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... definition are the various CPI's and PPI's (depending on the group of participants you want to focus on).

For the definition of inflation as a sustained, ongoing increase in the average price level in the economy, where the "social definition" above is understood as one possible but not necessary consequence, then some form of GDP deflator is the only practicable approach to encompass that.

And, of course, the "social definition" does not in fact encompass every important scenario involving price inflation, as when there is rapid economic growth accompanied by mild inflation, where the inflation may be redistributing some of the gains but is not imposing substantial losses, and the main concern for those wishing to push the the rate of inflation down is that the redistribution is going from people holding wealth denominated in monetary terms to people holding wealth in real productive capacity and most workers.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Oct 11th, 2007 at 02:15:34 PM EST
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