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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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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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 ...
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What will happen to property prices if local currency weakens against USD?

Say that the conversion rate of a local currency changes so that the currency is now relatively weaker against foreign currencies and as a result the inflation rate increases and as a result of that ...
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Why may printing trillions of dollars not lead to inflation?

By definition, inflation should be affected by the increase of the money supply. During the pandemic, there have been numerous huge monetary policies executed, e.g., quantitative easing (QE), ...
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Are government bonds ever profitable

With most government bonds having interest rates being rather low, (0.254%) This being a whole 1.75% below target inflation (To clarify all rates are UK rates, and UK target inflation is 2%), and 1.54%...
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New Keynesian Phillips curve with time-varying elasticity of demand

I am looking for a paper or notes which derive the New Keynesian Phillips curve with Calvo price staggering and time-varying elasticity of demand (i.e. markup shocks). Specifically, I am trying to ...
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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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54 views

Does inflation equal change in M1 or M2?

According to monetarism, inflation can be predicted precisely by the change in money supply and GDP growth. Does "money supply" here refer to M1 or M2, i.e. does it include debts created by ...
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stylized facts about inflation and output: fat tails, excess volatility,

I can find papers about the stylized facts, which would be excess volatility, fat tails, persistence, etc., about asset prices, but not really about inflation and output, which presumely would show ...
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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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How to calculate effects of inflation over a period of time

I am interested in weather there is a standard way of calculating and predicting the distribution of the decreased value over time as caused by inflation (something like money friction)? For example ...
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China's balance of payment and balance of trade - relation to inflation

I am struggling with understanding how China's balance of payments (negative, deficit) and balance of trade (positive, profit around 0.5 trln USD) affect it's inflation rate. Obviously, balance of ...
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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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Imports/Exports in the equation of exchange

From the equation of exchange: $MV=PY$, where $M$ is the money aggregate, $Y$ is the real output, $P$ is the price level and $V$ is the velocity of money, we derive $\% \Delta M + \% \Delta V = ...
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Question About Consumer Price Index (CPI)

So my question is regarding how a change in consumer buying behavior affects the CPI. Say for example, that in times of crisis people tend to buy their goods from shops with cheaper prices than the ...
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Is it better to calculate inflation rate using GDP deflater whether based year is the first year or last year of our data?

if we wanna calculate inflation rate for years 1997 and 1998, there are 2 ways, first is set our base-year 1997 and according to my data it will be 0.39 and if we set the base-year 1998 the rate will ...
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459 views

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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Forward exchange rates and inflation

Looking at forward rates, the exchange rate for the currency with the higher interest rate gets worse over time. This makes sense or else there would be an arbitrage opportunity to borrow in the low ...
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Expected Inflation and its results

I was reading a macroeconomics textbook and found two statements which seem kind of contradictory so I wish to ask how to correctly interpret this. “When expected inflation is high, people increase ...
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Why growth of national income in current prices during inflation not measured in poor sections and poverty alleviation programs?

Here 1) dwindles means reduce, smaller. Here is my doubt: If inflation fluctuates how can we use the word 'dwindles', what it means here? 2) Why the growth rate during inflation not measured in poor ...
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Why is having lots of silver and not raising/decreasing taxes leads to inflation in a country?

In The Spanish Empire, Silver, & Runaway Inflation: Crash Course World History #25, it is claimed that "In ..., the silver was pouring into Spain, and because they were collecting same taxes as ...
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Best way to measure company size relative to world GDP

I'm working o a model where corporate revenue / world GDP is a dependent variable of some stuff (based on the model proposed in this paper: http://www.scielo.br/scielo.php?pid=S1807-76922009000200002&...
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The law of supply and demand - How does it work?

I've learned what the principle of supply and demand says, and would paraphrase it like this: The price of a good is at equilibrium when supply and demand are equal. Or with other words: The price ...
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Debt-to-GDP ratio in connection to inflation

On this segment of the Tucker Carlson show, interviewing Robert Hockett, as an advisor to Rep. Octavio-Cortez on the proposed Green New Deal, the following interchange ensues: Tucker: "On the ...
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Inflation-adjusted units of account

In Chile, most of prices are measured in the local currency, the peso (currency code CLP). However, there are two other units of account. These are the UF and the UTM. These keep track of the real ...
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Can't we measure the growth in the income levels of poor?

Inflation has been a challenging aspect of policymaking. In such situations growth in the income levels of the population living below the poverty level can never be measured accurately (due to ...
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Is a loan lent with a rate under the inflation rate free money?

Suppose we have an inflation in a country with an annual 2% and we get a loan for an annual 1% (real interest). Is the money we receive free? This is a common practice in some European countries, ...
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101 views

Inflation and stock price

I have indicated my understanding and problem on the attached image below. I'm a bit confused on the impact of inflation on stock price. As increase in inflation would cause nominal interest rate to ...
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188 views

Explain inflation to an economic novice

I'm trying to get a grasp on how exactly inflation works. What I've read so far seems to be contradictory. In some articles I've read that government spending is always(?) inflationary, and in ...
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Causality: Money supply and prices

When there is an increase in price level, real money supply decreases and raises interest rates. In a similar situation, when money supply decreases, interest rates increases, consumption decreases, ...
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Small vlillage impact on Inflation

Let's suppose we have the opportunity to print unlimited money and give each of the 1,000 inhabitants of a small village $100,000 per person. Does this action boosts the inflation of the country? How ...
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How to reconcile fact that “real interest=nominal interest - inflation” with prediction of the interest rate theory about expensivity of loans?

According to the interest rate theory higher price level will lead to following chain of events in the short run: Marginal propensity to save will decrease(ratio of spending/saving will change, people ...

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