44:, the debtor pays more in real terms than the original agreed value. The opposite is true for creditors. Contracts and constant real value non-monetary items accounted in daily indexed units of account, Daily CPI or monetized daily indexed units of account incur no inflation or deflation risk, as the real value of payments and outstanding capital amounts remain constant over time while the nominal values are inflation- or deflation-indexed daily.
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effect of inflation during inflation. The value of the UF in pesos is published daily in all major
Chilean newspapers and on government websites. Initial doubts about the Chilean governments ability to adopt inflation targeting under such an indexed financial system proved unfounded as the Central Bank of Chile has successfully maintained low inflation rates since 1998.
36:(in the case of monetary items) or by the stable measuring unit assumption (in the case of constant real value non-monetary items). Non-indexed units, such as contracts written in nominal currency units and nominal monetary items, incur inflation or deflation risk in the case of monetary items. During all periods of
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was introduced in Chile in 1967, but it was only in the early 1980s that it was widely adopted by both the
Chilean people and the Chilean government. Its original base value has never been changed. By 1983, over 60 percent of total bank loans in Chile were written in the UF. which eliminated the
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discussed the inflation risk of non-indexed units of accounts. He stated that "All variations in the value of the circulating medium are mischievous: they disturb existing contracts and expectations, and the liability to such changes renders every pecuniary engagement of long date entirely
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40:, the debtor pays less in real terms than what both the debtor and creditor agreed at the original time of the contract or sale. On the other hand, in periods of
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similarly argued for the introduction of an indexed unit of account into the United States economy as a means of eliminating inflation risk.
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referred to previous authors and discussed an indexed unit of account which he calls a "tabular standard of value". In 1887
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Herrera, Luis Óscar; Valdés, Rodrigo O. (2005). "De-dollarization, Indexation and
Nominalization: the Chilean Experience".
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Indexation is typically achieved by adjusting payments and outstanding capital as well as interest values using a Daily
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accounting model, to ensure that deferred payments and constant real value non-monetary items are indexed to the
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in terms of a Daily Index. This is done so that the real value of these items is not affected by changes in the
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or a monetized daily indexed unit of account. A monetized daily indexed unit of account, called the
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72:, also referring to previous authors, discussed a similar proposal. In 1998 and onwards,
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209:
Marshall, Alfred (1925). "Remedies for
Fluctuations of General Prices". In Pigou (ed.).
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24:(Daily CPI) can be used in contracts or in the Capital Maintenance in Units of Constant
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226:"Indexed Units of Account: Theory and Assessment of Historical Experience"
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192:Jevons, William Stanley (1876). "Chapter XXV".
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86:Constant Item Purchasing Power Accounting
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263:"Designing Indexed Units of Account"
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195:Money and the Mechanism of Exchange
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224:Shiller, Robert (January 1998).
179:Principles of Political Economy
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181:. West Strand: John W. Parker.
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294:. Princeton University Press.
261:Shiller, Robert (June 1999).
211:Memorials of Alfred Marshall
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267:NBER Working Paper No. 7160
230:NBER Working Paper No. 6356
213:. London: MacMillan and Co.
96:Mexican Unidad de Inversion
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10:
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198:. D. Appleton and Company.
177:Mill, John Stuart (1848).
156:10.1080/13841280500394493
106:Unidad de Valor Constante
91:WCU – World Currency Unit
290:Shiller, Robert (2003).
133:Journal of Policy Reform
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292:The New Financial Order
18:indexed unit of account
66:William Stanley Jevons
64:precarious." In 1887
111:Unidade Real de Valor
49:consumer price index
22:Consumer Price Index
30:general price level
101:Unidad de Fomento
53:Unidad de Fomento
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312:Inflation
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59:In 1848,
42:deflation
38:inflation
20:or Daily
306:Category
80:See also
16:A daily
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244:S2CID
160:S2CID
117:Notes
271:doi
234:doi
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