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Inflation targeting and monetary analysis in Chile and Mexico

Listed author(s):
  • Jose Sanchez-Fung

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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File URL: http://repec.org/mmfc03/SanchezFung.pdf
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Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2003 with number 82.

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Date of creation: 27 Sep 2004
Handle: RePEc:mmf:mmfc03:82
Contact details of provider: Web page: http://www.essex.ac.uk/afm/mmf/index.html

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  9. Arrau, Patricio & De Gregorio, Jose, 1993. "Financial Innovation and Money Demand: Application to Chile and Mexico," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 524-530, August.
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  19. Hallman, Jeffrey J & Porter, Richard D & Small, David H, 1991. "Is the Price Level Tied to the M2 Monetary Aggregate in the Long Run?," American Economic Review, American Economic Association, vol. 81(4), pages 841-858, September.
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  22. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107, December.
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