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Inflation and stabilization in Yugoslavia

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  • Rocha, Roberto de Rezende
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    Abstract

    This paper shows that inflation in Yugoslavia shares common elements with inflation in other highly indebted countries, despite appearances other-wise. These common elements include a large transfer of resources abroad unmatched by an internal adjustment, resulting in a large internal redistribution of real resources through inflation. The author argues that Yugoslavia differs from other countries in that these internal conditions are not transparent. Instead of an open fiscal deficit, there were complex interactions among enterprises, commercial banks, and the central bank, involving, among other things, the absorption and servicing of a large stock of foreign exchange liabilities by the central bank. Events in the second half of 1990 also indicate that, for a stabilization program to succeed in Yugoslavia, there must be much greater political resolve to cope with wage indiscipline and loss-making enterprises than was observed in 1990. And the question remains whether financial discipline can be imposed in the system only at the macroeconomic level and without introducing private ownership of capital. The ultimate question may be whether stabilization can succeed without a comprehensive privatization program.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 752.

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    Date of creation: 31 Aug 1991
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    Handle: RePEc:wbk:wbrwps:752

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    Related research

    Keywords: Economic Stabilization; Economic Theory&Research; Environmental Economics&Policies; Banks&Banking Reform; Macroeconomic Management;

    References

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
    2. Helpman, Elhanan & Leiderman, Leonardo, 1990. "Real wages, monetary accommodation, and inflation," European Economic Review, Elsevier, vol. 34(5), pages 897-911, July.
    3. Barbosa, Fernando de Holanda & Pereira, Pedro L. Valls, 1987. "Insucesso do Plano Cruzado: A Evidência Empírica da Inflação 100% Inércia Para o Brasil," Economics Working Papers (Ensaios Economicos da EPGE) 98, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    4. Peter J. Montiel, 1989. "Empirical Analysis of High-Inflation Episodes in Argentina, Brazil, and Israel," IMF Staff Papers, Palgrave Macmillan, vol. 36(3), pages 527-549, September.
    5. Andrew C. Harvey, 1990. "The Econometric Analysis of Time Series, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 026208189x, January.
    6. Helpman, Elhanan & Leiderman, Leonardo, 1988. "Stabilization in high inflation countries: Analytical foundations and recent experience," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 9-84, January.
    7. Rudiger Dornbusch & Stanley Fischer, 1986. "Stopping Hyperinflations Past and Present," NBER Working Papers 1810, National Bureau of Economic Research, Inc.
    8. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
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    Cited by:
    1. Kiguel, Miguel A., 1992. "Exchange rate policy, the real exchange rate, and inflation : lessons from Latin America," Policy Research Working Paper Series 880, The World Bank.
    2. de Rezende Rocha, Roberto & Saldanha, Fernando, 1992. "Fiscal and quasi - fiscal deficits, nominal and real : measurement and policy issues," Policy Research Working Paper Series 919, The World Bank.
    3. Coricelli, Fabrizio & Rocha, Roberto de Rezende, 1991. "Stabilization programs in Eastern Europe : a comparative analysis of the Polish and Yugoslav programs of 1990," Policy Research Working Paper Series 732, The World Bank.

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