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Inflation targeting and monetary analysis in Chile and Mexico

Author

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  • Sanchez-Fung, Jose R.

    () (NUBS University of Nottingham, Ningbo, China)

Abstract

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 a real exchange rate gap, a standard measure of the real exchange rate, and a money growth indicator are consistently significant as predictors of deviations of actual from (i) expected (in the pre-IT period) and (ii) target inflation (in the post-IT span).

Suggested Citation

  • Sanchez-Fung, Jose R., 2002. "Inflation targeting and monetary analysis in Chile and Mexico," Economics Discussion Papers 2002-7, School of Economics, Kingston University London.
  • Handle: RePEc:ris:kngedp:2002_007
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Inflation targeting; monetary policy; P-star; Phillips curve; Chile; Mexico; Latin America;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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