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Inflación en Uruguay en 140 años de historia (1870-2010). Un enfoque monetario

Author

Listed:
  • Conrado Brum

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración)

  • Carolina Roman

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)

  • Henry Willebald

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)

Abstract

This paper aims at explaining the long-run inflation of Uruguay (1870-2010). A monetary inflation model is used based on the assumption that the long-run inflation results from the equilibrium conditions in the money market. A forward-looking Phillips curve is estimated where the inflation rate depends positively on the inflation expectations, the output gap and the international inflation. Following the Neumann and Greiber (2004) approach, the inflation expectations is explained by the core money growth, which is defined as the growth of long-lasting component of nominal money supply that exceeds the long-run increase of the real money demand, this last one determined by the change of the potential output (output adjusted core money, OACM). In addition, we compare the OACM with effective inflation and we construct a monetization index which enables us to identify processes of "demonetization" and "monetization" that the Uruguayan economy experienced along the last 140 years. The results of the Phillips curve estimation show a positive and significant effect of the core money growth on the inflation rate. In addition, a unit elasticity of the real money demand is found.

Suggested Citation

  • Conrado Brum & Carolina Roman & Henry Willebald, 2014. "Inflación en Uruguay en 140 años de historia (1870-2010). Un enfoque monetario," Documentos de Trabajo (working papers) 14-03, Instituto de Economia - IECON.
  • Handle: RePEc:ulr:wpaper:dt-03-14
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    More about this item

    Keywords

    inflation; core money; Uruguay;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean

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