tag:blogger.com,1999:blog-6297413898275266606.post5690191824835487143..comments2024-03-27T18:15:59.096+08:00Comments on Economics Malaysia: GST And Inflation Part III: The Economists’ Lamenthishamhhttp://www.blogger.com/profile/06265308095732759923noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-6297413898275266606.post-71821638037757390082013-06-14T23:00:13.259+08:002013-06-14T23:00:13.259+08:00@anon 10.19
But we are not talking about 10 spike...@anon 10.19<br /><br />But we are not talking about 10 spikes in a month, we are talking about the effect of the imposition of a tax on the overall price level, which is just once.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-80977932612558794962013-06-14T22:19:34.131+08:002013-06-14T22:19:34.131+08:00Well, what you claim in my case -a change in long ...Well, what you claim in my case -a change in long term slope -a Mathematical illusion, your case of reverting to long term growth with annual calculation -is to me an unfortunate Economic illusion. Mathematically, the long term growth has been tempered with; this is not an illusion, it's a numbered, algebraically provable fact. For example, if you perform the spike for 10 times in a month, Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-18570269188172156242013-06-11T11:29:30.929+08:002013-06-11T11:29:30.929+08:00@anon 11.06
What you are looking at is no more th...@anon 11.06<br /><br />What you are looking at is no more than the mechanical calculation of inflation, and the "increase" in the rate of inflation is a mathematical illusion. A sharp change in the price level cannot be equated to a change in the long term growth rate.<br /><br />To illustrate, most expressions of inflation use both the monthly and annual growth rate of the CPI. With a hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-20360752130291795482013-06-11T11:06:43.349+08:002013-06-11T11:06:43.349+08:00Hmm.... I don't think we're confused betwe...Hmm.... I don't think we're confused between price level and inflation, it's put forward quite clearly. We just moved one-step beyond that to say that this definition can be self-defeating. A sharp change in price level can be equated to a change in long term growth rate of prices, if you interpret it the right way. Imagine constant upward sloping line from time 1 through 20. If Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-68226211569530654342013-06-11T00:08:29.579+08:002013-06-11T00:08:29.579+08:00@anon 11.57
Actually you can't argue its infl...@anon 11.57<br /><br />Actually you can't argue its inflationary, by definition. If the tax does not affect the long term growth rate of prices before or after its implementation, it is not "inflationary", irrespective of whether there is a change in prices or not.<br /><br />Again, this is confusing the price level with inflation.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-27445378151187916382013-06-10T23:57:28.823+08:002013-06-10T23:57:28.823+08:00I think I share his view. Even if you don't j...I think I share his view. Even if you don't just focus on the minute-th the spike happened: if you draw a line to connect point before the spike, point A, to a point after the spike but further away, point B, then you can clearly see the inflationary slope change. I think a dual interpretation is warranted here. A sharp jump from point A to new level, and constant growth after that (your Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-76450410371147582132013-06-10T11:16:18.278+08:002013-06-10T11:16:18.278+08:00@anon 11.07
Purchasing power is just the flip sid...@anon 11.07<br /><br />Purchasing power is just the flip side of rising prices, another perspective if you will - it does not change the fundamental analysis.<br /><br />If you want to define inflation as the loss of purchasing power, it would properly speaking be the continuous loss of purchasing power, not a one-time loss as would occur with the imposition of a consumption tax.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-45041414916452898212013-06-10T11:07:07.871+08:002013-06-10T11:07:07.871+08:00So, u should draw a point at that time, not extrap...So, u should draw a point at that time, not extrapolate it as a line. However, investopedia define it in addition the purchasing power will be falling, do u include it. Or is the fallacy of investopedia? Or u convince it is same no reduction in purchasing power? Thank you.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-66319783908539142172013-06-10T10:37:42.945+08:002013-06-10T10:37:42.945+08:00@anon 8.12
No, it is not just from KR1M.
