verkhoturye51 Tue Mar 12, 2019 8:39 pm

So explain to me why Lada prices haven't grown by a factor of 10???

Because the inflation and the exchange rate effects offset each other

the exchange rate effect is

**static** and the inflation rate effect is

**dynamic**.

If you live in Russia you only take into account inflation effect to capture the price

**dynamics** from 1997-----> 2019 and translate old prices into new. What was worth 1 rub in 1997 is now worth 10 rub.

If you live in the US you need to offset this inflation effect, which is not present in your country, by multiplying the new price with the new exchange rate, it is a

**static** transformation in this moment in time to get you from Russian world to the US. Note that both effects perfectly offset each other. Russian inflation was averagely more than 10 % in the last 20 years, increasing prices tenfold, just as the exchange rate increased tenfold. So you get again exactly 0,15 USD for 1 rub in 2019 dollars as in 1997 dollars. But now you miss

**the dynamic effect** of 22 years - the inflation rate. It's not representative to talk about 1997 prices in 2019 without adjusting them! So multiply with 1,5, the US inflation.

Can anyone show an official price tag of Lada?

The source is https://www.forecastinternational.com/archive/disp_pdf.cfm?DACH_RECNO=905