<P> When looking at inflation, economic institutions may focus only on certain kinds of prices, or special indices, such as the core inflation index which is used by central banks to formulate monetary policy . </P> <P> Most inflation indices are calculated from weighted averages of selected price changes . This necessarily introduces distortion, and can lead to legitimate disputes about what the true inflation rate is . This problem can be overcome by including all available price changes in the calculation, and then choosing the median value . In some other cases, governments may intentionally report false inflation rates; for instance, during the presidency of Cristina Kirchner (2007--2015) the government of Argentina was criticised for manipulating economic data, such as inflation and GDP figures, for political gain and to reduce payments on its inflation - indexed debt . </P> <P> Historically, a great deal of economic literature was concerned with the question of what causes inflation and what effect it has . There were different schools of thought as to the causes of inflation . Most can be divided into two broad areas: quality theories of inflation and quantity theories of inflation . </P> <P> The quality theory of inflation rests on the expectation of a seller accepting currency to be able to exchange that currency at a later time for goods that are desirable as a buyer . The quantity theory of inflation rests on the quantity equation of money that relates the money supply, its velocity, and the nominal value of exchanges . Adam Smith and David Hume proposed a quantity theory of inflation for money, and a quality theory of inflation for production . </P>

What are the positive and negative effects of inflation