Regional Phillips Curve in a Small Open Economy: Evidence from Bolivia
This paper estimates the relationship between inflation and the output gap at the departmental level in Bolivia, using quarterly data for the period 1993–2019. Despite substantial subnational variation, the association between inflation and economic slack is small and statistically indistinguishable from zero. This result holds across multiple specifications, including estimators that control for common factors and allow for regional heterogeneity. Even when separating tradable and non-tradable inflation, the relationship remains weak. The evidence suggests that inflation dynamics in Bolivia exhibit a strong common component and limited sensitivity to regional cyclical conditions, with important implications for understanding monetary policy transmission in a context of elevated inflation and institutional constraints.
Feb 27, 2026
Regional Phillips Curve in a Small Open Economy: Evidence from Bolivia
Feb 25, 2026