A P* Model of Inflation in Puerto Rico
One can analyze and forecast the inflationary potential in the Puerto Rican economy using the “P* model.” Given the nature of the monetary sector in Puerto Rico (PR), the model is put into the context of variables from the mainland United States (US). The results indicate a long-run relationship between the money supply (M1) of the US and the price level in PR, between M1 and real production in PR, and between M1 and the prime rate in PR. The implications for forecasting and policy are discussed.
|Date of creation:||Sep 2004|
|Date of revision:|
|Publication status:||Published in American Review of Political Economy 2.2(2004): pp. 16-41|
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Web page: http://mpra.ub.uni-muenchen.de
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- Hall, Stephen G & Milne, Alistair, 1994. "The Relevance of P-Star Analysis to UK Monetary Policy," Economic Journal, Royal Economic Society, vol. 104(424), pages 597-604, May.
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- Jeffrey J. Hallman & Richard G. Anderson, 1993. "Has the long-run velocity of M2 shifted? Evidence from the P* model," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 14-26.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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