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The Physics of Inflation: Newton’s Law of Cooling and the Consumer Price Index
Keywords
inflation, price index, Newton’s law of cooling, sociophysics, econophysics
Abstract
In recent years, physicists have been using tools from physics to study social phenomena, an area of study sometimes called sociophysics and econophysics. Most of this work has appeared in physics journals, and the present paper is an attempt to bring this type of work to a largely social science audience. The focus is on the application of a differential equation model, widely used in physics, to the study of the long term trend in changes in the United States’ price level. This model is found to provide an excellent fit to the data, indicating that this trend is an exponential growth trend.