Analysis on Inflation Regression Model

Inflation influences economies in different positive and negative ways. The negative impacts of inflation incorporate an expansion in the open door cost of holding money, vulnerability over future inflation which may debilitate investment and reserve funds, and if inflation were sufficiently fast, deficiencies of merchandise as shoppers start storing out of worry that prices will increment later on. Constructive outcomes incorporate diminishing the genuine weight of open and private obligation, keeping ostensible loan costs over zero so national banks can change financing costs to balance out the economy, and lessening unemployment because of ostensible wage inflexibility.

The consensus from the 1970s and 1980s was that there was an inverse relationship between oil prices and real economic activities. This belief later changed when the oil price crash of the mid-1980s failed to boost economic growth. Researchers then believed that increasing oil prices negatively affect the economy whereas falling oil prices have very little impact and by the 1990s this impact was assumed to be minimal (DePratto, de Resende and Maier 2009). More recently, researchers have found that increases in the oil prices adversely affect the economy whereas the impact of a decline in oil prices on GDP growth is only negligible (Jimenez-Rodriguez and Sanchez

When is the last time we experienced deflation (prices actually dropped- you will have to go back a few decades)?

Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks)

But because “GDP is collected at current, or nominal, prices, one cannot compare two periods without making adjustments for inflation. To determine "real" GDP, its nominal value must be adjusted to take into account price changes to allow us to see whether the value of output has gone up because more is being produced or simply because prices have increased.” (Callen, T. 2008). A statistical tool called the price deflator is used to adjust GDP from nominal to constant prices. Nominal GDP is reported without the inflation adjusted to make it appear than its original value. Nominal GDP can be higher or lower than the conventional

Naturally, during an inflationary period it becomes very difficult for the government to fulfill its macroeconomic targets. Almost all targets, such as GDP growth, price inflation, bank borrowing, trade deficit, budget deficit, become difficult to achieve. This questions the credibility of the government. Costs of development project and non-development expenditure increase, due to which the government needs more funds the following year by the amount of inflation to keep economic activity at the level of the former year.

Is it true what experts say, when the price of oil drops the economy gets better, and when the price of oil rises the economy suffers? Of course as consumers we love to pay less at the gas pumps, but as we play much less now for gas then we did last year many of us are suffering due to the dramatic drop in the price of oil. As I strongly agree that the low cost of oil is hurting the economy in general, as I was one who fell victim to the recession working for an oil company up until January 2015, but fell victim to lay off due to the big drop in prices.

Although the lingering effects of the Great Recession of 2007-2009 continue to dissipate and economic growth resumes, volatile global oil prices remain a source of concern for economists and consumers alike. While the experts debate the precise date at which peak oil will be reached and the search for alternative energy sources has assumed new importance and relevance, it is clear that the world's commercial infrastructure will depend on fossil fuels well into the foreseeable future. Indeed, some authorities caution that unless drastic steps are taken today, the world will deplete its fossil fuel resources long before commercially viable alternatives become available. In this environment, determining how surging oil prices affect the U.S. economy represents a timely and valuable enterprise. To this end, this paper provides a review of the relevant peer-reviewed and scholarly literature to determine the impact of surging oil prices on the U.S. economy, followed by a summary of the research and important findings in the conclusion.

Core inflation is the price change of goods and services minus food and energy. It’s measured by two indexes; CPI, consumer price index and PCE, personal consumption expenditures. The accumulation of a consumer’s monthly spending; can signal a change in inflation. In this document, I want to show how consumer spending can cause inflation and explain how inflation is monitored and measured.

Disadvantages of inflation include high inflation rates that can cause hesitation and mistakes leading to less investment. It is discussed that countries with higher inflation, have lower rates of investment and economic growth. The higher the inflation the lower world-wide competitiveness. Another disadvantage is menu costs and the costs of changing price lists, stabile wage growth and declining incomes. Most importantly it can dcreas the real value of savings, which may affect older people who live on savings. However, it does depend on whether interest rates are higher than the inflation rate.

The third cause of acceleration of inflation - the growth of tariffs for state monopolies. Especially - electricity. Most state-owned companies raise their prices - for gas, for energy, for tickets. And the government can not stop this

I Poonam Pillai hereby declare that the term paper report titled study on Inflation in India that I have submitted is original. I was in regular contact with nominated guide and contacting him for discussing the project.

Decades ago, many economists did not believe that inflation –the escalation of prices that makes the money to be less valuable in the market- (Newnan, Eschenbach, & Lavelle, 2014) could rise together with unemployment because they stood in the wide belief of a direct relation between economic growth and employment. That is to say that when the nation’s economy is in its healthy moments, the rate of unemployment will decrease, and in the other part the inflation will increase because people have more income, so, they will be willing to spend more. Moreover, people thought that increasing of inflation allowed the economy to grow. Therefore, if inflation reduced, the unemployment would be raised, and consequently, the economy of the country

Comparing the inflation level it can be seen that the inflationary bias is lower for positive values of

Generalization is made on the basis of not only the single test but on the basis of a number of tests.