Inflation

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(current with version 1.1)

Inflation is the name given to the game mechanism which raises the cost of various relative to income during the game time. Although it shares a name with the economic concept of inflation, it should be remembered that there are differences between the two, notably that economic inflation would be expected to increase certain incomes (such as taxation) as well as expenses.

[edit] How inflation works

Your level of inflation can be seen on the finances screen of your national information.

Inflation is given relative to starting price levels, for instance if you have an inflation of 20 then price will be 120% of starting levels, so a province improvement which originally cost 50 ducats will now cost 60.

The following costs are affected by inflation:

Costs in events are not affected by inflation.

[edit] Causes of inflation

The primary cause of inflation in any game will be 'minting' - i.e. taking a proportion of your monthly tax incomes using the treasury slider, rather than re-investing these as technological research. With the treasury slider fully to the right, and no factors diminishing inflation (see below) you will receive 1% inflation per annum, meaning that prices will progressive increase by 1% every year in game.

Inflation can also be added or reduced by an event (for instance the 'corruption' event) and you will see a one-off increase in inflation when your nation goes bankrupt.

Inflation from gold provinces:

If you have income from gold that is more than a certain fraction of your total income, you will receive inflation even if you do not mint.

Gold inflation is controlled by these values in common\defines.txt:

0.4 #_EDEF_GOLD_INFLATION_THRESHOLD_

0.25 #_EDEF_GOLD_INFLATION_

The first is the fraction of your total income that can come from gold without causing inflation. The tricky part is that for this purpose, "total income" includes ONLY monthly taxes, trade, gold, and production income. It doesn't include tolls, census taxes, trade tariffs, etc. This means you can't use the "percentage of income" stated in the ledger to determine if you should be getting gold inflation or how much. The second number is the percentage of added inflation you would get per year if you were 100% over the threshold. So in the vanilla game you will get 0.0025% added inflation for every percentage point your gold income is above the threshold (0.4 or 40%).

[edit] Managing inflation

The main method used to prevent the nasty effects of inflation is to prevent its occurrence in the first place. Many players of the EU series attempt to never mint, and rely upon the annual tax incomes to cover any expenses throughout the year. If at any point in the year your savings fall to nothing, but still have a monthly expenditure, then your military and naval maintenance will be taken directly from province incomes, and diminish the income going to research.

The national idea, national bank will offer a 0.0083% decrease in inflation every month (0.1% per year), allowing one to take 10% of monthly incomes as coin without incurring any additional inflation. By taking less any inflation you have accrued will diminish. This also allows a one-off event which lowers inflation by 5%.

The province improvement, Tax Assessor, available at government technology level 23 for a basic cost of 50 ducats diminishes inflation by 0.5% for that province - i.e. if the improvement is in place in every province of your nation you will receive a total inflation reduction of 0.5% for the whole nation. There are two Tax Assessors built when the game starts. They are in the provinces of Avignon and Krakow, belonging to the Pope and Poland. If you don't have a very big country and you have real trouble with your inflation, you should think of arranging a trip to Avignon or Krakow. There are also events which can give a one-off reduction to inflation.

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