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Inflation stabilization in chronic inflation countries: The empirical evidence

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  • Reinhart, Carmen
  • Vegh, Carlos

Abstract

There is a rich history of stabilizations in chronic inflation countries, which spans more than three decades. This provides a unique opportunity to identify the main patterns of adjustment and examine econometrically some of the main features of disinflation in chronic inflation countries. Our study is based on 17 stabilization plans from 1964 to the present in 7 countries: Argentina, Brazil, the Dominican Republic, Israel, Mexico, Peru, and Uruguay. Twelve of these programs were based on the use of the exchange rate as the nominal anchor, while 5 were based on the use of a monetary aggregate. In addition to reviewing the main "stylized facts" for these 17 stabilization plans we resort to different econometric exercises and thus are able to provide some rigorous econometric basis for several key features of disinflation in chronic inflation countries.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13689.

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Date of creation: Aug 1994
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Handle: RePEc:pra:mprapa:13689

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Keywords: inflation stabilization exchange rates mone crises consumption boom;

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