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Statistical Fun

Mar 13, 2010 • Developing Economies, International Trade and Finance, Macroeconomic Measurement, Money and Monetary Policy • 177 Views    No Comments

Reading that China might be concerned with an annual 3.5 percent inflation rate, I wondered how that compared to other countries and the world.  At a Google site with World Bank data, not only did I get some answers, but I had some fun.  Graphically, this site lets you compare data between countries, among countries, and with the overall world rate.  For example, with inflation, I first discovered a world rate of 8.06 percent (2008) and then added China and saw that in 2008, it was not far from the world statistic.  Then, I started to have some fun by adding Zimbabwe.  The graph looked amazing.  With the world zigzagging rather consistently, Zimbabwe, by contrast, goes vertical in 2003!

I suggest taking a look.

The Economic Lesson
Inflation matters. A typical goal of monetary authorities is price stability which means close to zero inflation.  When prices are not stable, businesses have difficulty planning ahead, wages rapidly lose purchasing power, and interest rates soar because lenders would otherwise lose money.  As a self-fulfilling prophecy, inflationary expectations build unless a central bank such as the Federal Reserve controls the upward spiral.


 

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