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High Inflation, Price Stability and Hysteresis Effect: Evidence from Argentina

Author

Listed:
  • Carlos Dabús

    (CONICET IIESS - Departamento de Economía, UNS)

  • Fernando Delbianco

    (CONICET IIESS - Departamento de Economía, UNS)

  • Andrés Fioriti

    (Department of Economics, University of Warwick)

Abstract

We estimate a Currency Substitution model for 1980-2013 periods in Argentina. Following the Mongardini and Mueller (2000) specification, our paper studies the persistence of lower demand of local money, or dollarization, by including a hysteresis variable. By applying an ARDL (Auto Regressive Distributed Lags) model, we found a clear ratchet effect, which implies that in the short run agents do not adjust to changes on the fundamentals, leading to a significant hysteresis variable.

Suggested Citation

  • Carlos Dabús & Fernando Delbianco & Andrés Fioriti, 2016. "High Inflation, Price Stability and Hysteresis Effect: Evidence from Argentina," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 31(1), pages 59-73, April.
    • Handle: RePEc:ila:anaeco:v:31:y:2016:i:1:p:59-73
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    Citations

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    Cited by:

    1. Miranda-Zanetti, Maximilano & Delbianco, Fernando & Tohmé, Fernando, 2019. "Tampering with inflation data: A Benford law-based analysis of national statistics in Argentina," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 525(C), pages 761-770.
    2. Angela Ifeanyi Ujunwa & Augustine Ujunwa & Emmanuel Onah & Nnenna Georgina Nwonye & Onyedikachi David Chukwunwike, 2021. "Extending the determinants of currency substitution in Nigeria: Any role for financial innovation?," South African Journal of Economics, Economic Society of South Africa, vol. 89(4), pages 590-607, December.

    More about this item

    Keywords

    Hysteresis Effect; Money Demand; Currency Substitution;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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