BCU convenes researchers to “help understand” if Uruguay is expensive

The Central Bank of Uruguay (BCU) opened a call for researchers, with the aim of identifying the factors that determine significant differences between key prices of goods and services and their valuation for the Uruguayan economy.

For it, will contract up to five research papers that, once these factors have been identified, allow their effects on the well-being of individuals to be quantified. And “proposals leading to the reduction of price differences” will be welcome, says the document of the call

The final product must be original and overcome discussions already addressed regarding exchange rate misalignments or the surplus of exporters, says the BCU.

In particular, Researchers should have as a theoretical framework the law of a single price, and direct their efforts to study the reasons why it is not fulfilled for relatively long periods of time, it is explained.

As an example, mention distortions to the functioning of the markets (competition); institutional factors and bureaucratic costs; and unintended effects of public policies on the price level.

The BCU explains that a macroeconomic or a microeconomic approach or a combination of both may be used.

“It is suggested to take the Consumer Price Index (CPI) as a starting point and concentrate the analysis on the five groups with the greatest weight, that is: Food and non-alcoholic beverages; Housing, water, electricity, gas and other fuels; and Transportation, leaving two groups at the discretion of the researcher.

“The combination of the weights in the CPI with the price gaps of these items will allow us to estimate the incidence of price deviations in general welfare,” he adds. The specification of bases and particular conditions is available at this link.

The objective is “That help to understand what is true in the perception that Uruguay is an expensive country”says the official communication.

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