Inflation Rates, Car Devaluation, and Chemical Kinetics

Abstract

The inflation rate problem of a modern economy shows quite interesting similarities with chemical kinetics and especially with first-order chemical reactions. In fact, capital devaluation during periods of rather low inflation rates or inflation measured over short periods shows a dynamics formally similar to that followed by first-order chemical reactions and they can thus be treated by the aid of the same mathematical formalism. Deviations from this similarity occurs for higher inflation rates. The dynamics of price devaluation for two different types of car, a compact car and a luxury car, has been followed for seven years long and it has been established that car devaluation is a process that is formally similar to a zeroth-order chemical kinetic process disregarding the type of car, if car devaluation is much faster than money devaluation. In fact, expensive cars devaluate with a faster rate than inexpensive cars.