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Inflation,Inflation Variability, and Output Performance. Venezuela 1951-2002

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  • Olivo, Victor

Abstract

This paper explores the relationship between the level of inflation, inflation variability, and output performance in the Venezuelan economy for the period 1951-2002. The paper examines the mechanism through which higher inflation translates into lower non-oil real GDP growth. We find empirical evidence that supports Friedman's (1977) contention that higher inflation produces more inflation volatility /uncertainty that leads to relative price variability that in turn, is harmful for the proper functioning of the market as the best system for allocating resources.

Suggested Citation

  • Olivo, Victor, 2014. "Inflation,Inflation Variability, and Output Performance. Venezuela 1951-2002," MPRA Paper 57216, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:57216
    as

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    File URL: https://mpra.ub.uni-muenchen.de/57216/1/MPRA_paper_57216.pdf
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    References listed on IDEAS

    as
    1. Kerstin Gerling, 2008. "The Real Consequences of Financial Market Integration when Countries Are Heterogeneous," Working Papers 141, Oesterreichische Nationalbank (Austrian Central Bank).
    2. Mrs. Kerstin Gerling & Carlos Fernandez Valdovinos, 2011. "Inflation Uncertainty and Relative Price Variability in WAEMU Countries," IMF Working Papers 2011/059, International Monetary Fund.
    3. Taylor, John B., 1981. "On the relation between the variability of inflation and the average inflation rate," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 15(1), pages 57-85, January.
    4. Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-472, June.
    5. Grier, Kevin B. & Perry, Mark J., 1998. "On inflation and inflation uncertainty in the G7 countries," Journal of International Money and Finance, Elsevier, vol. 17(4), pages 671-689, August.
    6. Dennis W. Jansen, 1989. "Does inflation uncertainty affect output growth? Further evidence," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 43-54.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inflation; inflation variability; inflation uncertainty; output growth; trend inflation; trend money growth; relative prices;
    All these keywords.

    JEL classification:

    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other

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