Flexible exchange rate experience in Peru has been accompanied by frequent official interventions in the form of foreign exchange purchases or sales. Monetary authority pursues reducing excess volatility in the exchange rate through its direct intervention. However, in recent years, this...

We established, via finite sample simulations, that additive outliers have important effects on the exact size of the statistic for testing for Granger causality. An empirical application illustrates the effects of neglecting for additive outliers.

A dynamic factorial decomposition model of inflation is estimated using Peruvian monthly data for January 1995--July 2008. This model allows the identification of changes in three relevant inflation components: idiosyncratic relative prices, aggregate relative prices and absolute prices....