Inflation, Uncertainty, and Growth in Colombia
November 1, 1998
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Summary
It has been argued that higher levels of inflation lead to greater uncertainty about future inflation and to greater dispersion of relative prices. In either case, inflation could reduce the efficiency of market prices in coordinating economic activities. This paper shows that the rise of inflation in Colombia, from low levels in the 1950s to average rates of 18–22 percent since the 1970s, has been accompanied by increased uncertainty and relative price dispersion; and that inflation has had a negative and persistent effect on real GDP growth.
Keywords: consumer price inflation, forecasting inflation, inflation, inflation hedge, inflation increase, inflation lead, inflation level, inflation risk premium, inflation shock, inflation uncertainty, price dispersion, relative price dispersion, VAR, WP
Pages:
30
Volume:
1998
DOI:
Issue:
161
Series:
Working Paper No. 1998/161
Stock No:
WPIEA1611998
ISBN:
9781451981582
ISSN:
1018-5941
