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Inflation targeting and monetary analysis in Chile and Mexico

Listed author(s):
  • Sanchez-Fung, Jose R.

    ()

    (NUBS University of Nottingham, Ningbo, China)

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).

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File URL: http://eprints.kingston.ac.uk/6625/1/Sanchez-Fung-J-6625.pdf
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Paper provided by School of Economics, Kingston University London in its series Economics Discussion Papers with number 2002-7.

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Length: 40 pages
Date of creation: 01 Jan 2002
Handle: RePEc:ris:kngedp:2002_007
Contact details of provider: Postal:
Kingston University London, School of Economics, Penrhyn Road, Kingston upon Thames, Surrey, KT1 2EE, UK

Web page: http://fass.kingston.ac.uk/departments/economics/

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  21. 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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  23. 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.
  24. Ernst Baltensperger & Thomas Jordan & Marcel Savioz, 2001. "The demand for M3 and inflation forecasts: An empirical analysis for Switzerland," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(2), pages 244-272, June.
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