Central America: Inflation and stabilization in the crisis and post-crisis eras

The small, open economies of the Central American countries have all, to a large extent, been subject to the same determinants of inflation. The oil shocks of the 1970s brought the era of stable prices and steady growth in the subregion to an end. External factors continue to have a significant influence on price movements. In addition to the direct impact of international prices, the availability of external resources, which cases supply and demand pressures, also plays a role. It is true, however, that the nature of the national economic policies adopted to deal with fiscal imbalances have led to a progressive differentiation of the inflationary processes experienced by each country.