Working Paper: NBER ID: w10360
Authors: Jos de Gregorio
Abstract: This paper analyzes the role productivity growth had on disinflation in Chile during the 1990s. It argues that productivity growth was key in avoiding the output costs of stabilization in a highly indexed economy. Disinflation from the early 1990s through 1998 was costless. Among the many external and domestic factors that contributed to good macroeconomic performance, which combined simultaneously very high rates of growth and declining inflation, productivity stands high. The simulations presented in this paper illustrate this point.
Keywords: No keywords provided
JEL Codes: E31; E52; E58; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| productivity growth (O49) | disinflation (E31) |
| productivity growth (O49) | output costs (D24) |
| backward-looking wage indexation (J38) | disinflation (E31) |
| productivity growth (O49) | inflation (E31) |