El Intercambio entre Inflacion y Producto: Evidencia Empirica para Venezuela

The Trade-off between Inflation and Output: Empirical Evidence for Venezuela

Víctor Olivo

MPRA Paper from University Library of Munich, Germany

Abstract: Many researchers have explored the implications of Lucas’ misperception model. Arguably, the most important implication of this model is that the slope of the aggregate supply curve depends on the variability of nominal shocks. This paper examines this insight from Lucas’ model using annual data of the Venezuelan economy for the period 1951-2004. The motivation for this research is the perception that since the increase in oil prices in the mid 70s, Venezuelan policymakers have insisted in stimulating the economy applying systematically very expansive fiscal and monetary policies. The results obtained indicate that for the period analyzed, Lucas’s hypothesis explains fairly well why the trade-off between inflation and output has tended to disappear in the Venezuelan economy, as nominal shocks has increased in size and variability.

Keywords: Output; inflation; trade-off; nominal shocks; monetary policy; fiscal policy; variability (search for similar items in EconPapers)
JEL-codes: C22 E32 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:41242

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