Question

weite an article about the future of
Inflation Technology​

Answer 1

Answer:

In economics, inflation (or less frequently, price inflation) is a general rise in the price level in an economy over a period of time, resulting in a sustained drop in the purchasing power of money.[1][2][3][4] When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.[5][6] The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time.[7]

Price inflation (CPI year-on-year) in the United States from 1914 to 2018.

Inflation in countries around the world in 2019.

Economists generally believe that very high rates of inflation and hyperinflation are harmful, and are caused by an excessive growth of the money supply.[8] Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities.[9] However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.[10][11]

Inflation affects economies in various positive and negative ways. The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity,[12] allowing the central bank more leeway in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation.

Today, most economists favor a low and steady rate of inflation.[13] Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy.[14] The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.

Since the late 1990s, particularly since the global financial crisis, the core inflation of main developed economies’ has been persistently below target. The factors hindering the achievement of inflation targets are nothing more than commodity price, oil supply, weakness of aggregate demand, and various other factors. In addition, technology and globalization have also played a significant role. This paper uses an extended hybrid New Keynesian Phillips Curve (NKPC) model to quantify the contribution of technology and globalization variables to inflation in the United States (U.S.). The analysis suggests that technology and globalization well explain the low inflation dynamics in the U.S., as the impact of globalization on domestic inflation has been weakening over the past 20 years or so, while the impact of technology on inflation has been increasing. At present, technology exerts a greater role than globalization on low-inflation in the U.S.. This raises a different perspective for understanding the phenomenon of low inflation in the U.S. and other regions.