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Stabilization policies and trade liberalization: a comparative analysis of Chile, Argentina and Mexico’s experiences

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  • Cláudio Gontijo

Abstract

This article examines Chile’s 1976-81, Argentina’s 1987-92, and Mexico’s 1982-92 stabilization experiences. In these three cases high inflation was curbed after orthodox stabilization policies with liberal structural reforms had been followed by using a fixed exchange rate as an “anchor” for the price level. It suggests the existence of a trade off between internal and external equilibria. Orthodox stabilization policies can be very successful in equilibrating the balance-of-payment without producing price level stability. In contrast, curbing high inflation may require fixing the exchange rate, which, combined with trade liberalization, may produce huge commercial deficits. JEL Classification:

Suggested Citation

  • Cláudio Gontijo, 1995. "Stabilization policies and trade liberalization: a comparative analysis of Chile, Argentina and Mexico’s experiences," Brazilian Journal of Political Economy, Center of Political Economy, vol. 15(1), pages 41-57.
    • Handle: RePEc:ekm:repojs:v:15:y:1995:i:1:p:41-57:id:1224
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