Money. Credit. Banks. Types, types and forms of inflation (lecture notes)

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Money. Credit. Banks. Types, types and forms of inflation (lecture notes)

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Types, types and forms of inflation

Inflation can be classified from different positions. From the point of view of determining factors, there are two types.

The first group includes factors that cause an excess of demand (money supply) over supply (commodity mass), as a result of which there is a violation of the requirements of the laws of monetary circulation. Demand-side inflation sets in. Logic diagram: the excess of demand over supply causes prices to rise. An increase in prices at constant costs ensures the growth of profits and cash incomes of workers. This growth causes the next round of increased demand, which raises prices at a new level.

The second group combines factors that lead to an initial increase in costs (costs of wages, materials, etc.) and prices of goods, supported by the subsequent pulling up of the money supply to their increased level. Cost-push inflation occurs. Logic: prices for factors of production are rising, product supply is decreasing, commodity prices are rising, real wages are not growing, as well as nominal wages. Payroll costs increase costs again. A variation of cost-push inflation is supply-push inflation. This type of inflation is associated with the non-use of the production capacity of the enterprise (the effect of scale decreases, costs increase, profits and the volume of products offered decrease.

In terms of inflation into three main types : creeping (moderate, up to 10%); galloping (growth 10-50% per year); hyperinflation (exceeds 50% per month (according to the IMF), evidence of a deep crisis).

Forms. They are distinguished according to three criteria. According to the methods of occurrence: administrative (social, generated by administratively set and managed prices); imported (a lot of foreign currency, an increase in import prices); induced (a jump in tariffs causes a jump in inflation); credit (increasing the scale of provision of credit resources).

By the nature of the course: hidden (suppressed, in a planned economy); open.

According to the degree of predictability: expected / unforeseen; balanced (for all goods) / unbalanced.

There are 4 criteria by which the initial inflation is determined: the population prefers to keep money in non-monetary form or in foreign currency; the population characterizes prices in conventional currency; price growth in three years exceeds 100%; sales and purchases are made at prices that compensate for the loss of purchasing power.

Author: Shevchuk D.A.

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