DABUS Carlos Dario
Inflationary Regimes and Relative Price Variability: Evidence from Argentina
JOURNAL OF DEVELOPMENT ECONOMICS
Lugar: Amsterdam; Año: 2000 vol. 62 p. 535 - 535
This paper explores the relation between inflation and relative prices for Argentina over the 1960-1990 period.The study is carried out in the framework of four inflationary regimes: moderate, high, very high and hyperinflation.The evidence favours the view of non-neutrality of inflation: relative price variability is increasing in inflation, but decreasing when inflation climbs smoothly and gradually. The inflation rate and its volatility are the main explanatory factors of price variability, while the effects of expected and unexpected inflation are ambiguous. In contrast to previous consensus, we find that fix price variability is always increasing in inflation, and particularly in extreme inflation. In addition, the relation between inflation and relative prices exhibits structural changes across different levels of inflation.