Abstract

MORA BARRENECHEA, Mauricio. A review of the Phillips Curve in Bolivia. rlde [online]. 2021, n.35, pp.159-188. ISSN 2074-4706.

This paper conducts exploratory empirical research on the status of the slope of the Phillips curve for the Bolivian economy with quarterly data, for the period between 1992Q2-2019Q4, using the Generalized Method of Moments (GMM) with recursive regressions. For this purpose, an output gap consistent with economic theory was estimated. The results show that the output gap has a positive and significant effect on inflation in the short term, so the Phillips Curve does hold. Furthermore, the link between inflation and the business cycle has been strengthened in recent years. Although inflationary inertia is the main determinant in price formation, the importance of expectations increased over time. The effect of the external sector decreased in the last five years.

Keywords : Phillips Curve; Generalized Method of Moments; recursive regressions.

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