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Nature and Scope of this Book

  • Kenneth P. Gee

Abstract

Inflation is not a new phenomenon, but the 1970s have seen a marked and sustained acceleration of inflation throughout the countries of the industrialised West. Recently, Dale [28] has reported an OECD forecast suggesting inflation rates of at least 7–8% p.a. for these countries over the period 1975–80. The forecast rates vary from country to country, that for the U.K. being 10–12% p.a. Over the longer term, an extremely sophisticated simulation for the U.S. economy by Ibbotson and Sinquefield [50] gave a mean inflation rate of just over 6% p.a. for the period 1976–2000; a conclusion which they qualified by asserting that there was a 5% probability that inflation would exceed 11.3% p.a. over that period and a 5% probability that it would be less than 2% p.a. Inflation estimates are clearly subject to a high degree of uncertainty — and a particular ‘inflation rate’ for a country represents no more than a weighted average of a large number of individual price movements. Within an inflationary economy, the inflation rates appropriate to particular commodities vary widely; some prices may double in a year while others remain almost constant. It would seem plain that the complex interaction of large absolute and relative price changes must have enormous implications for management decision-making.

Keywords

Cash Flow Inflation Rate European Economic Community Capital Budget Relative Price Change 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Kenneth P. Gee 1977

Authors and Affiliations

  • Kenneth P. Gee
    • 1
  1. 1.Department of Accounting and FinanceUniversity of LancasterUK

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