Why Are Rates of Inflation So Low After Large Devaluations?

Ariel Tomas Burstein, Martin Eichenbaum () and Sergio Rebelo ()

No 486, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: This paper studies the behavior of inflation after nine large post-1990 contractionary devaluations. A salient feature of the data is that inflation is low relative to the rate of devaluation. We argue that the distribution costs and substitution away from imports to lower quality local goods can account quantitatively for the post-devaluation behavior of prices.

Keywords: inflation; devaluation; exchange rates (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-lam
Date: 2002-01
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Related works:
Working Paper: Why Are Rates of Inflation So Low After large Devaluations (2002)
Working Paper: Why Are Rates of Inflation So Low After Large Devaluations? (2002)
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