Inflation is a gradual loss of money’s purchasing power, and failing to foresee a change in inflation increases the risk that the realized return on an investment or the future value of an asset would be lower than projected. What impact does inflation have on finance? Most individuals are aware that inflation raises the cost

Zimbabwe experienced the second highest incidence of hyperinflation in history during a financial crisis a decade ago – the country’s inflation rate in November 2008 reached a stunning 79,600,000,000 percent (essentially a daily inflation rate of 98 percent ). Every day, prices in Zimbabwe roughly doubled, with products and services costing twice as much the

In a multiple regression model, the variance inflation factor (VIF) is a measure of multicollinearity among the independent variables. Multicollinearity must be detected because, while it has no effect on the model’s explanatory power, it does diminish the statistical significance of the independent variables. A strong variance inflation factor (VIF) on an independent variable implies

A common policy adopted by many central banks is an inflation target of around 2%. The Fed (which calls it a “long run aim”), the ECB (which targets inflation “below, but close to 2 percent”), and the central banks of most other advanced economies are among these central banks. In a recent essay (Ball 2013),