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Inflation targeting and monetary analysis in Chile and Mexico

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Author Info
Sanchez-Fung, Jose R (Kingston University)

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Abstract

This paper studies the role of monetary and open economy indicators in inflation targeting (IT) economies through the analysis of a nested Phillips curve/ P-star model for Chile and Mexico. For Chile a real money gap and a money growth indicator are found to be relevant in predicting deviations of observed from target inflation. In contrast, for Mexico real exchange rate measures are robust predictors of deviations of actual from (i) expected inflation during the pre-IT (1999) period, and (ii) target inflation in the post-IT span.

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Publisher Info
Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 179.

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Date of creation: 04 Jun 2003
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Handle: RePEc:ecj:ac2003:179

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Web page: http://www.res.org.uk/society/annualconf.asp
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Related research
Keywords: inflation targeting; monetary policy; money demand; PPP; P-star; Phillips curve; cointegration; Kalman filter; block Granger non-causality; VARs;

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Find related papers by JEL classification:
E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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References listed on IDEAS
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    Other versions:
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  17. Arrau, Patricio & De Gregorio, Jose, 1993. "Financial Innovation and Money Demand: Application to Chile and Mexico," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 524-30, August. [Downloadable!] (restricted)
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  19. Milton Friedman, 1961. "The Lag in Effect of Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 69, pages 447. [Downloadable!] (restricted)
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