High inflation, price stability and hysteresis effect: Evidence from Argentina

We estimate a Currency Substitution model for 1980-2013 periods in Argentina. Following the Mongardini and Mueller (2000) specification, our paper studies the persistence of lower demand of local money, or dollarization, by including a hysteresis variable. By applying an ARDL (Auto Regressive Distri...

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Detalles Bibliográficos
Autores principales: Dabus,Carlos, Delbianco,Fernando, Fioriti,Andres
Lenguaje:English
Publicado: ILADES. Universidad Alberto Hurtado. 2016
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Acceso en línea:http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-88702016000100004
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Sumario:We estimate a Currency Substitution model for 1980-2013 periods in Argentina. Following the Mongardini and Mueller (2000) specification, our paper studies the persistence of lower demand of local money, or dollarization, by including a hysteresis variable. By applying an ARDL (Auto Regressive Distributed Lags) model, we found a clear ratchet effect, which implies that in the short run agents do not adjust to changes on the fundamentals, leading to a significant hysteresis variable.