Inflation Determinants in Paraguay: Cost Push versus Demand Pull Factors
December 1, 2008
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Summary
This article uses two analytical methodologies to understand the dynamics of inflation in Paraguay, the mark-up theory of inflation and the monetary theory of inflation. We also study the impact of different monetary aggregates. The results suggest that monetary factors, in particular currency in circulation, play a major role in determining long-run inflation, while foreign prices, in particular from Brazil, or some food products have a large impact on the short-term dynamics of inflation. Wage indexation may also contribute to locking up price increases.
Subject: Consumer price indexes, Currencies, Demand for money, Exchange rates, Inflation
Keywords: core inflation index, inflation dynamics, monetary aggregate, U.S. dollar, WP
Pages:
41
Volume:
2008
DOI:
Issue:
270
Series:
Working Paper No. 2008/270
Stock No:
WPIEA2008270
ISBN:
9781451871289
ISSN:
1018-5941
