Dealing with cost-push inflation in Latin America: Multi-causality in a context of increased openness and commodity price volatility

PANIGO, DEMIAN TUPAC; ABELES, MARTIN

Review of Keynesian Economics

Edward Elgar Publishing

Año: 2015 vol. 3 p. 517 - 535

2049-5323

Despite recognizing the exogenous, cost-push nature of recent inflationary pressures in Latin America, plus the difficulties faced by monetary authorities in dealing, under such circumstances, with internal and external disequilibria simultaneously, intellectual attention in policy circles remains focused on demand-side issues and policy instruments. We develop an eclectic model that has the potential to nest demand-side elements, but focuses on cost-push factors distributional conflict and propagation mechanisms as typically addressed by the post-Keynesian-structuralist tradition. In addition to shedding some light on the nature of inflationary pressures as experienced in Latin American countries during the recent commodity boom -in particular South American commodity exporting economies-, our chief goal is to portray the policy and instrumental trade-offs faced by policy makers themselves. By bringing in unconventional policy devices into the model (such as direct interventions in commodity markets) we hope to broaden the scope of the conventional macroeconomic policy instruments.