NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Short-Run Relation Between Inflation and Growth in Latin America

Sebastian Edwards

NBER Working Paper No. 1065 (Also Reprint No. r0457)
Issued in 1983
NBER Program(s):   ITI   IFM

This paper investigates the relationship between monetary policy and growth in five Latin American countries (Brazil, Chile, Colombia, Mexico and Peru).The analysis focuses on the effects of expected and unexpected monetary growth on output, and explicitly incorporates the relationship between fiscal deficits and money creation in these countries. Open economy considerations are explicitly introduced into the analysis.Contrary to previous findings (Hanson, 1980), the results obtained in this paper indicate that these countries exhibit very different behavior with respect to the relationship between unexpected money and growth: While for Chile and Brazil no evidence was found of a positive relation between monetary policy (expected or unexpected) and growth, for Colombia, Mexico and Peru a positive relationship was found between unexpected monetary policy and growth.

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Document Object Identifier (DOI): 10.3386/w1065

Published: Edwards, Sebastian,. "The Short-Run Relation Between Inflation and Growth in Latin America: Comment." The American Economic Review, Vo. 73, No. 3,(June 1983), pp. 477-482. The American Economic Assoc.

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