Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/227899
Authors: 
Martins, Guilherme Klein
Skott, Peter
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 2020-08
Abstract: 
This paper presents a model of inflation in developing economies and makes uses of it to evaluate macroeconomic policy in those countries. We see cross-sectoral interactions between demand and supply side forces as central and show that the standard macroeconomic policy recommendations of inflation targeting and balanced budgets (i) increase volatility by amplifying external shocks and (ii) can lead to premature deindustrialization. The analysis applies to economies with marked underemployment, a central feature of developing and emerging countries. The recent Brazilian experience is used to illustrate the argument.
Subjects: 
inflation targeting
Dutch disease
overvaluation
commodities boom
Washington consensus
JEL: 
E63
O23
O14
Document Type: 
Working Paper

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