The work consists of two central axes. The first is of a methodological nature; Taking into account the characteristics of the Bolivian economy, the decomposition of inflation by main components is developed and a measure of underlying inflation is proposed, implemented and validated econometrically. The second consists of an application of the methodology to identify the structural characteristics of inflation in Bolivia, including an analysis of prices at the current juncture. An X-ray of inflation is obtained during the current period of price stability, consolidated in 1993 when inflation becomes single digit; changes in the structure of inflation stand out, with basic services as the most inflationary component of the economy, on the one hand, and the systematic deterioration of relative prices of non-industrial agricultural products, on the other. This radiograph includes the characterization of the long-term relationship between headline and core inflation as cointegrated, in addition to the short-term relationship expressed as zero-mean stationarity of the highly volatile non-core inflation with respect to stable core inflation. The empirical evidence revealed in this study contributes to a better understanding of the origin of social conflicts in the post-capitalization years and the current protest movements that emerged in the rural area mainly.
 
References about the project: CIEE Director
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