BUDGETARY DEFICIT AND INFLATION: CASE THE PACIFIC ALLIANCE

Résumé 0

The economic global and regional crises have been occurring with greater frequency and duration, leading to economic policy makers see the need to finance budget deficits not only through internal and external financing, but through the issuance primary money, putting at risk inflation. In the specific case of the Pacific Alliance, the group's main objective is to stimulate growth and economic development of the countries of the region. In this regard and considering that the four countries of the Pacific Alliance have significant fiscal deficits, it is pertinent to establish whether inflation is affected by the ways in which governments are funding these budget deficits. The methodology used was the estimation of an econometric model with standardized variables for each of the four countries and finally a pooled data model was estimated. It can be concluded according to the results of the models estimated that the ways to finance the fiscal deficit in Chile, Colombia, Mexico and Peru have no effect on inflation levels.