Inflation targeting, disinflation, and debt traps in Argentina

This paper highlights the role of external indebtedness and the presence of inflationary inertia in order to assess the effectiveness and sustainability of inflation targeting during disinflation episodes. As the recent Argentinian experience illustrates, a sluggish inflation rate and a significant...

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Detalles Bibliográficos
Autores principales: Libman, Emiliano, Palazzo, Gabriel
Formato: Artículo
Lenguaje:en_US
Publicado: 2019
Materias:
INFLACION
DEUDA EXTERNA
Acceso en línea:http://repositorio.cedes.org/handle/123456789/4515
https://doi.org/10.4337/ejeep.2019.00050
Aporte de:
Respositorio Digital CRIS del CEDES - Centro de Estudios de Estado y Sociedad de Centro de Estudios de Estado y Sociedad (CEDES)
id I61-R167123456789-4515
record_format dspace
institution Centro de Estudios de Estado y Sociedad (CEDES)
institution_str I-61
repository_str R-167
collection Respositorio Digital CRIS del CEDES - Centro de Estudios de Estado y Sociedad
language en_US
orig_language_str_mv en_US
topic INFLACION
DEUDA EXTERNA
spellingShingle INFLACION
DEUDA EXTERNA
Libman, Emiliano
Palazzo, Gabriel
Inflation targeting, disinflation, and debt traps in Argentina
topic_facet INFLACION
DEUDA EXTERNA
description This paper highlights the role of external indebtedness and the presence of inflationary inertia in order to assess the effectiveness and sustainability of inflation targeting during disinflation episodes. As the recent Argentinian experience illustrates, a sluggish inflation rate and a significant current-account deficit may make the stabilization process difficult. To illustrate the point, we build a model that shows that, when inflation adjusts fast, the target may be achieved without building too much external debt. But if inflation adjusts slowly, an excessive build-up of external debt could lead to an increase in the risk premium, a sudden shortage of foreign exchange, and the eventual collapse of the inflation-targeting regime.
format Artículo
author Libman, Emiliano
Palazzo, Gabriel
author_facet Libman, Emiliano
Palazzo, Gabriel
author_sort Libman, Emiliano
title Inflation targeting, disinflation, and debt traps in Argentina
title_short Inflation targeting, disinflation, and debt traps in Argentina
title_full Inflation targeting, disinflation, and debt traps in Argentina
title_fullStr Inflation targeting, disinflation, and debt traps in Argentina
title_full_unstemmed Inflation targeting, disinflation, and debt traps in Argentina
title_sort inflation targeting, disinflation, and debt traps in argentina
publishDate 2019
url http://repositorio.cedes.org/handle/123456789/4515
https://doi.org/10.4337/ejeep.2019.00050
work_keys_str_mv AT libmanemiliano inflationtargetingdisinflationanddebttrapsinargentina
AT palazzogabriel inflationtargetingdisinflationanddebttrapsinargentina
bdutipo_str Repositorios
_version_ 1764820545223786497

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