The problem is that it treats inflation as a uniform rise in prices. That’s theoretically convenient, but empirically false. In the real world, inflation is wildly divergent. At the same time that the price of apples rises by 5%, the price of cars could grow by 50%, and the price of clothing might fall by 20%.
The idea that averages should be reported together with a measure of variation is a basic part of empirical science. And yet when economists study inflation, this practice is conspicuously absent.
the real inflation story, which goes largely undiscussed, is that price change is remarkably non-uniform. In fact, it is so non-uniform that reporting the change in the average price borders on meaningless
Att också läsa:
Inflation: True and False av David R Henderson
The Forgotten Case Against Milton Friedman, en intervju med Thomas Palley, coeditor of the Review of Keynesian Economics
Real GDP: The Flawed Metric at the Heart of Macroeconomics av Blair Fix, Jonathan Nitzan & Shimshon Bichler.