Abstract

GONZALES MARTINEZ, Rolando. Nicaragua: Threshold inflation, economic growth and new monetary policy after the international crisis. Ens. polit. econ. [online]. 2015, vol.33, n.spe76, pp.31-43. ISSN 0120-4483.  https://doi.org/10.1016/j.espe.2015.01.003.

After the international crisis, it was suggested that inflation targets should be raised in order to allow more space to monetary policies during contractionary product times. The present study proposes that the limit to raise the inflation target should be threshold inflation, defined as the rate above which price variability is detrimental to economic growth. Bayesian methods are proposed to estimate this threshold. Results suggest that over the threshold there is a negative and statistically significant relationship between inflation and variations in the product.

Keywords : Bayesian methods; Inflation threshold; Central Bank policies.

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