tag:blogger.com,1999:blog-4681853571444952941.post2045189912900720663..comments2010-01-08T18:31:15.377-05:00Comments on For All Intensive Purposes: What is the Average U.S. Inflation Rate?Gandolphhttp://www.blogger.com/profile/13456401480549924480gandolph@virginia.eduBlogger4125tag:blogger.com,1999:blog-4681853571444952941.post-10218026930284327272010-01-08T18:31:15.377-05:002010-01-08T18:31:15.377-05:00Both methods agree well over the long term:
http:/...Both methods agree well over the long term:<br />http://i945.photobucket.com/albums/ad298/gandolph_photos/difference.pngGandolphhttp://www.blogger.com/profile/13456401480549924480noreply@blogger.comtag:blogger.com,1999:blog-4681853571444952941.post-85717470319232857702010-01-08T13:39:07.917-05:002010-01-08T13:39:07.917-05:00Yeah, I used start and end months. Using 12 month...Yeah, I used start and end months. Using 12 month periods doesn't make much of a difference other than underweighting the first 11 months and the last 11 months.cyrushttp://zapm.orgnoreply@blogger.comtag:blogger.com,1999:blog-4681853571444952941.post-43832251456210038682010-01-05T16:29:26.960-05:002010-01-05T16:29:26.960-05:00Cyrus,
I calculated the inflation rate for every...Cyrus, <br /><br />I calculated the inflation rate for every consecutive 12-month period from Jan 1913 through Sept 2009 (That's 12*(2008-1913)+9 = 1149 intervals). I then took an arithmetic mean which gave 3.39%/year (not 3.86 -- that number was from an example calculation). If I use the same data set and instead analyze with a geometric mean, I get 3.26%/year.<br /><br />I think you'Gandolphhttp://www.blogger.com/profile/13456401480549924480noreply@blogger.comtag:blogger.com,1999:blog-4681853571444952941.post-59561244377302477382010-01-04T16:28:29.228-05:002010-01-04T16:28:29.228-05:00Peter, what kind of average did you use? I think ...Peter, what kind of average did you use? I think the best way to analyze this is with a geometric mean, because inflation compounds through multiplication and not addition. Or, knowing the CPI numbers for the start and end years, you can use the following equation:<br /><br />inflation rate = (CPIend/CPIstart)^(1/years) - 1<br /><br />By this method, I calculate inflation from 1913-2009 as cyrushttp://zapm.orgnoreply@blogger.com