This paper examines the dynamics of the social loss function (loss of purchasing power of society) for the Mexican case during the period 2000-2011. To do this, based on the augmented Phillips curve, the inverse relationship between inflation and unemployment is empirically confirmed. Subsequently, in an econometric exercise the unemployment gap, the inflation persistency and the unemployment function are estimated. It is shown that there is empirical evidence that discretionary policies accompanied by a greater aversion to inflation by the public produce better results than fixed-rule policies, as this leads to lower levels of social loss. [ABSTRACT FROM AUTHOR]
Published
2014
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