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On the nature of monetary and price inflation and hyperinflation

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  • Laurence Francis Lacey

Abstract

Monetary inflation is a sustained increase in the money supply than can result in price inflation, which is a rise in the general level of prices of goods and services. The objectives of this paper were to develop economic models to (1) predict the annual rate of growth in the US consumer price index (CPI), based on the annual growth in the US broad money supply (BMS), the annual growth in US real GDP, and the annual growth in US savings, over the time period 2001 to 2019; (2) investigate the means by which monetary and price inflation can develop into monetary and price hyperinflation. The hypothesis that the annual rate of growth in the US CPI is a function of the annual growth in the US BMS minus the annual growth in US real GDP minus the annual growth in US savings, over the time period investigated, has been shown to be the case. However, an exact relationship required the use of a non-zero residual term. A mathematical statistical formulation of a hyperinflationary process has been provided and used to quantify the period of hyperinflation in the Weimar Republic, from July 1922 until the end of November 1923.

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  • Laurence Francis Lacey, 2021. "On the nature of monetary and price inflation and hyperinflation," Papers 2109.12980, arXiv.org.
    • Handle: RePEc:arx:papers:2109.12980
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    References listed on IDEAS

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    1. Laurence Lacey, 2021. "The relationship between the US broad money supply and US GDP for the time period 2001 to 2019 with that of the corresponding time series for US national property and stock market indices, using an in," Papers 2106.07354, arXiv.org.
    2. Mizuno, T. & Takayasu, M. & Takayasu, H., 2002. "The mechanism of double-exponential growth in hyper-inflation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 308(1), pages 411-419.
    3. Laurence Francis Lacey, 2021. "Characterization of the probability and information entropy of a process with an increasing sample space by different functional forms of expansion, with an application to hyperinflation," Papers 2107.05483, arXiv.org.
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    Cited by:

    1. Laurence Francis Lacey, 2022. "Macroeconomic evaluation of the growth of the UK economy over the period 2000 to 2019," Papers 2212.03947, arXiv.org.

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