unanticipated inflation

unanticipated inflation

the future INFLATION rate in a country that is not generally expected by business people, trade union officials and consumers, and thus takes them by surprise. Unanticipated inflation is not incorporated in the current prices set for products, wage rates agreed for workers and asset values, unlike ANTICIPATED INFLATION, and thus is more painful in its effects. See RISK AND UNCERTAINTY.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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The sequence in which this analysis is developed, in particular presenting the economics of unanticipated inflation before that of anticipatory inflation, corresponds to the temporal sequence of economic events during an inflation.
where GY is the growth rate of real GNP, CVI is a measure of inflation uncertainty, SHOCKI is unanticipated inflation, ANTI is anticipated inflation,(5) computed as the difference between actual and unanticipated values, and [[mu].sub.t], is a white noise error term.
It has been advocated by Ansley (1979) and Weiss (1985) that reserve error misestimation is caused largely by unanticipated inflation in the costs of settling claims.
The average rate of unanticipated inflation is -0.48 percent (t = -.92) for LIV and -1.04 percent (t = -1.96) for LEASTSQ.
Parks [1978] found unanticipated inflation to be positively associated with movements in relative prices.
(These assumptions on Dln(y) and Dln(R) were tested by Rasche.) Instead of the price variable of equation (3), Rasche uses as a measure of unanticipated inflation the residuals from an ARIMA (0,1,1) model.
The costs of inflation are associated with both anticipated and unanticipated inflation. (4)
Traditionally, the biggest risk for an investor choosing to lend to governments or companies over a longer time frame, rather than opting for a series of short term securities, is the threat of unanticipated inflation. Hence, the 'underweight' in bonds as an asset class, both in our strategic, as well as our tactical asset allocation recommendation."
Unanticipated inflation is a risk that investors in any nominal instrument face.
Keywords: Anticipated inflation Unanticipated inflation Relative price variability Macroeconomic framework
Friedman [21] criticized this exploitation of the short-term inflation-unemployment trade-off, remarking that the temporary trade-off between inflation and unemployment "comes not from inflation per se, but from unanticipated inflation, which generally means, from a rising rate of inflation." However, there is no permanent trade-off; hence governments should not employ the policy to stimulate employment with inflation.
Unanticipated inflation occurs when people, businesses and governments make errors in their inflation forecasts.