a sustained increase in a country's general level of prices that devalues its currency, often caused by excess demand in the economy
Wiktionary Definition for: Inflation
#An act, instance of, or state of expansion or increase in size, especially by injection of a gas.
Ex: ''The '''inflation''' of the balloon took five hours.''
Expansion in the money supply beyond the increase in available goods and services. Often misunderstood to mean a rise in prices, which generally accompanies such an expansion.
Ex: ''The low level of the Federal Reserve Rate caused a great '''inflation''' in the money supply that year, accompanied soon after by a general rise in prices.''
"Understanding inflation is crucial to investing because inflation can reduce the value of investment returns. Inflation affects all aspects of the economy, from consumer spending, business investment, and employment rates, to government programs, tax policies, and interest rates. This article explains the basics: What is Inflation? What Causes Inflation?...
This paper re-examines the relationship between inflation, inflation volatility and growth using cross-country panel data for the past 30 years. To examine the role of inflation uncertainty on growth, intra-year inflation data to construct an annual measure of inflation volatility is used. Using this measure, it is found that inflation...
An inflation-linked bond is a bond that provides protection against inflation. Most inflation-linked bonds, the Canadian "Real Return Bond "RRB and the new U.S. Treasury inflation-protected security IPS are principal indexed. This means their principal is increased by the change in inflation over a period. In most countries, the Consumer...
Low inflation has been a fact of economic life in many countries now for at least a decade. If inflation persistence has declined, why has it occurred? This paper addresses this question by studying the univariate inflation process in a number of countries. It helps to identify if changes in...
The purpose of this study is to test the hypothesis that inflation uncertainty increases at higher levels of inflation. Our analysis is based on the generalized autoregressive conditional heteroscedasticity GARCH class of models, which allow the conditional variance of the error term to be time-varying. Since this variance is a...
This paper examines the international experience with full-fledged inflation targeting monetary regimes. Stylized facts are brought together from a review of the institutional elements of inflation targeting frameworks, a comparison of actual and targeted inflation outcomes, and case studies of large inflation target misses. Inflation targets are missed about 40...
When was the last time one accounted for inflation when researching a company's financial statements? Believe it or not, inflation can fool even the most sophisticated investors. That is why it is important, when analyzing a company, that one understands how inflation affects the figures presented in a company's financial...
But it is not enough to explain the inflation of the 1970s to say that the U.S. economy had bad luck during the 1970s, that the political consensus to support a policy of inflation reduction did not exist until the very end of the 1970s, and that economic policy makers...
The paper explains the behavior of inflation in Georgia in the post-stabilization period. A long-run equation linking prices to money and the exchange rate, as well as a short-run, dynamic equation for inflation are estimated. The inflation equation is stable, points to a dominant role of the exchange rate in...
This paper discusses an explaination for the costliness of reducing inflation in that inflation expectations are less than perfectly rational. To explore this possibility, the estimate the degree of non-rationality implicit in two survey measures of inflation expectations are derived. It is also found that a structural New Keynesian model...
The Canadian economy is currently in transition from a period of disinflation to one with a very low and relatively stable inflation rate. Against this background, the author asks whether reduced-form parameters should be expected to be invariant to changes in the inflation process. It also explains two empirical issues....
This paper empirically investigates issues associated with inflation targeting using a dataset of 66 countries for the 1980 - 2000 periods. The paper focuses on two issues. First, which factors are systematically associated with a country's decision to adopt inflation targeting as its monetary framework? Second, does inflation targeting improve...
Inflation is significantly positively related to the size of government mainly when periods of war and peace are compared. The paper discusses that a weak positive peacetime time-series correlation between inflation and the size of government and a negative cross-country correlation of inflation with non-defense spending. Read on for more...
Inflation is a sustained rise in the average level of prices. Inflation causes a decrease in the purchasing power of a country’s currency. By decreasing the purchasing power of money, inflation has what economists call redistributive effects. During periods of inflation, people who are on fixed incomes, such as...
This paper reviews the U.S. experience with inflation-indexed debt. To date, Treasury inflation-indexed securities have not been highly valued by investors, with the spread between the yields on nominal and inflation-indexed securities falling consistently below most measures of long-run inflation expectations. By purchasing inflation-indexed securities, investors could lock in a...
Mark Thoma submits: There is a lot of confusion over the Fed's use of core inflation as part of its policy making process. One reason for confusion is that we are using a single measure to summarize three different definitions of the term "core inflation" based upon how it...
James Picerno submits: We've been chatting up the inflation story lately, and for good reason: inflation is rising. But that's yesterday's news. Thus the relevant question: Will it continue to rise? No one really knows, although everyone has a guess, and those guesses are all over the...
This article defines the refined definition of inflation like "inflation" after "the act of inflating or the condition of being inflated" is: "An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may...
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