Inflation volatility and economic growth in Bolivia: a regional analysis

Abstract

This paper analyses the effects of inflation and its volatility on Gross Domestic Product (GDP) per capita for the regions of Bolivia over the period 1989–2011. Results show the existence of a positive relationship with inflation but a negative one with respect to volatility. Moreover, we identify a threshold for volatility and inflation. Our conclusions imply that economic agents are more tolerant to relatively high levels of inflation than to high inflation volatility.