Topic
Purchasing power
About: Purchasing power is a research topic. Over the lifetime, 2714 publications have been published within this topic receiving 36866 citations. The topic is also known as: adjusted for inflation.
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TL;DR: This article argued that the commodity is a better analytical starting point than the market and established a common essence for money as generalized purchasing power, a peculiarly bland essence that allows money to undertake the variety of social roles identified by Zelizer.
Abstract: This article addresses the issue of how the market and the non-market are to be understood especially by concentrating on the theory of money. For mainstream economics, the market is simply an institution facilitating exchange, money being the key instrument for alleviating the inefficiencies of barter. In contrast, recent work in other social sciences, such as that by Zelizer, distinguishes among markets, and various roles of money, depending on cultural and social content. While being sympathetic to such an approach, we claim that the commodity is a better analytical starting point than the market. Based on Marx's work, we then show what commodities have in common and establish a common essence for money as generalized purchasing power. This is a peculiarly bland essence that allows money to undertake the variety of social roles identified by Zelizer.
88 citations
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TL;DR: This paper showed that even during periods of low inflation or deflation, nominal financial statements violate the assumption that the monetary unit assumption of financial accounting assumes a stable currency (i.e., constant purchasing power over time).
Abstract: The monetary unit assumption of financial accounting assumes a stable currency (i.e., constant purchasing power over time). Yet, even during periods of low inflation or deflation, nominal financial statements violate this assumption. I posit that, while the effects of inflation are not recognized in nominal statements, such effects may have economic consequences. I find that unrecognized inflation gains and losses help predict future cash flows as these gains and losses turn into cash flows over time. I also find significant abnormal returns to inflation-based trading strategies, suggesting that stock prices do not fully reflect the implications of the inflation effects for future cash flows. Additional analysis reveals that stock prices act as if investors do not fully distinguish monetary and nonmonetary assets, which is fundamental to determining the effects of inflation. Overall, this study is the first to show that, although inflation effects are not recognized in nominal financial statements, they have significant economic consequences, even during a period in which inflation is relatively low.
86 citations
TL;DR: In this article, the authors examined the impact of a revenue-neutral tax of $50 per ton of CO2 on multiple forms of inequality and showed that the double dividend typically associated with labor tax cuts is insufficient to protect the purchasing power of a majority of Americans.
86 citations
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85 citations
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TL;DR: To many Americans, the idea that a central bank should make crucial economic policy decisions with no direct political accountability either to the citizenry or to their elected representatives seems the antithesis of democracy as mentioned in this paper.
Abstract: To many Americans, the idea that a central bank should make crucial economic policy decisions with no direct political accountability either to the citizenry or to their elected representatives seems the antithesis of democracy. Central bank independence, however, is but one solution to a problem endemic to fiat money. Because fiat money has no intrinsic value, the willingness of individuals to hold it depends solely on their faith that the government will not depreciate its purchasing power. Uncertainty about the long-term value of money arises because inflation generates government revenues and, according to some economic theories, can lead to a temporary surge in employment and output.
85 citations