The Latin American Structuralist Theory of Inflation

Inflation had bedeviled economic policy in most Latin American countries for many years, and structuralist-type arguments had been put forward by opponents of liberal economic policies from time to time, in Brazil as early as 1949. But it was primarily the experience of Chile, the most conspicuous case of chronic inflation, that gave rise to the formulation of a structuralist theory of inflation. The Chilean peso had depreciated externally and domestically in all but 15 of the preceding 80 years, at annual rates which rose from around 20% in the 1940s to well over 50% in the mid-1950s. In the latter half of 1955, the Chilean Government decided on yet another effort at stabilization and employed a group of American consultants, the Klein-Saks Mission, to prepare a stabilization program. It was this, reinforced by broadly ‘monetarist’ stabilization policies recommended by the IMF in Argentina and Chile in 1958/9, that sparked off the monetarist-structuralist controversy.

The crux of the argument (in the preceding paragraph) is that:

Item 4 - The structuralist theory of inflation was borne out of the Chilean experience