A note on the Pazos-Simonsen mechanism and Kaldor's early research on Latin American inflation

Bibliographic Data

ID7675669
AuthorsLeonardo Vera (0000-0002-5390-6397, Central University of Venezuela, corresponding author)
Year2013
Volume33
Issue2
Pages260-280
Publication date2013-06-01
Open AccessYes
TypeARTICLE
VenueBrazilian Journal of Political Economy (JOURNAL)
Journal identifiersISSN: 0101-3157 • E-ISSN: 1809-4538
PublisherFapUNIFESP (SciELO) (PUBLISHER)
DOI10.1590/s0101-31572013000200004
OpenAlexW2081600285
SciELOS0101-31572013000200004
LanguageEN
Citations received3
References cited18

In contrast with the inflationary finance story, inflation acceleration in Latin America has been explained as the result of the interaction of inflation dynamics and the frequency of wage adjustments. Accordingly, small inflation disturbances are connected with a shift from moderate to high inflation (or beyond to hyperinflation) though a mechanism that makes adjustment intervals in wage contracts endogenous. Rudiger Dornbusch (1986) labeled this process the "Pazos-Simonsen mechanism". In this note we summarize the basic contribution of both Felipe Pazos (1978) and Mario Henrique Simonsen (1983) and find crucial differences between their views on wage dynamics, specifically regarding the endogeneity of the time interval between wage readjustments. A remarkable affinity with Pazos's view on wage dynamics and inflation is found in an early and almost unknown essay written by Nicholas Kaldor in 1957 (inspired in his brief experience in Latin America

Econometrics · Economics · Endogeneity · Hyperinflation · Inflation (cosmology · Keynesian economics · Labour economics · Latin Americans · Macroeconomics · Mechanism (biology · Monetary policy · Political science · Wage · Economic theories and models · Economic Theory and Policy · Law · Monetary Policy and Economic Impact · Philosophy

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