Inflation Determinants in Paraguay: Cost Push versus Demand Pull Factors

Brieuc Monfort and Santiago Peña

No 2008/270, IMF Working Papers from International Monetary Fund

Abstract: This article uses two analytical methodologies to understand the dynamics of inflation in Paraguay, the mark-up theory of inflation and the monetary theory of inflation. We also study the impact of different monetary aggregates. The results suggest that monetary factors, in particular currency in circulation, play a major role in determining long-run inflation, while foreign prices, in particular from Brazil, or some food products have a large impact on the short-term dynamics of inflation. Wage indexation may also contribute to locking up price increases.

Keywords: WP; core inflation index; U.S. dollar; inflation dynamics; monetary aggregate (search for similar items in EconPapers)
Pages: 41
Date: 2008-12-01
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Citations: View citations in EconPapers (3)

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