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Stabilization, Persistence, and Inflationary Convergence: A Comparative Analysis

In: Indexation, Inflation and Monetary Policy

Author

Listed:
  • Sebastián Edwards

    (University of California-Los Angeles)

  • Fernando Lefort

    (Pontificia Universidad Católica de Chile)

Abstract

The purpose of this paper is to analyze empirically the importance of inflationary persistence in a group of sixteen advanced and developing countries. We do this by studying, in great detail, the time series properties of inflation using both univariate as well as multivariate techniques. We show that inflationary inertia greatly varies both across countries and across different periods of time within a country. Moreover, there seems to exists a clear connection between our estimates of inertia and the levels of inflation in the countries in our sample. Nominal exchange rate anchors seem to reduce inflation inertia but only until time goes by and the program fails to lower inflation to international levels.
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Suggested Citation

  • Sebastián Edwards & Fernando Lefort, 2002. "Stabilization, Persistence, and Inflationary Convergence: A Comparative Analysis," Central Banking, Analysis, and Economic Policies Book Series,in: Fernando Lefort & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Serie (ed.), Indexation, Inflation and Monetary Policy, edition 1, volume 2, chapter 3, pages 065-104 Central Bank of Chile.
  • Handle: RePEc:chb:bcchsb:v02c03pp065-104
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    References listed on IDEAS

    as
    1. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
    2. Maurice Obstfeld, 1995. "Intenational Currency Experience: New Lessons and Lessons Relearned," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 119-220.
    3. Pazos, Felipe, 1990. "Runaway inflation: experiences and options," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
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    Cited by:

    1. Fernando Lefort & Eduardo Walker, 1999. "El Dólar Como Activo Financiero: Teoría y Evidencia Chilena," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 36(109), pages 1035-1066.

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