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%.
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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.
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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.