An approach to the causes of inflation in Argentina

GUIDO ZACK; MARTÍN MONTANÉ; MATIAS KULFAS

Buenos Aires

Workshop; Workshop on Macroeconomics, Development and Structural Change; 2016

Research Institute for Development, Growth and Economics (RIDGE)

Argentina has a very long tradition of high inflation. Indeed, since 2005 price variation has been rising until it exceeded 40% in the first half of 2016. The main causes of this process must be known to suggest a mitigating policy. In the present article a SVAR ? X model is made for the 2003 ? 2015 period in which inflation, as well as several monetary, exchange rate and salaries endogenous variables are included, and some international prices are included as exogenous variables. The results show that two third of the inflation is explained by inertia and the rest is explained in similar proportions by the monetary supply, the exchange rate and the wages.