Uruguay: Selected Issues

IMF Staff Country Reports, March 27, 2009

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Uruguay: Selected Issues

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Bibliographic details

• Published: March 27, 2009
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781451839432.002

Summary

• Publication date: March 27, 2009
• Core purpose: Quantifies the importance of international food and oil price inflation for Uruguayan inflation.
• Principal finding: World food prices have had a strong but stable impact on Uruguay’s inflation.

Methodology

• Econometric approaches used:
  • Vector autoregressive (VAR) model estimations.
  • Phillips-curve estimations.
• Comparative context:
  • Similar estimations are carried out for a broader set of emerging markets to put the Uruguayan results into an international context.
• Scope of analysis:
  • Examines spillovers from commodity price increases to measures of core inflation.

Key findings and analysis

• Spillovers to core inflation:
  • The paper examines how commodity price increases—specifically international food and oil price inflation—transmit to measures of core inflation in Uruguay.
• Relative impacts:
  • World food prices are identified as having a strong impact on Uruguay’s inflation.
  • That impact is characterized as stable over the analysis period.
• Cross-country perspective:
  • Comparable estimations for a broader set of emerging markets are presented to contextualize Uruguay’s experience, allowing assessment of whether Uruguay’s transmission differs from peer economies.

Policy implications and recommendations (implied by analysis)

• Monitoring and policy calibration:
  • Given the strong but stable transmission from world food prices to domestic inflation, macroeconomic policy and inflation-targeting frameworks should account for international food price dynamics.
• Consideration of core inflation measures:
  • Analysis focuses on spillovers to core inflation, suggesting that policymakers should track core measures alongside headline inflation to assess persistent inflationary pressures from commodities.
• Comparative benchmarking:
  • Use of broader emerging market estimations implies value in benchmarking Uruguay’s inflation responses to external shocks against peers when designing policy responses.

Content in this bundle

• Uruguay: Selected Issues; IMF Country Report 09/103; October 9, 2008
  • Uruguay: Selected Issues; IMF Country Report 09/103; October 9, 2008 (Markdown version)
  • Uruguay: Selected Issues; IMF Country Report 09/103; October 9, 2008 (PDF)