Inflation Dynamics in the Dominican Republic

Oral Williams and Olumuyiwa Adedeji

No 2004/029, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the determinants of inflation in the Dominican Republic during 1991-2002, a period characterized by remarkable macroeconomic stability and growth. By developing a parsimonious and empirically stable error-correction model using quarterly observations, the paper finds that inflation is explained by changes in monetary aggregates, real output, foreign inflation, and the exchange rate.

Keywords: WP; nominal exchange rate; Inflation; Cointegration; Error-Correction; inflation equation; goods market; drives inflation; interest rate differential; low-inflation environment; inflation dynamics; Exchange rates; Demand for money; Monetary base; Currency markets; Global (search for similar items in EconPapers)
Pages: 21
Date: 2004-02-01
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Citations: View citations in EconPapers (8)

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