Openness And Inflation: Evidence From The Seven Largest Latin American Economies

Abstract

The variables of Fisher’s Equation of Exchange were estimated as rates of growth for the economies of Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. These estimations suggest that between 1995 and 2007 for Brazil, and between 1991 and 2007 for the other nations, some inflation failed to materialize.  In per-year terms, the missing inflation went from a minimum of 0.9 percentage points in Colombia and Chile, to a maximum of 7.5 percentage points in Venezuela. The missing inflation was attributed to the growing openness of the economies of these nations.