This paper estimates a medium-term forecasting model for the headline inflation of Costa Rica, utilizing disaggregate data from the components of the Consumer Price Index (CPI). The period used for the estimation is characterize by a process of reduction of inflation and stabilized around the...

This paper addresses the issue of moral hazard associated with the use of short-term foreign borrowing by the financial intermediaries in Costa Rica. This situation arises from the implicit insurance that the authorities confer; given the expectation that banks have about central bank incentives...

This document analyzes different measures of international inflation and their influence on the domestic inflation. We found that these measurements have a statistical significant effect on the behavior of domestic inflation. Therefore the evolution of the international inflation must be...

This paper develops variants of the model suggested by Glick and Rogoff (1996) and VAR models to analyze short term effects of the main determinants for the current account in Costa Rica. Empirical evidence suggests that, lagged investment, government’s primary surplus, terms of trade,...

This paper estimates a coefficient of pass through for Costa Rica and tries to determine the importance of some factors that had been pointed out by several empiric studies as probable determinants (GDP gap, real exchange rate deviation from equilibrium, economy openness, and inflationary lag)....

This paper estimates Costa Rica’s Equilibrium Real Exchange Rate (ERER) using quarterly data from 1991 to 2003. Cointegration and Unit Root tests are used to determine if the Purchasing Power Parity (PPP) applies. The results show that PPP does not stand. The ERER is an unobservable variable;...

This document illustrates the inflows of capital to a small and open economy such as Costa Rica using the Metzler Diagram. The simplicity of the Metzler Diagram provides clarity to understand the motivation for the inflows of capital, as well as a framework to analyze the policy options...

The purpose of this document is to discuss, from the monetary point of view, the long run effects of a fixed exchange rate regime on prices and interest rates. We develop a partial equilibrium model for the monetary sector of a small open economy in which we link fixed exchange rate to the...

This paper estimates short run and long run coefficients of exchange rate pass through in to the prices of tradable and non-tradable goods in Costa Rica. The coefficients are estimated by OLS. A VAR analysis is conducted in order to estimate the dynamic process between exchange rate and...

This paper modifies the standard Hodrick Prescot Filter in order to reduce the problem of misleading predictive outcome when used with updated information. The modification allow for a more accurate estimation of output gap, as well as the introduction of confidence intervals that permit a...