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Runaway Inflation in Chile, 1970-1973

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  • Sebastian Edwards

Abstract

In this essay, I argue that the explosion of inflation during the Salvador Allende administration in Chile (above 1,500% on a six-month annualized measure) was predictable. The government’s use of massive and strict price controls generated acute macroeconomic imbalances. I postulate that the combination of runaway inflation, shortages, and black markets generated major hostility among the middle class and that that unhappiness reduced the support for the Unidad Popular government.

Suggested Citation

  • Sebastian Edwards, 2024. "Runaway Inflation in Chile, 1970-1973," Estudios de Economia, University of Chile, Department of Economics, vol. 51(2), pages 383-416, December.
    • Handle: RePEc:udc:esteco:v:51:y:2024:i:2:p:383-416
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    File URL: https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/76966/78610
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    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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