Inflation, Uncertainty, and Growth in Colombia

Henry Ma

No 1998/161, IMF Working Papers from International Monetary Fund

Abstract: It has been argued that higher levels of inflation lead to greater uncertainty about future inflation and to greater dispersion of relative prices. In either case, inflation could reduce the efficiency of market prices in coordinating economic activities. This paper shows that the rise of inflation in Colombia, from low levels in the 1950s to average rates of 18–22 percent since the 1970s, has been accompanied by increased uncertainty and relative price dispersion; and that inflation has had a negative and persistent effect on real GDP growth.

Keywords: WP; inflation uncertainty; price dispersion; inflation; relative price dispersion; VAR; inflation risk premium; inflation increase; inflation lead; inflation shock; inflation level; consumer price inflation; inflation hedge; forecasting inflation (search for similar items in EconPapers)
Pages: 30
Date: 1998-11-01
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Citations: View citations in EconPapers (12)

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