Inflation and its predictability in high‐inflation Latin American countries: Some evidence on two competing hypotheses – a research note Journal Article uri icon



  • AbstractIn this paper we argue that the relationship between inflation and the accuracy of inflation predictions in high‐inflation countries, such as those in Latin America, is ambiguous. Several empirical studies have measured a positive link between the level of inflation and its variability, suggesting that inflation uncertainty rises with the level of inflation. Others have noted, however, that variability measures may not capture uncertainty and that the evidence on a positive relationship between inflation and its uncertainty is weak. In fact, the relationship could, in principle, be negative and we present here some evidence from Latin America that supports partially this latter view. The reason for the potentially negative effect of inflation on inflation uncertainty is that in a high‐inflation environment economic agents invest more resources in generating accurate inflation forecasts and in developing instruments capable of reducing the uncertainty costs of high inflation. In general, however, there is no clear relationship between inflation and its predictability.

publication date

  • July 1, 1990

has restriction

  • closed

Date in CU Experts

  • July 11, 2014 12:06 PM

Full Author List

  • Maskus KE; Pourgerami A

author count

  • 2

Other Profiles

International Standard Serial Number (ISSN)

  • 0954-1748

Electronic International Standard Serial Number (EISSN)

  • 1099-1328

Additional Document Info

start page

  • 373

end page

  • 379


  • 2


  • 3