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Inflation targeting and monetary analysis in Chile and Mexico

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  • Sanchez-Fung, Jose R

    (Kingston University)

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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Bibliographic 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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Keywords: inflation targeting; monetary policy; money demand; PPP; P-star; Phillips curve; cointegration; Kalman filter; block Granger non-causality; VARs;

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References

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Cited by:
  1. Jihene Bousrih, 2012. "Degree of openness and inflation targeting policy: model of a small open economy," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 4(3), pages 232-246, August.

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