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Macroeconometric Stabilization And Imf Policies: A Surveillance Of Inflation

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  • WARBURTON, C.E.S.

Abstract

This paper uses time series data from 1960 to 2012 to evaluate the long-run relationship between aggregate money supply and changes in the general price level (inflation) for a selected group of countries with historically stable prices and episodes of very high inflation. Recent paradigmatic shifts from exchange-rate-based stabilization policies to conditionalities involving price stability have greatly influenced the empirical work of this paper. Empirical results indicate that the money supply and inflation are cointegrated in some countries with high spells of inflation, such as Argentina, Brazil, and Mexico, but that the variables may not be cointegrated with each other for countries with prices that are generally and historically stable, such as the UK and the US. The paper highlights the need for good quality governance, employment, and productivity in surveillance measures that are designed to obtain external balance.

Suggested Citation

  • Warburton, C.E.S., 2014. "Macroeconometric Stabilization And Imf Policies: A Surveillance Of Inflation," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 23(4), pages 7-22.
  • Handle: RePEc:sdo:regaec:v:23:y:2014:i:4_2
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    File URL: http://www.usc.es/econo/RGE/Vol23/rge2342c.pdf
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    References listed on IDEAS

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    1. Mario I. Blejer & Alfredo M. Leone & Pau Rabanal & Gerd Schwartz, 2002. "Inflation Targeting in the Context of IMF-Supported Adjustment Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(3), pages 1-2.
    2. Andrew Berg & Luisa Charry & Rafael A Portillo & Jan Vlcek, 2013. "The Monetary Transmission Mechanism in the Tropics; A Narrative Approach," IMF Working Papers 13/197, International Monetary Fund.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    4. Shengzu Wang & Chris Marsh & Rishi Goyal & Narayanan Raman & Swarnali Ahmed, 2011. "Financial Deepening and International Monetary Stability," IMF Staff Discussion Notes 11/16, International Monetary Fund.
    5. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    6. WARBURTON, Christopher E.S., 2013. "When Markets Fail: Asset Prices, Government Expenditures, and the Velocity of Money," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 73-92.
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    Cited by:

    1. WARBURTON Christopher E.S., 2014. "Time Dynamics Of Stabilization Theories And Responses To Debt And Financial Crises: An Analysis Of Mexico, Argentina, Nigeria And Ghana, 1960-2011," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 14(2).

    More about this item

    Keywords

    Devaluation; Flexible Exchange Rate; Inflation; Stabilization; Surveillance.;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises

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