DISINFLATING FROM MODERATE INFLATION

Marc Hofstetter

No 2373, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This paper studies the behavior of several macroeconomic variables during disinflationary episodes in Latin-America and the Caribbean (LAC). In particular, it focuses on disinflations from low and moderate peaks for the period 1973-2001. The methodology used for studying the average behavior of macroeconomic variables across disinflations overcomes the traditional problem of scarce long time series (of high frequency data) that has hindered the empirical research of monetary shocks in many LAC countries. Some of the important findings are as follows: (i) while GDP growth slowed down during the disinflations of the 70s and 80s, there is no evidence of this for the 90s; (ii) the trade balance significantly deteriorated during the disinflations; (iii) the nominal devaluation rate slowed down during the episodes; and (iv) the real exchange rate appreciated during the episodes.

Keywords: Inflation; Growth; Disinflation; Trade; Balance; Exchange; Rate (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 F43 (search for similar items in EconPapers)
Pages: 26
Date: 2007-03-05
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:002373

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