Propagation of inflationary shocks in Costa Rica
Keywords:
Propagation, inflation, shocks, structural VAR, JEL Classification, C32, E31Abstract
Abstract
We present an estimation of propagation effects of inflationary shocks to groups and specific products of the CPI using a SVAR framework. We found significant propagation effects for 6 out of the 12 groups of the CPI, which together account for 72% of the basket. These groups include those related to food, home apparel and housekeeping services and transportation. The estimations suggest that shocks to Food and Non-Alcoholic Beverages and to fuels are passed through entirely to the rest of the CPI basket. The majority of the most important propagation effects occur between 6 and 10 months after the shocks. This includes propagation effects stemming from shocks to fuels, products with regulated price, tradables and the IPPI index.
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