Is Inflation Targeting destabilizing? Lessons from Latin America

Detalhes bibliográficos
Autor(a) principal: LIBMAN,EMILIANO
Data de Publicação: 2022
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Revista de Economia Política
Texto Completo: http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572022000200304
Resumo: ABSTRACT This paper argues that several aspects of the productive structure and the macroeconomic policies of Latin American countries, when combined with a Taylor Rule, may produce too much output volatility and a bias towards real exchange rate overvaluation. Relaying on a simple Aggregate Demand - Aggregate Supply model, we show that this is a likely outcome when: a) the real interest rate elasticity of demand is low; b) depreciations have strong contractionary effects; and c) the exchange rate pass-through is relatively large. These conditions imply that depreciations are contractionary and a have a strong effect on inflation.
id EDITORA_34-1_396dc019558da39534a0d2646466a9ec
oai_identifier_str oai:scielo:S0101-31572022000200304
network_acronym_str EDITORA_34-1
network_name_str Revista de Economia Política
repository_id_str
spelling Is Inflation Targeting destabilizing? Lessons from Latin AmericaInflation Targetingcontractionary depreciationsfear of floatingABSTRACT This paper argues that several aspects of the productive structure and the macroeconomic policies of Latin American countries, when combined with a Taylor Rule, may produce too much output volatility and a bias towards real exchange rate overvaluation. Relaying on a simple Aggregate Demand - Aggregate Supply model, we show that this is a likely outcome when: a) the real interest rate elasticity of demand is low; b) depreciations have strong contractionary effects; and c) the exchange rate pass-through is relatively large. These conditions imply that depreciations are contractionary and a have a strong effect on inflation.Centro de Economia Política2022-04-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersiontext/htmlhttp://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572022000200304Brazilian Journal of Political Economy v.42 n.2 2022reponame:Revista de Economia Políticainstname:EDITORA 34instacron:EDITORA_3410.1590/0101-31572022-3075info:eu-repo/semantics/openAccessLIBMAN,EMILIANOeng2022-05-02T00:00:00Zoai:scielo:S0101-31572022000200304Revistahttps://centrodeeconomiapolitica.org.br/repojs/index.php/journalONGhttps://centrodeeconomiapolitica.org.br/repojs/index.php/journal/oai||cecilia.heise@bjpe.org.br1809-45380101-3157opendoar:2022-05-02T00:00Revista de Economia Política - EDITORA 34false
dc.title.none.fl_str_mv Is Inflation Targeting destabilizing? Lessons from Latin America
title Is Inflation Targeting destabilizing? Lessons from Latin America
spellingShingle Is Inflation Targeting destabilizing? Lessons from Latin America
LIBMAN,EMILIANO
Inflation Targeting
contractionary depreciations
fear of floating
title_short Is Inflation Targeting destabilizing? Lessons from Latin America
title_full Is Inflation Targeting destabilizing? Lessons from Latin America
title_fullStr Is Inflation Targeting destabilizing? Lessons from Latin America
title_full_unstemmed Is Inflation Targeting destabilizing? Lessons from Latin America
title_sort Is Inflation Targeting destabilizing? Lessons from Latin America
author LIBMAN,EMILIANO
author_facet LIBMAN,EMILIANO
author_role author
dc.contributor.author.fl_str_mv LIBMAN,EMILIANO
dc.subject.por.fl_str_mv Inflation Targeting
contractionary depreciations
fear of floating
topic Inflation Targeting
contractionary depreciations
fear of floating
description ABSTRACT This paper argues that several aspects of the productive structure and the macroeconomic policies of Latin American countries, when combined with a Taylor Rule, may produce too much output volatility and a bias towards real exchange rate overvaluation. Relaying on a simple Aggregate Demand - Aggregate Supply model, we show that this is a likely outcome when: a) the real interest rate elasticity of demand is low; b) depreciations have strong contractionary effects; and c) the exchange rate pass-through is relatively large. These conditions imply that depreciations are contractionary and a have a strong effect on inflation.
publishDate 2022
dc.date.none.fl_str_mv 2022-04-01
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572022000200304
url http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572022000200304
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv 10.1590/0101-31572022-3075
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv text/html
dc.publisher.none.fl_str_mv Centro de Economia Política
publisher.none.fl_str_mv Centro de Economia Política
dc.source.none.fl_str_mv Brazilian Journal of Political Economy v.42 n.2 2022
reponame:Revista de Economia Política
instname:EDITORA 34
instacron:EDITORA_34
instname_str EDITORA 34
instacron_str EDITORA_34
institution EDITORA_34
reponame_str Revista de Economia Política
collection Revista de Economia Política
repository.name.fl_str_mv Revista de Economia Política - EDITORA 34
repository.mail.fl_str_mv ||cecilia.heise@bjpe.org.br
_version_ 1754122482595397632

Registros relacionados