Victor Brajer

Document Type

Working Paper

Publication Date



The existence of inflation has long been one of the great concerns of economic theory. In the 1970s, however, the phenomenon of rising prices became a problem of global dimensions for the first time. Industrial and developing nations alike were carried along by the wave of increasing prices, and even nations with long traditions of price stability experienced high domestic inflation rates. Costa Rica is an example of a nation with such a tradition. Having long enjoyed an atmosphere of political and economic stability quite atypical of the Latin American region, Costa Rica suddenly found itself facing double-digit inflation rates i n the mid-1970s, and close to triple-digit rates in the early 1980s. This study reviews Costa Rica's experience with inflation over the past twenty-five years and evaluates alternative explanations of its causes. Focusing primarily on the inflationary experience of the mid-1970s, and the inflationary "explosion" that took place in the early 1980s, a variety of inflation models are formulated and tested empirically as they apply to Costa Rica.


Latin American and Iberian Institute

Language (ISO)



Inflation, Economy, Costa Rica