IDEAS home Printed from
   My bibliography  Save this article

The Business Cycle Associated.with Exchange Rate-Based Stabilizations


  • Kiguel, Miguel A
  • Liviatan, Nissan


This article examines the effects of disinflation on economic activity in countries characterized by chronic inflation. Such countries have a long history of inflation at rates exceeding those in industrial countries as well as labor and capital markets that have adjusted to function in an inflationary environment. A sample of disinflation programs in several Latin American countries and in Israel demonstrates that stabilization efforts in countries with chronic inflation often do not induce the usual Phillips curve tradeoff in the medium run. Specifically, stabilization programs that use the exchange rate as the main nominal anchor are often associated with a business cycle that begins with a boom and ends with a recession. Stabilization programs that use money supply as the nominal anchor generally induce the expected Phillips curve result: lower inflation is accompanied by a recession after the program is implemented. Copyright 1992 by Oxford University Press.

Suggested Citation

  • Kiguel, Miguel A & Liviatan, Nissan, 1992. "The Business Cycle Associated.with Exchange Rate-Based Stabilizations," World Bank Economic Review, World Bank Group, vol. 6(2), pages 279-305, May.
  • Handle: RePEc:oup:wbecrv:v:6:y:1992:i:2:p:279-305

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:wbecrv:v:6:y:1992:i:2:p:279-305. 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: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.