Inflation, Désinflation et Déflations

Inflation, Désinflation, Déflations

• Inflation: A positive and continuous increase in the consumer price level; the most frequent situation globally.
• Désinflation: A positive price change that is decreasing; prices increase, but more and more slowly.
• Déflations: A negative price change; prices decrease.

Nominal vs. Real Values

• The fluctuations of prices can mask changes in aggregate value (e.g., GDP), making comparisons over time or between countries difficult.
• Nominal/Current Prices: Raw data without price adjustments.
• Real/Constant Prices: Data adjusted for price changes, offering a clearer view of actual changes in quantities.
• Relationship between nominal and real aggregates: Nominal aggregates are directly influenced by price levels, while real aggregates adjust for these changes and reflect volume changes accurately.
• Relationship between price growth rate (θi), nominal aggregate (θA), and real aggregate (θa): Nominal aggregates are affected directly by price changes to produce a corresponding effect on real aggregates.

Causes of Inflation

• Demand-Pull Inflation: Excessive demand or a shortage of supply in a given market.
• Cost-Push Inflation: Rising costs for businesses (wages, taxes, interest rates).
• Monetary Inflation: Increased lending to agents and maintained supply of money.
• Structural Inflation: Monopoly power.
• Imported Inflation: Increased prices of intermediary goods, devaluation of currency.

Consequences of Inflation

• Positive: Debt relief for fixed-rate loans, social peace, potentially supporting global demand.
• Negative: Harmful to fixed-income earners (rentiers), discouraged productivity gains, penalizes creditors, harms exporters if exchange rates aren't adjusted, and can reduce trust in currency.

Tools to Combat Inflation

• Increase interest rates: Discourages borrowing, limited money creation.
• Increase required reserves: Reduces banks' lending capacity.
• Reduce credit: Restricts banks' ability to lend.

Hyperinflation

• Extreme example: 1923 Germany's 50 billion mark note.

The Spectre of Deflation

• Any price decrease is a negative sign for the economy.
• Real Sector: Reduced profitability, increased unemployment and reduced investment. Consumers wait for lower prices, creating a vicious cycle of falling demand.
• Financial Sector: Rising debt-to-equity ratios for businesses, resulting in credit rationing.
• Historical Examples: The Great Depression and 1990s Japan.

The Post-Covid Inflation Shock

• Conjunctural Causes:

  • "Base effect": Inflation is usually measured annually, so the base level is low after 2 pandemic years.
  • Economic reopening with pent-up demand.
  • Slower production start-up.
  • War in Ukraine (decreased Ukrainian exports, sanctions on Russia).
  • Massive Covid-era stimulus packages.
  • Weak single currency increasing import prices, especially energy, contributing to imported inflation.

• Structural Causes:

  • Rising energy costs, geopolitical tensions, and the ecological transition.
  • High demand for specific goods surpassing existing supply.
  • Quantitative easing (QE).
  • Massive injection of liquidity into economies to boost demand, notably impacting asset prices (stocks and real estate) and now creating inflation due to liquidity overload in a less productive global economy.

Upcoming Economic Outlook

• Inflation is expected to remain below 2.0% for the year, reaching 1.6% by December 2024.

Ce quiz explore les concepts d'inflation, de désinflation et de déflation, ainsi que leur impact sur les valeurs nominales et réelles. Apprenez à distinguer ces phénomènes économiques et comprenez pourquoi ils sont cruciaux pour l'analyse économique globale. Testez vos connaissances sur les fluctuations des prix et leur influence sur les indicateurs économiques.