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Money and Inflation in an Inflation-Tageting Regime

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  • Pablo García S.
  • Rodrigo Valdés P.

Abstract

This work describes the role of money in the current inflation-targeting framework in Chile, in particular given the large recent annual increase in M1A. From a conceptual standpoint, it analyzes the relationship between money growth and inflation, as well as the interpretation of movements in monetary aggregates. Empirically, the article evaluates the informational content of money as an indicator of inflationary pressures in Chile, and examines whether the recent evolution of M1A is consistent with money demand fundamentals. The evidence indicates that the recent trajectory of money does not represent a material risk to the achievement of the inflation target.

Suggested Citation

  • Pablo García S. & Rodrigo Valdés P., 2003. "Money and Inflation in an Inflation-Tageting Regime," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 6(1), pages 21-47, April.
    • Handle: RePEc:chb:bcchec:v:6:y:2003:i:1:p:21-47
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    References listed on IDEAS

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