About Inflation Lab

A small, honest tool for feeling how inflation actually works.

Inflation is one of those words that gets used a lot and understood rarely. Prices go up, savings buy less, and the explanations on the news tend to be either a single villain or a wall of jargon. Inflation Lab is an attempt to do something different: let you move the levers of an economy yourself and watch what happens, so the mechanisms become something you can see rather than something you have to take on faith.

What you can do

Drag the money supply, interest rate, government spending, supply shocks and expectations, and watch inflation, jobs and the real value of your money respond in real time. Load a scenario like the 1970s oil shocks or the Volcker rate hikes and watch the story play out. When you want to see how uncertain the future really is, turn on the uncertainty view and the single line blooms into a range of fates.

Three things worth taking away

• Money quietly loses value over time. A little inflation is normal; a lot is corrosive.
• Inflation is partly a belief that feeds itself. What people expect becomes what happens.
• Fighting inflation has real costs. Killing it usually means a price paid in jobs.

Is it accurate?

It is a teaching model, not a forecaster. The engine is the standard 3-equation New Keynesian model used to teach monetary policy, and every default parameter is drawn from the published economics literature. It will not predict next year's inflation, and it never pretends to. The methodology page lays out the equations, the sources, and the things the model deliberately leaves out.

Inflation Lab is part of LogicaLeap. Create. Launch. Iterate.