In my remarks today I will offer some tentative answers to these questions, noting as always that the views I will express are not necessarily shared by my colleagues at the Federal Reserve.1  The roots of Latin American inflation For those of us here in the United States, acclimated as we have become to price stability, the severity of inflation in many Latin American countries in recent decades may be difficult to comprehend.
A measure of price changes in nine of the most populous Latin American countries shows that inflation in the region averaged nearly 160 percent per year in the 1980s and 235 percent per year in the first half of the 1990s.2 Indeed, high inflation morphed into hyperinflation - conventionally defined as inflation exceeding 50 percent per month (Cagan, 1956) - in a number of Latin countries during the latter part of the 1980s and in the early 1990s.