IDEAS home Printed from https://ideas.repec.org/a/sae/envirc/v4y1986i1p31-41.html
   My bibliography  Save this article

Inflation in Latin America, 1970–1980

Author

Listed:
  • J H Cole

    (Department of Economics, Universidad Francisco Marroquín, Zona 10, Guatemala)

Abstract

In explaining the highly varied inflationary experience of sixteen Latin American countries, a simple quantity theory model is shown to be quite robust in the sense that variations in the rate of monetary growth and in the rate of real growth explain practically all of the variation in the rate of inflation. The correlation-causation issue is addressed within the framework of a monetary-base-multiplier model of the determination of monetary growth. It is shown that the larger share of monetary growth in Latin America has been due to changes in the monetary base. Changes in the money multiplier due to changes in reserve requirements were also significant in some cases. It is argued that this evidence, taken jointly with the strong correlation between monetary growth and inflation, implies that the direction of causality runs from money to prices.

Suggested Citation

  • J H Cole, 1986. "Inflation in Latin America, 1970–1980," Environment and Planning C, , vol. 4(1), pages 31-41, March.
    • Handle: RePEc:sae:envirc:v:4:y:1986:i:1:p:31-41
    DOI: 10.1068/c040031
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1068/c040031
    Download Restriction: no
    File URL: https://libkey.io/10.1068/c040031?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Arthur Laffer & David Meiselman, 1975. "The Phenomenon of Worldwide Inflation," Books, American Enterprise Institute, number 725613, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vladimir V. Ilyashenko, 2019. "Interrelation of economic theory and the policy of the Russian state," Journal of New Economy, Ural State University of Economics, vol. 20(5), pages 5-22, December.
    2. Visser, H., 1988. "Austrian thinking on international economics," Serie Research Memoranda 0001, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    3. Weshah Razzak, 2018. "The Purchasing Power Parity Puzzle: An Update," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 61(2), pages 77-104.
    4. Michael R. Darby, 1983. "The United States as an Exogenous Source of World Inflation under the Bretton Woods System," NBER Chapters, in: The International Transmission of Inflation, pages 478-490, National Bureau of Economic Research, Inc.
    5. Darby, Michael R, 1980. "The Monetary Approach to the Balance of Payments: Two Specious Assumptions," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 321-326, April.
    6. Michael R. Darby & James R. Lothian, 1983. "Conclusions on the International Transmission of Inflation," NBER Chapters, in: The International Transmission of Inflation, pages 491-524, National Bureau of Economic Research, Inc.
    7. Michael R. Darby, 1983. "International Transmission of Monetary and Fiscal Shocks under Pegged and Floating Exchange Rates: Simulation Experiments," NBER Chapters, in: The International Transmission of Inflation, pages 162-231, National Bureau of Economic Research, Inc.
    8. Michael R. Darby & James R. Lothian, 1981. "Exchange Rate Systems and Trends in Inflation," UCLA Economics Working Papers 226, UCLA Department of Economics.
    9. Ayesh Ariyasinghe & N. S. Cooray, 2021. "The Nexus Of Foreign Reserves, Exchange Rate And Inflation: Recent Empirical Evidence From Sri Lanka," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 22(1), pages 29-72, March.
    10. Adam Cagliarini & Christopher Kent & Glenn Stevens, 2010. "Fifty Years of Monetary Policy: What Have We Learned?," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Michael Robson (ed.),Reserve Bank of Australia 50th Anniversary Symposium, Reserve Bank of Australia.
    11. Maria O. Kakaulina, 2017. "Visual Representation of Laffer Curve Factoring in Implications of Capital Outflow," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 3(2), pages 103-114.
    12. Michael R. Darby, 1983. "Monetary Policy in the Large Open Economy," NBER Working Papers 1127, National Bureau of Economic Research, Inc.
    13. Razzak, Weshah, 2017. "The PPP Puzzle: An Update," MPRA Paper 80774, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:envirc:v:4:y:1986:i:1:p:31-41. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.