Advanced Search
MyIDEAS: Login to save this paper or follow this series

Inflation Stabilization with Incomes Policy Support: A Review of the Experience in Argentina, Brazil and Israel

Contents:

Author Info

  • Rudiger Dornbusch
  • Mario Henrique Simonsen

Abstract

In 1985-86 Argentina, Brazil and Israel initiated programs of stabilization after episodes of high and sharply accelerating inflation. Among the key features of each stabilization program were the use of wage- price controls, a fixed exchange rate and fiscal correction as well as a significant expansion in the nominal quantity of money. The combination of fiscal correction and incomes policy has come to be known as "heterodox" stabilization policy, thus opposing it to the conventional IHF programs which emphasize tight monetary and fiscal policies as the exclusive instrument of stabilization. The stabilization programs in Argentina and Israel have now been in force for over a year and the more recent one in Brazil for half a year. There is accordingly enough evidence to make a first judgment on the success and the limitations of these new schemes. At the same time it is worthwhile spelling out some of the special features of stabilization and the resulting intellectual case for heterodox programs. The paper focuses on the conceptual issues related to the use of incomes policy in the context of stabilization when inertia is a central feature, The analysis includes the relation between deficits and inflation, inertial inflation and the basics of monetary reform. We also review the actual stabilization experience in Argentina, Brazil and Israel. The paper concludes with a discussion of the political dimension of stabilization, showing the extraordinary political popularity of the new programs.

Download Info

If 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.
File URL: http://www.nber.org/papers/w2153.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2153.

as in new window
Length:
Date of creation: Feb 1987
Date of revision:
Publication status: published as Dornbusch, Rudiger and Mario Henrique Simonsen. "Inflation Stabilization with Incomes Policy Support," Inflation Stabilization with Incomes Policy Support, pp. 1-48. New York: Group of Thirty, 1987.
Handle: RePEc:nbr:nberwo:2153

Note: ITI IFM
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Fernandez, Roque B., 1985. "The expectations management approach to stabilization in Argentina during 1976-1982," World Development, Elsevier, vol. 13(8), pages 871-892, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Marongiu, Federico, 2007. "Alta inflación y planes de ajuste en Brasil durante el retorno a la democracia - 1985-1994
    [High inflation and adjustment in Brazil during the return to democracy - 1985-1994]
    ," MPRA Paper 18956, University Library of Munich, Germany.
  2. Helpman, Elhanan & Leiderman, Leonardo, 1990. "Real wages, monetary accommodation, and inflation," European Economic Review, Elsevier, vol. 34(5), pages 897-911, July.
  3. Bruno Chiarini, 1996. "Disinflation in the Italian economy in an optimal control setting," Open Economies Review, Springer, vol. 7(4), pages 391-422, October.
  4. Kiguel, Miguel & Liviatan, Nissan, 1990. "The inflation - stabilization cycles in Argentina and Brazil," Policy Research Working Paper Series 443, The World Bank.
  5. Miguel A. Kiguel, 1999. "The Argentine Currency Board," CEMA Working Papers: Serie Documentos de Trabajo. 152, Universidad del CEMA.
  6. van Wijnbergen, Sweder, 1991. "Should price reform proceed gradually or in a"big bang?"," Policy Research Working Paper Series 702, The World Bank.
  7. Chris Canavan & Mariano Tommasi, 1997. "Visibility and Credibility in the Political Economy of Reform," Boston College Working Papers in Economics 346., Boston College Department of Economics.
  8. Eliana A. Cardoso & Rudiger Dornbusch, 1987. "Brazil's Tropical Plan," NBER Working Papers 2142, National Bureau of Economic Research, Inc.
  9. Kiguel, Miguel A. & Liviatan, Nissan, 1989. "The old and the new in heterodox stabilization programs : lessons from the 1960s and the 1980s," Policy Research Working Paper Series 323, The World Bank.
  10. Kiguel, Miguel A. & Liviatan, Nissan, 1991. "Lessons from the heterodox stabilization programs," Policy Research Working Paper Series 671, The World Bank.
  11. Solimano, Andres, 1989. "Inflation and the costs of stabilization : country experiences, conceptual issues, and policy lessons," Policy Research Working Paper Series 226, The World Bank.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2153. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

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.