5 ms·
One of the problems with looking at the economy through the lens of inflation is defining "inflation" itself. Consider the Wikipedia definition: > In economic
by aazaa 5y ago
One of the problems with looking at the economy through the lens of inflation is defining "inflation" itself.
Consider the Wikipedia definition:
> In economics, inflation (or infrequently, price inflation) is a general rise in the price level of an economy over a period of time.
https://en.wikipedia.org/wiki/Inflation https://en.wikipedia.org/wiki/Inflation
What is "the price level of an economy?" How do you measure it? What factors are included and excluded? Why? Who decides?
Do we include real estate? Financial assets like stocks and bonds? Or do we stick to things like milk and eggs. Housing? Is that an asset or a consumable?
And this happens before we can really talk about what causes inflation to increase or decrease. The problem with most of the discussions of inflation I've read and seen is that each side has its own, often implicit, definition of inflation.
- massinstall 5y agoThis. Thank you for a thoughtful comment.
- rdtwo 5y agoSometimes this question matters but sometimes like now it doesn’t. You really have to contort your basket hard to not see inflation in 2021. No matter what you pick it’s up10-20%
- rrrrrrrrrrrryan 5y ago> What is "the price level of an economy?" How do you measure it? Your link has a lot of options: https://en.wikipedia.org/wiki/Inflation#Measures https://en.wikipedia.org/wiki/Inflation#Measures Sure, we usually use CPI, and it has some downsides, but all the measures are correlated to some degree. Headlines regularly use the U-6 unemployment rate, but academics usually use U-3. Nothing's stopping you from using a different measure of inflation in a discussion, and I'd personally love to hear your take.