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Econometrics and the Design of Economic Reform

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  • Bruno, Michael
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    Abstract

    The concept of economic reform is described as a planned shift from one Pareto inefficient, but quasi-stable, Nash equilibrium (or "trap") to a new Pareto superior equilibrium, which will also be stable. The concept is applied to recent "shock" stabilization programs, with special reference to Israel, where the economy was credibly shifted from a three-digit inflationary process, with considerable inertia, to relative price stability with higher real growth, at only moderate adjustment costs, by means of a "heterodox" plan. The idea is rationalized with a simple dual equilibrium inflation model, for which some econometric estimates are also given. Copyright 1989 by The Econometric Society.

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    Bibliographic Info

    Article provided by Econometric Society in its journal Econometrica.

    Volume (Year): 57 (1989)
    Issue (Month): 2 (March)
    Pages: 275-306

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    Handle: RePEc:ecm:emetrp:v:57:y:1989:i:2:p:275-306

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    Cited by:
    1. Sudip Ranjan Basu, 2004. "Economic Growth, Well-Being and Governance under Economic Reforms: Evidence from Indian States," IHEID Working Papers 05-2004, Economics Section, The Graduate Institute of International Studies.
    2. Klaus Adam & George W. Evans & Seppo Honkapoja, 2003. "Are Stationary Hyperinflation Paths Learnable?," CESifo Working Paper Series 936, CESifo Group Munich.
    3. Marimon, Ramon & Sunder, Shyam, 1993. "Indeterminacy of Equilibria in a Hyperinflationary World: Experimental Evidence," Econometrica, Econometric Society, vol. 61(5), pages 1073-107, September.
    4. William Ricardo de Sá, 1998. "Repensando os jogos de política econômica com governos sinceramente estabilizadores," Textos para Discussão Cedeplar-UFMG td122, Cedeplar, Universidade Federal de Minas Gerais.
    5. Alexandre Sokic, 2012. "The Monetary Analysis of Hyperinflation and the Appropriate Specification of the Demand for Money," German Economic Review, Verein für Socialpolitik, vol. 13(2), pages 142-160, 05.
    6. Krzysztof Rybinski, 1997. "Testing Integration of Macroeconomic Time Series in Transitional Socialist Economies. A Modification of Perron Test," Economic Change and Restructuring, Springer, vol. 30(2), pages 127-179, May.
    7. Alexandre Sokic, 2008. "Monetary Hyperinflations, Speculative Hyperinflations and Modeling the Use of Money," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(3), pages 51-70, August.
    8. Adam, Klaus & Evans, George W. & Honkapohja, Seppo, 2006. "Are hyperinflation paths learnable?," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2725-2748, December.
    9. Michael Bruno, 1990. "High Inflation and the Nominal Anchors of an Open Economy," NBER Working Papers 3518, National Bureau of Economic Research, Inc.
    10. James B. Bullard & Alvin L. Marty, 1998. "What has become of the "stability-through-inflation" argument?," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 37-45.
    11. Blangiewicz, Maria & Charemza, Wojciech W., 1999. "East European Economic Reform: Some Simulations on a Structural Vector Autoregressive Model," Journal of Policy Modeling, Elsevier, vol. 21(5), pages 535-557, September.
    12. Vázquez Pérez, Jesús & Gutiérrez Huerta, María José, 2002. "Explosive Hyperinflation, Inflation Tax Laffer Curve and Modelling the use of Money," DFAEII Working Papers 2002-27, University of the Basque Country - Department of Foundations of Economic Analysis II.
    13. Vazquez, Jesus, 1998. "How high can inflation get during hyperinflation? A transaction cost demand for money approach," European Journal of Political Economy, Elsevier, vol. 14(3), pages 433-451, August.
    14. Marimon, R. & Sunder, S., 1993. "Expectations and Learning under Alternative Monetary Regimes: An Experimental Approach," Papers 189, Cambridge - Risk, Information & Quantity Signals.
    15. Sudip Ranjan Basu, 2005. "Correlating Growth with Well-Being during Economic Reforms Evidence from India and China," Development and Comp Systems 0509010, EconWPA.
    16. Zink, Helmut, 1993. "Stability problems in hyperinflation models," Discussion Papers, Series 1 268, University of Konstanz, Department of Economics.
    17. Blangiewicz, Maria & Charemza, Wojciech W., 2001. "East European economic reform: Some simulations on a structural VAR model," Journal of Policy Modeling, Elsevier, vol. 23(2), pages 147-160, February.
    18. Alexandre Sokic, 2008. "Theoretical support for a new class of demand for real cash balances in explosive hyperinflations," Working Papers of BETA 2008-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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