Inflation Determinants in Paraguay: Cost Push versus Demand Pull Factors

Author/Editor:

Brieuc Monfort ; Santiago Peña

Publication Date:

December 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This article uses two analytical methodologies to understand the dynamics of inflation in Paraguay, the mark-up theory of inflation and the monetary theory of inflation. We also study the impact of different monetary aggregates. The results suggest that monetary factors, in particular currency in circulation, play a major role in determining long-run inflation, while foreign prices, in particular from Brazil, or some food products have a large impact on the short-term dynamics of inflation. Wage indexation may also contribute to locking up price increases.

Series:

Working Paper No. 2008/270

Subject:

Consumer price indexes Currencies Demand for money Exchange rates Inflation

English

Publication Date:

December 1, 2008

ISBN/ISSN:

9781451871289/1018-5941

Stock No:

WPIEA2008270

Pages:

41

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