Inflation Dynamics in the Dominican Republic

ByOral Williams, Olumuyiwa S Adedeji

February 1, 2004

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the determinants of inflation in the Dominican Republic during 1991-2002, a period characterized by remarkable macroeconomic stability and growth. By developing a parsimonious and empirically stable error-correction model using quarterly observations, the paper finds that inflation is explained by changes in monetary aggregates, real output, foreign inflation, and the exchange rate.

Subject: Currency markets, Demand for money, Exchange rates, Financial markets, Foreign exchange, Inflation, Monetary base, Money, Prices

Keywords: Cointegration, Currency markets, Demand for money, drives inflation, Error-Correction, Exchange rates, Global, goods market, Inflation, inflation dynamics, inflation equation, interest rate differential, low-inflation environment, Monetary base, nominal exchange rate, WP

Pages:
21
Volume:
2004
DOI:
https://doi.org/10.5089/9781451844832.001
Issue:
029
Series:
Working Paper No. 2004/029
Stock No:
WPIEA0292004
ISBN:
9781451844832
ISSN:
1018-5941

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