quite ...
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How interest rate affects currency

I am quite new to economics. I was reading about changes in interest rates and its effect on currency value. The fact is as interest rates increases, the currency value also increases and vice versa....
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Why is modest inflation a good thing? [duplicate]

I have been reading a BBC news article about inflation in the UK, which is saying that inflation has recently become negative (http://www.bbc.co.uk/news/business-33147660). The article suggests that ...
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How could monetary policy be affected if cash “gifts” to consumers were more frequently used?

A few years ago in the US, everyone who filed taxes received a check for $1000. If this method of inflation was logistically more feasible, how could this be used in monetary policy, and what ...
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Question on real exchange rate

If the Phillipine peso falls in value against the USD by 5% in a year, but the domestic inflation rate in the Phillipines is 10%, compared to 2% in the USA, the nominal exchange rate has fallen (by 5%)...
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Could debt cause inflation instead of deflation?

It is well known that debt can cause deflation, especially during crisis: to repay their debts agents sell their goods which causes a fall in prices. But if there is no crisis and agents "have the ...
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Floating exchange rate and cost-push inflation?

I have a trouble understanding the following text from my textbook. I bolded the fragments that don't make sense to me. "Disadvantages of a floating exchange rate: A floating exchange rate regime may ...
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How inflation affects exchange rates?

I have a question regarding the impact of inflation on exchange rate between trading countries. Let's assume a hypothetical situation where the UK and the USA trade with each other. The USA import ...
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Does Dogecoin or Bitcoin have a more appropriate rate of monetary inflation?

The supply of new Bitcoins and Dogecoins is depicted in the graph below. The Bitcoin inflation rate is currently higher than the Dogecoin rate, but it reduces sharply to a rate close to zero. It ...
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Why is a higher inflation rate bad for international competitiveness?

Why if there's a higher inflation rate in country A then its exports are less competitive and its trading partners prefer to buy from countries with lower inflation rates?
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Why do indebted governments fear deflation?

It's widely accepted among people who follow finance that various governments around the world, including the US government, are doing (or their central banks are doing) everything possible to keep ...
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Is zero inflation desirable?

Is zero inflation really desirable? To be more precise: Does inflation in real life have benefits that in some situations outweigh its social cost? E.g.: it works as a disincentive against holding ...
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Why did large denomiations exist in the early 20th century?

In the early 1900s, you could buy a newspaper for 5 cents, a pound of apples for 10 cents and the average salary was about \$40 a month. Nowadays, an issue of the NYT costs \$2.50 , a pound of apples ...
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How does inflation in income go 'hand in hand with inflation in prices'?

Source: p 594, Economics, 3 Ed, 2014, by N G Mankiw, M P Taylor Yet further thought reveals a fallacy in this answer. When prices rise, buyers of goods and services pay more for what they buy. At ...
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Why is the Argentine Peso still so expensive?

In the last twelve months, the argentine peso (ARS) lost about 11% of its value in comparison to USD. In the same time range the prices rouse about 29% (spanish). What's the reason for this effect? ...
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Quantitative Easing in Africa

I am currently doing a research work on quantitative easing and can't find any example of it occurring in Africa. Have any African central banks ever used QE?
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Changing the base year of Real GDP from 2001 Euros to 1990 Geary–Khamis dollars

Estimating regional Gdp in Italy (1871-2001): sources, methodology, and results (Felice, E) This article has Italian historical regional GDP figures, but they are in constant 2001 euros not in 1990 ...
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Would a major wealth redistribution cause a major inflation?

I've seen a video on wealth distribution on the US where perceived, "desired"(by the majority) and actual income distributions are shown. I've been thinking what would happen to the purchasing power ...
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If a GDP deflator is continually greater than 100%, does that mean inflation is still occuring?

If a GDP deflator is continually greater than 100%, does that mean inflation is still occuring? If the difference in deflators from year to year is continually greater than 1%, does that mean ...
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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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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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Why aren't house prices included in CPI?

Swedens central bank recently lowered their prime rate to -0.25% from -0.10% in an effort to avoid deflation. At the same time, house and apartment prices are higher than ever, up 11% last 12 months,...
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Old Measure of Inflation Still Tracked?

