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Are stabilization programs expansionary?

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Author Info

  • Federico Echenique

    (Universidad de la República de Uruguay, Universidad of California at Berkeley)

  • Alvaro Forteza

    (Universidad de la República de Uruguay)

Abstract

The empirical evidence presented in this paper casts doubts on the by now widely accepted “fact’’ that exchange rate based stabilization programs are expansionary. Even though these programs were associated with output booms, no evidence was found to support the thesis that the booms were caused by the stabilization programs. Rather, positive external shocks seem to have caused both the output booms and the stabilization programs.

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Bibliographic Info

Article provided by El Colegio de México, Centro de Estudios Económicos in its journal Estudios Económicos.

Volume (Year): 15 (2000)
Issue (Month): 1 ()
Pages: 65-89

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Handle: RePEc:emx:esteco:v:15:y:2000:i:1:p:65-89

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Web page: http://www.colmex.mx/centros/cee/
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  1. Federico Echenique & Alvaro Forteza, 1997. "Are Stabilization Programs Expansionary?," Documentos de Trabajo (working papers) 0497, Department of Economics - dECON.
  2. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
  3. Rebelo, Sérgio, 1995. "Real Effects of Exchange-Rate-Based Stabilization: An Analysis of Competing Theories," CEPR Discussion Papers 1220, C.E.P.R. Discussion Papers.
  4. Gustavo Bittencourt & Rosario Domingo, 1996. "Inversión Extranjera Directa en Uruguay: tendencias y determinantes," Documentos de Trabajo (working papers) 0696, Department of Economics - dECON.
  5. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, vol. 75(3), pages 308-13, June.
  6. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
  7. Helpman, Elhanan & Razin, Assaf, 1987. "Exchange Rate Management: Intertemporal Tradeoffs," American Economic Review, American Economic Association, vol. 77(1), pages 107-23, March.
  8. Reinhart, Carmen & Vegh, Carlos, 1994. "Inflation stabilization in chronic inflation countries: The empirical evidence," MPRA Paper 13689, University Library of Munich, Germany.
  9. Jorge E. Roldós, 1995. "Supply-Side Effects of Disinflation Programs," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 158-183, March.
  10. Marcel Vaillant, 1996. "El GATT 94 y la Organización Mundial del Comercio. Una nueva agenda para Uruguay," Documentos de Trabajo (working papers) 0496, Department of Economics - dECON.
  11. Casella, Alessandra & Eichengreen, Barry, 1996. "Can Foreign Aid Accelerate Stabilisation?," Economic Journal, Royal Economic Society, vol. 106(436), pages 605-19, May.
  12. Laurence Ball, 1993. "What Determines the Sacrifice Ratio?," NBER Working Papers 4306, National Bureau of Economic Research, Inc.
  13. Michael Bruno & Guido Di Tella & Rudiger Dornbusch & Stanley Fischer, 1988. "Inflation Stabilization: The Experience of Israel, Argentina, Brazil, Bolivia, and Mexico," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022796, December.
  14. Uribe, Martin, 1997. "Exchange-rate-based inflation stabilization: The initial real effects of credible plans," Journal of Monetary Economics, Elsevier, vol. 39(2), pages 197-221, July.
  15. Orphanides, Athanasios, 1996. "The timing of stabilizations," Journal of Economic Dynamics and Control, Elsevier, vol. 20(1-3), pages 257-279.
  16. Stanley Fischer, 1984. "Real Balances, the Exchange Rate and Indexation: Real Variables in Disinflation," NBER Working Papers 1497, National Bureau of Economic Research, Inc.
  17. Alesina, Alberto & Drazen, Allan, 1991. "Why Are Stabilizations Delayed?," American Economic Review, American Economic Association, vol. 81(5), pages 1170-88, December.
  18. Reinhart, Carmen & Vegh, Carlos, 1995. "Nominal interest rates, consumption booms, and lack of credibility: A quantitative examination," MPRA Paper 13898, University Library of Munich, Germany.
  19. Robert J. Gordon, 1982. "Why Stopping Inflation May Be Costly: Evidence from Fourteen Historical Episodes," NBER Chapters, in: Inflation: Causes and Effects, pages 11-40 National Bureau of Economic Research, Inc.
  20. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1994. "The capital inflows problem: Concepts and issues," MPRA Paper 13902, University Library of Munich, Germany.
  21. Adriana Cassoni, 1996. "A bargaining model with uncertainty and varying outside opportunities," Documentos de Trabajo (working papers) 1096, Department of Economics - dECON.
  22. Calvo, Guillermo A, 1986. "Temporary Stabilization: Predetermined Exchange Rates," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1319-29, December.
  23. Fischer, Stanley, 1988. "Real Balances, the Exchange Rate, and Indexation: Real Variables in Disinflation," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 27-49, February.
  24. repec:imf:imfpdp:9310 is not listed on IDEAS
  25. Alejandro Nin & María Inés Terra, 1996. "Mercosur: un camino a la apertura o la consolidación de un bloque cerrado?," Documentos de Trabajo (working papers) 0996, Department of Economics - dECON.
  26. Reinhart, Carmen & Leiderman, Leonardo, 1994. "Capital inflows to Latin America," MPRA Paper 13406, University Library of Munich, Germany.
  27. Elvio Accinelli & Martín Puchet, 1996. "An application of the catastrophe theory in general equilibrium theory," Documentos de Trabajo (working papers) 0296, Department of Economics - dECON.
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Citations

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Cited by:
  1. Stanley Fischer & Ratna Sahay & Carlos A. Vegh, 2002. "Modern Hyper- and High Inflations," NBER Working Papers 8930, National Bureau of Economic Research, Inc.
  2. Walter García Fontes & Ruben Tansini, 1996. "The effects of trade liberalization on R&D investments: the case of the Uruguayan manufacturing industry," Documentos de Trabajo (working papers) 0396, Department of Economics - dECON.
  3. Traversa, Federico, 2004. "Estabilización con ancla cambiaria y apertura externa en el Uruguay de la década de 1990: una combinación difícil
    [Exchange rate based stabilization and trade liberalization in Uruguay during t
    ," MPRA Paper 53263, University Library of Munich, Germany.
  4. Forteza, Alvaro & Rama, Martin, 2001. "Labor market"rigidity"and the success of economic reforms across more than one hundred countries," Policy Research Working Paper Series 2521, The World Bank.
  5. Federico Echenique & Alvaro Forteza, 1997. "Are Stabilization Programs Expansionary?," Documentos de Trabajo (working papers) 0497, Department of Economics - dECON.
  6. Alvaro Forteza, 1995. "Welfare state dynamics," Documentos de Trabajo (working papers) 0896, Department of Economics - dECON.
  7. Alvaro Forteza, 1998. "Un modelo de simulación de la Reforma de la Seguridad Social en Uruguay," Documentos de Trabajo (working papers) 0598, Department of Economics - dECON.
  8. Ari Aisen, 2004. "Money-Based Versus Exchange-Rate-Based Stabilization," IMF Working Papers 04/94, International Monetary Fund.
  9. Alvaro Forteza & Martin Rama, 2006. "Labor Market 'Rigidity' and the Success of Economic Reforms Across More Than 100 Countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 75-105.

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