DABUS Carlos Dario
A Non-Linear Inflation-Relative Price Variability Relationship: Evidence from Latin America
MARÍA A. CARABALLO POU, CARLOS DABÚS Y DIEGO CARAMUTA
Documentos de trabajo de centrA
Lugar: Sevilla; Año: 2006 p. 1 - 1
This paper presents evidence on a non linear inflation-relative prices relationship in three Latin American countries with very high inflation experiences: Argentina, Brazil and Peru. In particular, we find a non concave relation at higher inflation regimes, i. e. when inflation rate surpasses certain threshold. This non concavity is mainly explained by the component of unexpected inflation, which suggests that the uncertainty associated to episodes of extreme inflation can be particularly relevant to understand the non neutrality of inflation in extreme price instability.