In a prior post (here) I presented one measure of Inflation in Venezuela (NY.GDP.DEFL.KD.ZG from the World Development Indicators) with an attractor path and 98% Bootstrap Prediction Intervals.** The graphic above shows that there were two periods (the 1970s Energy Crisis and the 1994 Caldera Banking Crisis) where inflation spiked well above the upper 98% prediction interval. Interestingly enough, during the Chavez Period, inflation was well below the lower 98% prediction interval. What might we expect for the period after Hugo Chavez died in 2013 and his predecessor Nicolas Maduro came to power?
In the graphic above, I extend the Inflation data (using another GDP Deflator** from the World Development Indicators). For most of Maduro's reign, inflation seemed under control. Then in 2020 it started to take off and went exponential around 2025. Maduro was removed from power as a result of a US Invasion on Jan 3, 2026.
President Trump has said that, possibly for years, the US will run Venezuela. One of the most pressing problems is to get hyperinflation under control. It will not be easy. ChatGPT concludes:
Any prediction about what might happen to the Venezuelan economy in the future will be very uncertain.
Notes
** Inflation is usually presented as percentage changes in the GDP Deflator. For technical reasons, I do not use the conventional measure in statistical estimation. Change scores, Q(t) + E(t) - Q(t-1) - E(T-1), contain error, E. In time series data, the errors are unlikely to cancel and are typically not normally distributed and will not cancel in probability. The regression coefficient, B, for a time series model of the deflator, DEFL(t) = a + B DEFL(t-1) + E(t-1) is better estimate of deflation and is free of error, E(t-1).
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