At this ZH link (paranoid blogger warning), the free documentary mentions that using an old measure of inflation, which was used during Paul Volcker's years at the Fed, inflation has been much higher ...
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Why do central banks increase their rate to fight inflation?

It was top news a week ago that Bank of Ukraine increased its rate to 30%. And the news said they did this to fight inflation. But I don't understand one thing: isn't the increased rate of "money ...
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Effects of an expected increase in the inflation rate on the market for loanable funds

I am supposed to answer a question in my economics class and was wondering if someone could explain it out for me. The question is, What is the effect of an increase in the expected inflation rate ...
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Does the amount of inward investments affect inflation?

I understand that inflation has an impact on the foreign direct investment. But can the opposite be true? The amount of foreign direct investment has an impact on the inflation of the country that ...
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What effect would raising reserve requirements while printing money have?

It is generally accepted, that printing money will be inflationary, as it increases the money supply without a corresponding real growth of the economy. At the same time, if the central bank ...
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Real value of debt

The Wikipedia article for real value says In economics, a nominal value is an economic value expressed in historical nominal monetary terms. By contrast, a real value is a value that has been ...
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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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Inflation and economic growth

Noticeable works about the impact of inflation on economic growth are dated back to the 90s. For example, Barro (1995): the impact effects from an increase in average inflation by 10 percentage ...
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Can I use percentage change in CPI to calculate fare rate schedule?

There was a recent rollback in the fare rate in our city from 9.50 pesos to 6.50 pesos because of the decrease in the price of gasoline. The fare rate here is pegged to the prevailing price of ...
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Would it be correct to use exchange rates of the biggest trading partners to the dollar as an explanatory variable?

I'm trying to study the relationship of general macro factors and their effect on credit in the private sector. The country in question has a fixed exchange regime with the dollar, would it be ...
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Does Inflation Make Money Eventually Worthless?

I used this calculator: http://www.buyupside.com/calculators/inflationjan08.htm to estimate the future worth of 100 dollars in 100 years at 2% inflation. Does this really mean that a decent meal at a ...
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How does inflation impact the welfare of the economy?

When the government causes inflation through printing money, the individuals who saved their money in the bank are poorer. Is there a way to determine how different inflation rates impact the welfare ...
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Models for inflation prediction

I am looking for some statistical models that are accepted to best predict inflation rates. Anything that is more complicated than linear model will be appreciated. Or even recommend books that ...
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Central Banks and Price Stability

Are there any empirical studies on the question of whether independent central banks cause price stability? I am seeking to understand if independence (of the central monitory authority) is part of ...
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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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Has any country attempted to inflation adjust capital gains before taxation?

Inspired by the answer to a different question I wondered: Can anyone think of a case study example, past or present, when capital gains are inflating adjusted before being taxed. I could imagine ...
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Is foreign-financed Basic Income Guarantee inflationary?

The question came up on comments in Politics.SE: Situation: A government of a country sets up an unconditional Basic Income Guarantee (defined as monthly payments to EVERY resident, unconditionally,...
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Inflation, cause or result of monetary emission?

The argentine economist Fernanda Vallejos, while trying to protect the government because of the inflation, the following: Inflation is not the result but the cause of monetary emission. As there'...
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Inflation reasons beyond Friedman

I think everyone know this Friedman's quote nowadays: Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the ...
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From an economics perspective, what are the ramifications of a currency with fixed money supply?

I'm thinking specifically of bitcoins. What are the pros and cons of having a fixed number of coins, as opposed to more "normal" currencies? Would the currency have no inflation?
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Currency Values, Developing Economies and Balance of Trade

For a developing economy like India, where balance of trade is negative, is it good to have a weak dollar or a strong dollar? Dollar value increases (Rupee, the local currency, weakens), imports (...
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Why isn't there an “ideal value” for a given currency? [closed]

If a currency can be worth too little (e.g. needing \$10,000,000,000 to buy a loaf of bread) and worth too much (e.g. being able to buy a loaf of bread for $0.00001), why isn't there an "ideal value" (...

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