Inflation Dynamics in the Dominican Republic

21 Pages Posted: 12 Feb 2006

See all articles by Oral H. Williams

Oral H. Williams

International Monetary Fund (IMF)

Olumuyiwa Adedeji

International Monetary Fund (IMF)

Date Written: February 2004

Abstract

This paper investigates the determinants of inflation in the Dominican Republic during 1991-2002, a period characterized by remarkable macroeconomic stability and growth. By developing a parsimonious and empirically stable error-correction model using quarterly observations, the paper finds that inflation is explained by changes in monetary aggregates, real output, foreign inflation, and the exchange rate. Long-run relationships in the money and traded-goods markets are found to exist, but only the disequilibrium from the money market exerts a significant impact on inflation.

Keywords: Inflation, Cointegration, Error-Correction

JEL Classification: E5, F41

Suggested Citation

Williams, Oral H. and Adedeji, Olumuyiwa, Inflation Dynamics in the Dominican Republic (February 2004). IMF Working Paper No. 04/29. Available at SSRN: https://ssrn.com/abstract=878852

Oral H. Williams (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Olumuyiwa Adedeji

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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