Forum pracy nad projektem wskrzeszenia The Forge

[xp052505]

Shishu inflation



Abstract With the rapid economic development, people's living standard has gradually improved, but this year the price rose an alarming rate, people had to worry about inflation. In this paper, the causes and effects of inflation are analyzed and summarized the corresponding measures to counter inflation on the adverse effects of living. Key words
Analysis of inflation measures

I. Introduction

inflation in modern economics means that the overall price level in the rise. The market value of the currency of general inflation or purchasing power decline, while currency depreciation between the two economies, currency relative decrease. Law of notes in circulation show that the amount of notes issued on behalf of not more than it represents the amount of gold and silver currency, once more than this amount of paper money will depreciate, prices will rise, and thus inflation. Inflation only in the notes will appear under the conditions of circulation, because the value of gold and silver currency itself, functions as a storage means, can spontaneously adjust the amount of money in circulation, making it the same commodity circulation amount of money needed to adapt. The gold and silver currency notes only represent the symbol, not as a storage means, therefore, if the circulation of banknotes in circulation exceeds the required number of goods will fall.

Second, the cause of inflation

(a) demand-pull inflation demand-pull inflation
is the growth of aggregate demand, inflation caused by the transition that have been impossible, the transition can cause the demand for the general price level to rise.
(b) cost-push inflation
cost or supply-side reasons for the formation of inflation, that cost-push inflation, also known as supply-driven inflation, increased production costs by the manufacturer caused the general price level increases. The reasons causing the cost of moving up roughly: the transition wages rise, profits increase in prices of imported goods rise transition.
(c) demand and cost inflation
hybrid propulsion in practice, resulting in the cause of inflation is not a single, for various reasons, the price level rose at the same time promoting, that is, the currency supply and demand of hybrid propulsion expansion. Suppose inflation is driven by the needs of the beginning of that transition led to increased demand for the overall price level, the rise in the overall price level has become a reason for wage increases, rising wages and the cost of promoting the formation of inflation.
(d)
expectations and inflation inertia in practice, once the formation of inflation, will continue normal times, this phenomenon is called inflation inertia, an explanation for inflation inertia is that people will make the corresponding inflation expectations.
people expected to have significant impact on economic behavior, people are expected to lead to inflation and inflation inertia, as people expected inflation rate of 10% in the formulation of the contract, the vendor will require price increases of 10% and contract workers and vendors will also require a 10% increase in wages, so that the other conditions remain unchanged, the cost per unit will increase 10% to 10% rate of inflation continues, it must then the formation of inflation inertia.
Third, the impact of inflation

inflation will impact on the social and economic life. If the society is stable rate of inflation, one can fully expect that the inflation rate on the impact of social and economic life is very small. Because inflation can be expected under such various nominal variables can be adjusted for inflation,[link widoczny dla zalogowanych], so real variables unchanged. At this time of inflation on the only impact of social and economic life, is that people will reduce the amount of cash they hold. However, the expected inflation rate can not be completely the case, inflation will affect the social distribution of income and economic activity. Because then people can not accurately according to the inflation rate to adjust the various nominal variables, and the economic behavior they should take.
(a) debt between man and creditors, inflation will be conducive to the detriment of creditors, the debtor usually
borrowing debt covenants are based on the inflation rate when signing the contract to determine the nominal interest rate, so when unexpected inflation occurred after the debt contract can not be changed, so that real interest rates to fall to benefit the debtor, the creditors suffer. As a result of the loan, particularly adverse effects on long-term loans, the creditors do not want loans. Reduction of the loan will affect investment, and finally make the investment decline.
(b) between employers and workers, inflation will help employers to the detriment of workers in the unforeseen
under inflation, wage growth can not easily be adjusted for inflation, so even in the same or increased slightly in nominal wages case, the decline in real wages. Real wages will increase in profits. Increase in profits help to stimulate investment, which is what some economists advocate a moderate inflation to stimulate economic development reasons.
(c) between the Government and the public, inflation will help the government to the detriment of the public
not expected due to under inflation, nominal wages will always increase with the nominal wage improved, more people to tax threshold, and a lot of people into a higher tax brackets, so that makes the Government's tax increase. However, the amount of public tax increases, real income has declined. The Government obtained by such inflation in the tax known as the Some economists believe that this fact is the Government's plundering of the public. The existence of this inflation tax, is not conducive to savings, also affected the private and business investment initiative.

four main conclusions and countermeasures

national central banks, such as the People's Bank of China, the Fed may set interest rates through monetary policy and other strongly affected the rate of inflation. High interest rates (and slow growth of demand for funds) is typical of anti-inflation the central bank to reduce employment and production to curb rising prices.
However, central banks in different countries have different views to control inflation. For example, some central banks pay close attention to symmetric inflation target, and some only to control the rate of inflation is too high. European Central Bank in the face of high unemployment rates due to adoption of the latter and to blame.
monetarist emphasis on the financial policy to reduce the money supply to increase interest rates. Keynesians were focused on reducing government spending by the tax increases or other Financial means to reduce the demand for universality. Explanation of its monetary policy in part from Robert? Solow of commodity prices by research results. Supply-siders advocate the method against inflation: gold and other fixed-fixed currency exchange rate of reference materials, or reduce the floating currency structure of marginal tax rates to encourage the formation of capital. All of these policies can be achieved through open market operations.
Another way to directly control wages and prices. The United States in the early 1970s under Nixon in power, has tried this approach. One of the main problem is that these policies are implemented simultaneously with the stimulation of demand side. Therefore, restrictions on the supply side (means of control, potential output) and demand conflict. Economists generally regard price controls as a bad practice, because of the shortage contributed to lower production quality, and thus distort economic operation. However, if we can avoid a serious economic recession led to higher costs, or in the case against wartime inflation, this price may be worth it.

References: