TY - JOUR
T1 - Regional inflation spillovers and monetary policy design
AU - Quineche Uribe, Ricardo
N1 - Publisher Copyright:
© 2025 The Society for Policy Modeling.
PY - 2025/11
Y1 - 2025/11
N2 - Should emerging market central banks anchor inflation targeting to capital cities or national aggregates? Peru's Central Reserve Bank has achieved Latin America's lowest inflation (2.96 % average annual between 2001 and 2024) using Lima's CPI—an uncommon choice raising equity concerns. Using frequency-domain spillover analysis on monthly data (2002–2024) across nine regions, we find Lima dominates long-run transmission (NET: 27.23 pp) but absorbs short-run agricultural shocks. We recommend maintaining Lima-centered targeting while integrating upstream food-region signals into forecasts and developing crisis-adaptive frameworks. These findings validate Peru's approach and provide actionable guidance for spatially heterogeneous inflation-targeting economies.
AB - Should emerging market central banks anchor inflation targeting to capital cities or national aggregates? Peru's Central Reserve Bank has achieved Latin America's lowest inflation (2.96 % average annual between 2001 and 2024) using Lima's CPI—an uncommon choice raising equity concerns. Using frequency-domain spillover analysis on monthly data (2002–2024) across nine regions, we find Lima dominates long-run transmission (NET: 27.23 pp) but absorbs short-run agricultural shocks. We recommend maintaining Lima-centered targeting while integrating upstream food-region signals into forecasts and developing crisis-adaptive frameworks. These findings validate Peru's approach and provide actionable guidance for spatially heterogeneous inflation-targeting economies.
KW - Emerging markets
KW - Inflation targeting
KW - Monetary policy design
KW - Regional spillovers
UR - https://www.scopus.com/pages/publications/105025118799
UR - https://www.mendeley.com/catalogue/42ab1aff-02fe-3d17-9df7-c80cb09877d1/
U2 - 10.1016/j.jpolmod.2025.10.003
DO - 10.1016/j.jpolmod.2025.10.003
M3 - Article in a journal
SN - 0161-8938
JO - Journal of Policy Modeling
JF - Journal of Policy Modeling
ER -