Dynamics of inflation and the gap product in Nicaragua

Authors

DOI:

https://doi.org/10.5377/reice.v7i13.8180

Keywords:

Inflation, gap, Inelastic, VAR, multiple regression.

Abstract

The purpose of the article is to determine the impact of the output gap on the level of inflation in Nicaragua for the period 1992-2018. For this purpose, two econometric models were used; the first of multiple regression and the second an autoregressive vector (VAR). The results suggest that the output gap impacts inflation at 0.52 percent, and it was determined that fluctuations in the output gap can affect the usual level of prices per year and then this effect is diluted. Therefore, it is concluded that the aggregate supply approach is useful in explaining the inflationary dynamics in Nicaragua and that the inflation-output gap relationship is characterized by an inelastic condition.

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Author Biographies

Oliver David Morales Rivas, National Autonomous University of Nicaragua, Managua

Professor of the Department of Economics, National Autonomous University of Nicaragua, Managua

Ricardo José Canales Salinas, National Autonomous University of Nicaragua, Managua

Professor of the Department of Economics, National Autonomous University of Nicaragua, Managua

References

Claus, I., Conway, P., y Scott, A. (2000). The output gap: measurement, comparisons and assessment. Number 44. Reserve Bank of New Zealand.

Giorno, C., Richardson, P., Roseveare, D., y Van den Noord, P. (1995). Potential output, output gaps and structural budget balances. OECD Economic Studies, 24(1):167–209.

Mankiw, G. (1998). Macroeconomics. Third edition Mc graw hill

Morales Rivas, O., y Flores Méndez, L. (2018). Estimación del Balance Fiscal Estructural en Nicaragua Para el Periodo 1994 - 2016. REICE: Revista Electrónica De Investigación En Ciencias Económicas, Vol. 5, No. 10, julio - diciembre 2017. https://doi.org/10.5377/reice.v5i10.5534

Segura,Rodríguez, C. y Vásquez Carvajal, J. (2011). Estimación del parámetro de suavizamiento del filtro de Hodrick y Prescott para Costa Rica. Banco Central de Costa Ricas.

Urbina J. (2015). Producto Potencial y Brecha del Producto en Nicaragua. Revista de Economía y Finanzas. Vol. 2. Banco Central de Nicaragua. ISSN 2313-8696

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Published

2019-08-09

How to Cite

Morales Rivas, O. D., & Canales Salinas, R. J. (2019). Dynamics of inflation and the gap product in Nicaragua. Revista Electrónica De Investigación En Ciencias Económicas, 7(13), 156–167. https://doi.org/10.5377/reice.v7i13.8180

Issue

Vol. 7 No. 13 (2019): Enero- Junio

Section

Research Articles

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