Two Crises: Inflationary Inertia and Credibility
AbstractThis paper provides a comparative analysis of the Mexican currency crisis of 1994 and the Chilean crisis of 1982 to assess to what extent exchange-rate-based stabilization programs are successful in reducing--or even eliminating--inflationary inertia. The paper provides a brief overview of the Chilean and Mexican reform and stabilization programs. A theoretical model that emphasizes the role of credibility is developed to analyze the effects of exchange-rate based stabilization programs on inflationary inertia. According to the model, less than credible stabilizations will not eliminate inertia and will generate major real exchange rate overvaluation. Detailed data are used to test the hypothesis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 108 (1998)
Issue (Month): 448 (May)
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2002. "Decades lost and found: Mexico and Chile since 1980," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 3-30.
- Sebastian Edwards, 2006.
"The Relationship Between Exchange Rates and Inflation Targeting Revisited,"
NBER Working Papers
12163, National Bureau of Economic Research, Inc.
- Sebastian Edwards, 2006. "The Relationship Between Exchange Rates and Inflation Targeting Revisited," Working Papers Central Bank of Chile 409, Central Bank of Chile.
- Augustine Arize & John Malindretos & Kiseok Nam, 2005. "Inflation and Structural Change in 50 Developing Countries," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 461-471, December.
- Jose Sanchez-Fung, 2004.
"Inflation targeting and monetary analysis in Chile and Mexico,"
Money Macro and Finance (MMF) Research Group Conference 2003
82, Money Macro and Finance Research Group.
- Sanchez-Fung, Jose R, 2003. "Inflation targeting and monetary analysis in Chile and Mexico," Royal Economic Society Annual Conference 2003 179, Royal Economic Society.
- Çiçek, Serkan & Akar, Cüneyt, 2013. "The asymmetry of inflation adjustment in Turkey," Economic Modelling, Elsevier, vol. 31(C), pages 104-118.
- Dias, Daniel & Robalo Marques, Carlos, 2005.
"Using mean reversion as a measure of persistence,"
Working Paper Series
0450, European Central Bank.
- Sebastian Edwards, 2011. "Exchange Rates in Emerging Countries: Eleven Empirical Regularities from Latin America and East Asia," NBER Working Papers 17074, National Bureau of Economic Research, Inc.
- Sebastián Edwards, 2007. "The Relationship between Exchange Rates and Inflation Targeting Revisited," Central Banking, Analysis, and Economic Policies Book Series, in: Frederic S. Miskin & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Monetary Policy under Inflation Targeting, edition 1, volume 11, chapter 10, pages 373-413 Central Bank of Chile.
- Henry, Olan T. & Shields, Kalvinder, 2004. "Is there a unit root in inflation?," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 481-500, September.
- Sebastian Edwards, 2011. "Exchange-Rate Policies in Emerging Countries: Eleven Empirical Regularities From Latin America and East Asia," Open Economies Review, Springer, vol. 22(4), pages 533-563, September.
- Sebastian Edwards, 2001. "Exchange Rate Regimes, Capital Flows and Crisis Prevention," NBER Working Papers 8529, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.