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Dirty Float, Commodity Prices, and Macroeconomic Fluctuations: A Model for Peru

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  • Waldo Mendoza

    (Pontificia Universidad Católica del Perú)

  • Rafael Vilca

    (Pontificia Universidad Católica del Perú)

Abstract

This paper presents a macroeconomic model that replicates the key stylized facts of the Peruvian economy, namely the strong dependence of private investment and GDP on mineral export prices, within a framework where the Central Reserve Bank of Peru (BCRP) operates under a dirty float regime and the Ministry of Economy and Finance (MEF) follows fiscal rules that endogenize public spending. The model is designed for undergraduate students and instructors of economics and builds on the work of Dancourt (2009), Dancourt & Mendoza (2016), and Mendoza (2019).

Suggested Citation

  • Waldo Mendoza & Rafael Vilca, 2024. "Dirty Float, Commodity Prices, and Macroeconomic Fluctuations: A Model for Peru," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 47(94), pages 76-105.
    • Handle: RePEc:pcp:pucrev:y:2024:i:94:p:76-105
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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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