The ove...@anon 8.12<br /><br />No, it is not just from KR1M.<br /><br />The overall collection methodology is described <a href="http://www.statistics.gov.my/portal/index.php?option=com_content&view=article&id=770&Itemid=111&lang=en#1" rel="nofollow">here</a>.<br /><br />Quote:<br /><br /><i>"The Department of Statistics, Malaysia carries out monthly consumer price collection for the hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-10481100548336285862013-06-10T10:29:02.775+08:002013-06-10T10:29:02.775+08:00@anon 8.06
I define it as the point in time that ...@anon 8.06<br /><br />I define it as the point in time that the tax takes effect. There's plenty of economic research in this field across many countries that show that the impact of such taxes result in only a one-time increase in prices, and not an acceleration in the rate of increase of prices.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-10664745614987934832013-06-10T10:27:06.431+08:002013-06-10T10:27:06.431+08:00Kenny,
Mathematically, you're right. During t...Kenny,<br /><br />Mathematically, you're right. During the period of the price increase from the tax, the slope of the line will change, before returning to "normal".<br /><br />The key to thinking about this is the time period of the change. Most tax implementations of this sort have a D-Day approach - you switch between different tax regimes at a cutoff date. So the temporary hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-26458751036400653512013-06-10T08:12:32.270+08:002013-06-10T08:12:32.270+08:00One more thing, does CPI reflect our market price ...One more thing, does CPI reflect our market price or just based on kedai 1 malaysia? So if CPI for certain goods decrease, does it mean maerketing price also decrease. For me, CPI only for paper view only, it doesn't make any sense. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-83244185103847417152013-06-10T08:06:42.617+08:002013-06-10T08:06:42.617+08:00Hi, how do u define one time in only one period? H...Hi, how do u define one time in only one period? How long is your period? 12 months, 5 years, 20 years or forever? If Government set 4 percent gst, then after one year, change to 7 percent. And so on. So, based on your define, this is not inflation, but is a rise of price? Thank you. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-28660743737561227202013-06-06T17:53:42.542+08:002013-06-06T17:53:42.542+08:00Hi Hishamh, wouldn't the 1 time spike in CPI, ...Hi Hishamh, wouldn't the 1 time spike in CPI, already changes the slope of increase in CPI (inflation)?<br /><br />In your graph, if I connect two points of Ln CPI2 (before and after the 1 time spike) to draw a straight line, the slope of the line is greater than Ln CPI. Thus, the 1 time spike in CPI does contributed to an increase in the rate of inflation if seen over a period of time, Kennyhttps://www.blogger.com/profile/08707073119562886887noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-81245543682846579582013-06-03T11:02:02.095+08:002013-06-03T11:02:02.095+08:00@sicfallacy
If price increases happen in only one...@sicfallacy<br /><br />If price increases happen in only one period and not in others, that is not inflation. This doesn't change, whichever time frame you choose.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-3629877460617192742013-05-31T18:36:33.835+08:002013-05-31T18:36:33.835+08:00I try to understand this, correct me if I'm wr...I try to understand this, correct me if I'm wrong.<br />Inflation = general rise in price level over a period of time.<br />'over a period of time' is generic term.<br /><br />So, in your example, there is an inflation, if we limit the time frame, i.e from period 14 to period 16 right? But not if we broaden the time frame.sicfallacyhttp://twitter.com/sicfallacynoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-47356421129558533662013-05-28T12:21:42.931+08:002013-05-28T12:21:42.931+08:00roger,
One problem is, will increased productivit...roger,<br /><br />One problem is, will increased productivity result in higher wages? On the evidence of the last decade, the answer is no.<br /><br />A second reason is that, specifically for services, higher productivity = higher prices anyway.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-41677603424257018902013-05-28T10:43:08.685+08:002013-05-28T10:43:08.685+08:00Noted about your point on increased prices with in...Noted about your point on increased prices with increased wages. But can't you have increased wages with no change in prices through higher productivity?roger dodgerhttp://roger.dodger.comnoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-54433105027947101622013-05-28T09:26:49.577+08:002013-05-28T09:26:49.577+08:00Jon,
A higher price level is a necessary conditio...Jon,<br /><br />A higher price level is a necessary condition for being a high income nation. You can't improve wages without increasing the prices people have to pay. Focusing on low prices for the sake of competitiveness risks being caught in a low-cost/low-wage equilibrium e.g. the proverbial middle income trap.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-47059246993070430382013-05-28T00:59:46.229+08:002013-05-28T00:59:46.229+08:00Hisham. wouldnt an increase in the price level res...Hisham. wouldnt an increase in the price level result in a country becoming economically less competitive and thus present a cause for concern from a competitive standpoint?Jonhttps://www.blogger.com/profile/08128355567843525610noreply@blogger.com