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Determinants of Inflation in Argentina, 2004-2022

Author

Listed:
  • Pablo de la Vega

    (Fundar, Argentina and Institute of Economic Research (UNLP), Argentina)

  • Guido Zack

    (Fundar, Argentina; Interdisciplinary Institute of Political Economy (UBA–CONICET), Argentina and Center for Macroeconomic Research for Development (EEyN-UNSAM), Argentina)

  • Jimena Calvo

    (Fundar, Argentina)

  • Emiliano Libman

    (Fundar, Argentina and National Council for Scientific and Technical Research (CONICET), Argentina)

Abstract

This paper analyzes the empirical relationship between the inflation rate and its proximate determinants in Argentina, using quarterly data during the period 2004-2022 and a vector error correction modeling approach. Unlike previous literature, this article is based on a theoretical scheme that motivates the inclusion of variables that are expected to contribute to explaining inflation, which allows reducing the risk of omitting relevant variables and formalizing key mechanisms. Inference is performed through Granger causality analysis, impulse response functions and analysis of variance of forecast errors. The results suggest that an anti-inflationary plan for Argentina should take into consideration both the greater relevance of the inertial components, the exchange rate and the interest rate in the short-term dynamics of the price level, as well as the long-term relationship between prices, interest rate and level of activity.

Suggested Citation

  • Pablo de la Vega & Guido Zack & Jimena Calvo & Emiliano Libman, 2024. "Determinants of Inflation in Argentina, 2004-2022," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(83), pages 70-96, May.
    • Handle: RePEc:bcr:ensayo:v:1:y:2024:i:83:p:70-96
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    Citations

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    Cited by:

    1. Ordoñez Lucas Sebastián, 2024. "The transmission of Supply Shocks to inflation: The case of Argentina (2004-2023)," Asociación Argentina de Economía Política: Working Papers 4750, Asociación Argentina de Economía Política.

    More about this item

    Keywords

    Argentina; inflation; inflation determinants; VEC models;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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