Aspects of the real effects of inflation : Australia in the 1970's

O'Brien, Julie-Anne Louise. (1981). Aspects of the real effects of inflation : Australia in the 1970's Honours Thesis, School of Economics, The University of Queensland.

       
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Author O'Brien, Julie-Anne Louise.
Thesis Title Aspects of the real effects of inflation : Australia in the 1970's
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 1981
Thesis type Honours Thesis
Total pages 73
Language eng
Subjects 1402 Applied Economics
Formatted abstract In the early 1970, private consumption expenditure failed to grow at the rate suggested by the magnitude of disposable income. The consumption ratio continued to decline into the 19808. During periods of inflation disposable income is overstated owing to the retention of nominal accounting methods. Income• may be redefined incorporate real capital gains and losses on assets, and eliminate increased interest receipts and payments. The consumption ratio exhibits stability in keeping with previous periods. However, this method of adjustment has not been adopted, resulting in a cost to the economy through misinterpretation of the economic situation.

Measurement of costs associated with the effects of inflation do not form a large part of inflation literature. Conventional theory states that the welfare loss to the economy of fully anticipated inflation is insignificant at mild rates of inflation. Fa1.1ureofthe economy to• adjust for inflation and the implausibility of perfectly anticipated inflation indicate the presence of inflation reduced costs. Without an appropriate statement of the costs it is not possible to determine how serious inflation is.

A review of some areas in which inflation exerts a direct effect provides an understanding of the nature of associated costs.




 
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