Potential output, output gap and high inflation in Argentina (2007-2015)

Abstract: I investigate the causes of the high inflation Argentina experienced from 2007 to 2015. To do so, I estimate the potential output and the output gap using the Blanchard-Quah decomposition for this country and compare it to the estima- tions I obtained for other economies in the region were...

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Autor principal:	Campos,Luciano
Lenguaje:	English
Publicado:	Universidad de Chile. Departamento de Economía 2020
Materias:	Potential output Output gap Inflation Argentina Structural VARs
Acceso en línea:	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862020000100005
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spelling	oai:scielo:S0718-528620200001000052020-07-02Potential output, output gap and high inflation in Argentina (2007-2015)Campos,Luciano Potential output Output gap Inflation Argentina Structural VARs Abstract: I investigate the causes of the high inflation Argentina experienced from 2007 to 2015. To do so, I estimate the potential output and the output gap using the Blanchard-Quah decomposition for this country and compare it to the estima- tions I obtained for other economies in the region were inflation was kept under control. I find that there are some country specific patterns in Argentina that can explain the high inflation observed during the analyzed years. First of all, Argentinean potential output grew at a slower pace than the rest of the countries, most notably since 2011. Second, there has been in Argentina a positive and increasing output gap since 2007, which was highly correlated with the inflation rate. Last, a comparison between the actual interest rate and the one derived from an ex-post monetary policy rule reveals that monetary policy was too lose in Argentina but that has not been the case in the rest of the countries. The policy implications of these findings are straightforward: Argentina could have reduced inflation by following a monetary rule, just like the rest of the Central Banks in the region seem to have done.info:eu-repo/semantics/openAccessUniversidad de Chile. Departamento de EconomíaEstudios de economía v.47 n.1 20202020-06-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862020000100005en10.4067/S0718-52862020000100005
institution	Scielo Chile
collection	Scielo Chile
language	English
topic	Potential output Output gap Inflation Argentina Structural VARs
spellingShingle	Potential output Output gap Inflation Argentina Structural VARs Campos,Luciano Potential output, output gap and high inflation in Argentina (2007-2015)
description	Abstract: I investigate the causes of the high inflation Argentina experienced from 2007 to 2015. To do so, I estimate the potential output and the output gap using the Blanchard-Quah decomposition for this country and compare it to the estima- tions I obtained for other economies in the region were inflation was kept under control. I find that there are some country specific patterns in Argentina that can explain the high inflation observed during the analyzed years. First of all, Argentinean potential output grew at a slower pace than the rest of the countries, most notably since 2011. Second, there has been in Argentina a positive and increasing output gap since 2007, which was highly correlated with the inflation rate. Last, a comparison between the actual interest rate and the one derived from an ex-post monetary policy rule reveals that monetary policy was too lose in Argentina but that has not been the case in the rest of the countries. The policy implications of these findings are straightforward: Argentina could have reduced inflation by following a monetary rule, just like the rest of the Central Banks in the region seem to have done.
author	Campos,Luciano
author_facet	Campos,Luciano
author_sort	Campos,Luciano
title	Potential output, output gap and high inflation in Argentina (2007-2015)
title_short	Potential output, output gap and high inflation in Argentina (2007-2015)
title_full	Potential output, output gap and high inflation in Argentina (2007-2015)
title_fullStr	Potential output, output gap and high inflation in Argentina (2007-2015)
title_full_unstemmed	Potential output, output gap and high inflation in Argentina (2007-2015)
title_sort	potential output, output gap and high inflation in argentina (2007-2015)
publisher	Universidad de Chile. Departamento de Economía
publishDate	2020
url	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862020000100005
work_keys_str_mv	AT camposluciano potentialoutputoutputgapandhighinflationinargentina20072015
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Potential output, output gap and high inflation in Argentina (2007-2015)

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