The Difficult Road of Rising and Falling Inflation in Latin America

Abstract

ABSTRACT The article analyzes problems stemming from inflation and/or the recessions which have affected Latin American countries, namely Argentina and Mexico. It challenges the ambiguous use of the concepts of “high inflation” and “inertial inflation” to characterize the rises in prices in some of these countries, and proposes the additional qualification of “rampant hyperinflation.” Vie transition from the latter to open hyperinflation is seen as linked to sharp falls in productive investments, increases in redistributive conflicts among social groups, inflationary expectations, the lack of credibility of economic policies, and the dollarization phenomenon. The article proposes monetary and/or financial solutions to ending hyperinflationary processes, but also stresses the role of social inequalities and exclusion in this matter.