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Inflation and relative price variability in Venezuela

Author

Listed:
  • José Contreras

    () (Oficina de Investigaciones Económicas, Banco Central de Venezuela. Carmelitas Caracas, Venezuela.)

  • Nora Guarata

    () (Oficina de Investigaciones Económicas, Banco Central de Venezuela. Carmelitas Caracas, Venezuela.)

Abstract

There are several theories about the causes of inflation but none of them is capable of explaining the phenomenon in all cases. We started with an overview of the main theories. In the particular case of Venezuela, it seems that the inflationary phenomenon responds to structural factors rather than circumstantial ones. We utilized three variables that measure relative price distribution and tested for their relation with inflation. Later we used a modified Phillips curve, which included exchange rate as an explanatory variable and regressed it with and without the variables relating relative price distribution: variance, skewness and a combination of both. We concluded that those variables helped explain inflation in Venezuela for the period we studied.

Suggested Citation

  • José Contreras & Nora Guarata, 2013. "Inflation and relative price variability in Venezuela," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 38(36), pages 85-122, July-Dece.
  • Handle: RePEc:ula:econom:v:38:y:2013:i:36:p:85-122
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    References listed on IDEAS

    as
    1. Andrés Langebaek R. & Eliana González Molano, 2007. "Inflación Y Precios Relativos En Colombia," Borradores de Economia 459, Banco de la Republica de Colombia.
    2. Bruce E. Hansen, 2001. "The New Econometrics of Structural Change: Dating Breaks in U.S. Labour Productivity," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 117-128, Fall.
    3. Parks, Richard W, 1978. "Inflation and Relative Price Variability," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 79-95, February.
    4. Dabus, Carlos, 2000. "Inflationary regimes and relative price variability: evidence from Argentina," Journal of Development Economics, Elsevier, vol. 62(2), pages 535-547, August.
    5. Luc Aucremanne & Guy Brys & Peter J Rousseeuw & Anja Struyf & Mia Hubert, 2003. "Inflation, relative prices and nominal rigidities," BIS Papers chapters,in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 81-105 Bank for International Settlements.
    6. Dabus, C. & Viego, V., 2003. "Inflación, Precios Relativos y Crecimiento: Evidencia de América Latina," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 21, pages 91-107, Abril.
    7. Nath, Hiranya K., 2004. "Inflation and relative price variability: short-run vs. long-run," Economics Letters, Elsevier, vol. 82(3), pages 363-369, March.
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    More about this item

    Keywords

    Inflation; Phillips curve; relative price distribution.;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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