What's the macro plan? What's the macro plan????? Arghh, what's the macro-plan?
Yup, lots of inflation and not so suppressed at the moment. I'd bet
on devaluation soon (were it not for some folks who think that this
will increase inflation--- given the extent of imports). Posted the
following here on 6 December:
I used the term there as shorthand to suggest the situation in which
booming oil revenues are generating strong inflationary tendencies
which the government (with a fixed exchange rate and currency
controls) has deliberately tried to suppress by maintaining an
official exchange rate well below street market rates. This has had
negative effects upon the government's stated policy of fostering
endogenous development. (In fact, there is an annual devaluation of
the currency, and I'm certain, despite the annual denials. that will
occur again early in the new year but it may need to be larger than
in the past.) Meanwhile, there is no shortage at all of supply side
initiatives-- in agriculture, industry, communications, RRs, etc
with massive imports of means of production occurring from China,
Iran and you name it by the state. But, supply-side initiatives take
time for fruition and meanwhile the overvalued bolivar has meant
that some emerging import-substitute operations have been squelched
because of how much cheaper the imports are (which was, of course,
Venezuela's experience in the 70s). Yes, indeed, there are a lot of
options but it doesn't mean the government (which is to say, the
Economic Cabinet) has been actively pursuing them. You'll note that
my original post said: 'there is a problem with an over-valued
currency that goes against the policy of endogenous development
promoted by the government. We have a problem of two goals and one
policy instrument being used.' The problem, I was suggesting, was
trying to use only one policy instrument-- the exchange rate.
Current street rate (influenced by recent announcements) is 4000 Bs
to the usd; official rate remains 2,150.
michael
At 17:19 04/02/2007, you wrote:
these are standard results from controls. What is happening with
demand? is there a lot of suppressed inflation (suppressed by
controls)? if so, it just pop up again. What is the macro plan in
Venezula?
On 1/31/07, Yoshie Furuhashi <[EMAIL PROTECTED]> wrote:
<http://www.bloomberg.com/apps/news?pid=20601087&sid=aEQjUNgrqIpU&refer=home>
Chavez Policies Fuel Venezuelan Shortages, Driving Up Inflation
By Alex Kennedy
. . . . . . . . . . . . . . . . . . . .
The 52-year-old Chavez, who was re-elected to a six-year term on Dec.
3, has used controls to combat inflation since 2003, when he froze the
price of basic foods, such as rice and meat, after a two-month
national strike.
Setting Prices
Since then, he's capped phone and electricity rates, and most
recently, set prices for 45 construction materials after the cost of
some products, such as drywall, doubled in 2006, Irwin Perret,
president of the Venezuelan Construction Association, said in an
interview.
Government-controlled prices account for about half the country's
consumer price index. Venezuela's consumer prices climbed 1.8 percent
in December from the previous month, after a 1.3 percent gain in
November, the central bank said yesterday.
Michael A. Lebowitz
Professor Emeritus
Economics Department
Simon Fraser University
Burnaby, B.C., Canada V5A 1S6
Currently based in Venezuela.
NOTE NEW PHONE NUMBERS
Can be reached at
Residencias Anauco Suites
Departamento 601
Parque Central, Zona Postal 1010, Oficina 1
Caracas, Venezuela
(58-212) 573-6333, 571-1520, 571-3820 (or hotel cell: 0412-200-7540)
fax: (58-212) 573-7724
