Articles on Issue Theme
Mihaela IFRIM
Universitatea “Alexandru Ioan Cuza” din Iaşi
The classical definition of inflation refers to increasing the quantity of money in circulation. However, in everyday language, inflation is seen rather through the effects of monetary expansion, i.e. increasing prices. Therefore, the term “inflation” generates a semantic confusion, for which could be responsible the omnipresence of consumer price index (CPI) in the official reports. From governments to small entrepreneurs, everybody is watching the consumer price index as a tool for measuring inflation. Beside the lack of drawing a true picture of inflation, the CPI contributes to the perpetuation of an erroneous understanding of the phenomenon. The error stems from the confusion between cause and effect, between inflation and rising prices. Furthermore, using the CPI as a main tool for targeting inflation is responsible for neglecting the relative prices and for the absence of real pictures on the structure of prices from an economy. Reporting to the economy through averages and aggregates overlooks the relative prices evolution and the changes in the structure of production.
ŒCONOMICA no. 3/2012
Keywords: inflation, monetary expansion, relative prices
JEL: E30, E31, E32
Inflaţia din spatele indicelui preţurilor de consum
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