Worldwide inflation averaged annually 3.5 per cent in the 1950s, 4.2 per cent in the 1960s, and 10.4 per cent in the 1970s. The secular acceleration m inflation, which has been more pronounced in the developing than in the industrial countries, is the focus of this paper. On average, inflation has risen in every region of the world and in every country grouping over the past two decades. It has also shown greater variability between country groups, within country groups, within individual countries, between components of consumer price indices, and among relative prices of individual commodities. Increased variability concomitant with higher average inflation is not coincidental. There is good reason to expect higher inflation to be more variable and less predictable. Section 1 describes some aspects of the present inflation. Section 2 examines the effects of higher inflation rates. Causes are discussed in section 3. The final section sketches policy responses to inflation and presents a stabilization model which incorporates active use of monetary control and nominal institutional rates of interest.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
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