inflation is determined by (1) the gap between the actual real exchange rate and the exchange rate that clears the market for … non-traded goods, and (2) persistence effects of past inflation. Using the model, I decompose the excess of Mexican … inflation in 1988-94 over peso-adjusted international inflation rates--that is, the real appreciation of the peso--into that …

This paper shows that the response of inflation to external shocks is very different when the authorities target the … would have no effect on the steady-state inflation rate under a fixed exchange rate are either inflationary or deflationary …

Exchange rate-based inflation stabilization (ERBS) policies are associated with a boom-recession cycle in economic … forward-looking pricing behavior without inflation stickiness and attribute the slow decline in inflation to the consumption …-looking components of inflation weigh approximately equally in pricing behavior, and therefore, that inflation is partially sticky. The …