Inflation,Inflation Variability, and Output Performance. Venezuela 1951-2002

Olivo, Victor (2014): Inflation,Inflation Variability, and Output Performance. Venezuela 1951-2002.

Abstract

This paper explores the relationship between the level of inflation, inflation variability, and output performance in the Venezuelan economy for the period 1951-2002. The paper examines the mechanism through which higher inflation translates into lower non-oil real GDP growth. We find empirical evidence that supports Friedman's (1977) contention that higher inflation produces more inflation volatility /uncertainty that leads to relative price variability that in turn, is harmful for the proper functioning of the market as the best system for allocating resources.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, inflation variability,inflation uncertainty, output growth, trend inflation, trend money growth, relative prices
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E59 - Other

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