The Debauchery of Currency and Inflation: Chile, 1970-1973

Sebastian Edwards

No 31890, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this essay, I analyze Salvador Allende’s economic policies in Chile during the early 1970s. I argue that the explosion of inflation during his administration (above 1,500% on a six-month annualized measure) was predictable, and that the government’s response to it, through massive and strict price controls, generated acute macroeconomic imbalances. I postulate that the combination of runaway inflation, shortages, and black markets generated major disaffection among the middle class and that that unhappiness reduced the support for the Unidad Popular government.

JEL-codes: E31 E40 E52 F38 F42 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-his, nep-hpe and nep-mon
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