Arbeitspapier
Disinflations in Latin America and the Caribbean: A free lunch?
This paper challenges the conventional view according to which disinflations in LAC-even from low and moderate peaks-have been carried out at no cost to output. After suggesting a new methodology that allows for long-lived effects and inflation inertia when measuring costs of disinflations, large sacrifice ratios are obtained for the 1970s and 80s. Nevertheless, a new puzzle arises: disinflation costs in the 90s are negative, even with the new methodology. It is shown that an unusual combination of circumstances-i.e. capital inflows, structural reforms and the peculiar recent inflation history-can explain that fortunate result. Moreover, it is shown that LAC episodes exhibit a larger speed than G7 experiences. That speed differential explains why disinflation costs in developed nations are on average larger than LAC’s.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 506
Price Level; Inflation; Deflation
Business Fluctuations; Cycles
Monetary Policy
Economic Growth of Open Economies
Macroeconomics and Monetary Economics: General
Growth
Disinflation costs
Inflationsbekämpfung
Wirtschaftswachstum
Lateinamerika
- Handle
- Last update
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20.09.2024, 8:20 AM CEST
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hofstetter, Marc
- The Johns Hopkins University, Department of Economics
Time of origin
- 2004