Inflation Expectations and Dollarisation in Peru

15 Pages Posted: 3 Dec 2016

See all articles by Renzo Rossini

Renzo Rossini

Central Reserve Bank of Peru

Marco Vega

Central Reserve Bank of Peru

Zenon Quispe

Central Reserve Bank of Peru

Fernando J. Pérez Forero

Central Reserve Bank of Peru

Date Written: November 2016

Abstract

Dollarisation intensifies the challenges posed to monetary policy by the pass-through of the exchange rate to domestic prices. These challenges become even greater when real transactions are dollarised, contaminating the formation of inflation expectations. This introduces non-linearities and asymmetries into the implications of the exchange rate for inflation during larger currency depreciations, in contrast to the case of smaller depreciations and appreciations.

Full Publication: Inflation Mechanisms, Expectations and Monetary Policy

Keywords: Inflation expectations, exchange rate pass-through into prices, SVAR models

JEL Classification: E52, E58, F31

Suggested Citation

Rossini, Renzo and Vega, Marco Antonio and Quispe, Zenon and Pérez Forero, Fernando J., Inflation Expectations and Dollarisation in Peru (November 2016). BIS Paper No. 89r, Available at SSRN: https://ssrn.com/abstract=2872108

Renzo Rossini (Contact Author)

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Marco Antonio Vega

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima Lima 1
Peru

HOME PAGE: http://www.bcrp.gob.pe/

Zenon Quispe

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima 1
Peru

Fernando J. Pérez Forero

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima 1
Peru

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