Re: Pure Inflation

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Posted by Warren Mosler (208.49.176.241) on 21:11:29 11/29/07

In Reply to: Re: Pure Inflation posted by Winslow R.

: : In that model there is no 'money' as we know it, it's just an arbitrary numeraire. The elegant definition of 'inflation' i[s] functionally inapplicable, as is that definition in any context I can think of.
:
: I interpret your comment as viewing the 'pure inflation model' being based on price changes in no particular currency.

not exactly. the nc model has no actual govt. currency as we know it, but assume a currency that's a numeraire that expresses relative value, with no other 'link' to anything, origin, functional description of what it is or how it works, and no govt involved initially. it's nothing more than a relative value model with an arbitrary measurement value assigned to it.

this can't exist outside of the model and only marginally makes sense within the model.

what they are trying to do is incorporate actual data into it which makes even less sense, best i can tell

:
: The model is based on...
: "Our data are the quarterly price changes in each of 187 sectors in the U.S.
: personal consumption expenditures (PCE) category of the national income and product
: accounts from 1959:1 to 2006:2."
:
: The authors define changes in prices as having a relative-price component and a 'pure' price component.....
: "But, in reality, there are many goods and prices, and there is an important
: distinction between price changes that are equiproportional across all goods (absoluteprice
: changes) and changes in the cost of some goods relative to others (relative-price
: changes). The goal of this paper is to empirically separate these two sources of price
: changes, and to investigate how they affect the key macroeconomic relations involving
: inflation."
:
:
:
:
:
: :
: :
: : More generally, it corresponds to the famous thought experiment
: : : that economists have used since Hume (1752): imagine that all prices increase in the
: : : same proportion, but no relative price changes. "
: : :
: : : http://econ.ucsd.edu/seminars/0708seminars/rw_35.pdf
: :
:

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Subject:	Re: Pure Inflation
Comments:	: : : In that model there is no 'money' as we know it, it's just an arbitrary numeraire. The elegant definition of 'inflation' i[s] functionally inapplicable, as is that definition in any context I can think of. : : : : I interpret your comment as viewing the 'pure inflation model' being based on price changes in no particular currency. : : not exactly. the nc model has no actual govt. currency as we know it, but assume a currency that's a numeraire that expresses relative value, with no other 'link' to anything, origin, functional description of what it is or how it works, and no govt involved initially. it's nothing more than a relative value model with an arbitrary measurement value assigned to it. : : this can't exist outside of the model and only marginally makes sense within the model. : : what they are trying to do is incorporate actual data into it which makes even less sense, best i can tell : : : : : : : The model is based on... : : "Our data are the quarterly price changes in each of 187 sectors in the U.S. : : personal consumption expenditures (PCE) category of the national income and product : : accounts from 1959:1 to 2006:2." : : : : The authors define changes in prices as having a relative-price component and a 'pure' price component..... : : "But, in reality, there are many goods and prices, and there is an important : : distinction between price changes that are equiproportional across all goods (absoluteprice : : changes) and changes in the cost of some goods relative to others (relative-price : : changes). The goal of this paper is to empirically separate these two sources of price : : changes, and to investigate how they affect the key macroeconomic relations involving : : inflation." : : : : : : : : : : : : : : : : : : : More generally, it corresponds to the famous thought experiment : : : : that economists have used since Hume (1752): imagine that all prices increase in the : : : : same proportion, but no relative price changes. " : : : : : : : : http://econ.ucsd.edu/seminars/0708seminars/rw_35.pdf : : : : : :
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