Why Have so Many Disinflations Succeeded?

Contemporary Economic Policy, Vol. 26, Issue 1, pp. 89-106, January 2008

18 Pages Posted: 18 Jan 2008


Why is it that the achievements of some disinflations from low and moderate peaks are long-lived, whereas in others the gains in the inflationary front dissipate quickly? Based on an index of the sustainability of disinflations, various competing explanations of what determines sustainability are tested. Three factors, potentially at the top of the list of many researchers, are shown to be insignificant: oil shocks, fiscal policy, and inflation targeting. Nevertheless, other important features such as the exchange rate regime, achieving low inflation rates during the disinflation, and food price shocks are shown to be important variables driving the sustainability records.

JEL Classification: E31, E32, E52, E58, F41

Suggested Citation

Hofstetter, Marc, Why Have so Many Disinflations Succeeded?. Contemporary Economic Policy, Vol. 26, Issue 1, pp. 89-106, January 2008, Available at SSRN: https://ssrn.com/abstract=1084205 or http://dx.doi.org/10.1111/j.1465-7287.2007.00056.x

Marc Hofstetter (Contact Author)

Universidad de los Andes ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311

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