Working Paper: NBER ID: w8748
Authors: Ariel Burstein; Martin Eichenbaum; Sergio Rebelo
Abstract: This paper studies the behavior of inflation after nine large post-1990 contractionary devaluations. A salient feature of the data is that inflation is low relative to the rate of devaluation. We argue that distribution costs and substitution away from imports to lower quality local goods can account quantitatively for the post-devaluation behavior of prices.
Keywords: No keywords provided
JEL Codes: F31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| large devaluations (F31) | low inflation rates (E31) |
| large devaluations (F31) | rise in distribution costs (D39) |
| rise in distribution costs (D39) | low inflation rates (E31) |
| large devaluations (F31) | shift in consumer preferences from imported goods to lower quality local alternatives (F61) |
| shift in consumer preferences from imported goods to lower quality local alternatives (F61) | low inflation rates (E31) |