Abstract:
In this paper we investigate the role of macroeconomic performance,
mainly in terms of rates of inflation, in determining economic growth in
four Latin American countries which suffered hyperinflationary bursts
in the 1980s and early 1990s, but that also differ in terms of develop-
ment levels. The data set covers the period between 1970 and 2007,
and the empirical results, based on panel time-series data and analysis,
confirm the anecdotal evidence which suggests that inflation has had a
detrimental effect to growth in the region. All in all, we highlight the
fact that excessive inflation has clearly offset the Mundell-Tobin effect
and consequently the high costs that inflation has had on economic
activity in the region.
