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Interactions Between Inflation and Trade-Regime Objectives in Stabilization Programs

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  • Anne O. Krueger

Abstract

This paper examines the relationship between macroeconomic objectives of controlling inflation and trade-regime objectives in stabilization programs of developing countries. It is seen that there need be, in principle, no close relationship between the two, as a crawling peg exchange-rate policy can prevent inflation from affecting the performance of the foreign sector. In practice, trade regime objectives have been linked with inflation-reducing objectives, often to the detriment of resource allocation and growth. Differences between devaluation under liberalized regimes and under exchange control are also examined.

Suggested Citation

  • Anne O. Krueger, 1980. "Interactions Between Inflation and Trade-Regime Objectives in Stabilization Programs," NBER Working Papers 0475, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0475
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    References listed on IDEAS

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    1. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    2. Carlos F. Diaz-Alejandro, 1976. "Foreign Trade Regimes and Economic Development: Colombia," NBER Books, National Bureau of Economic Research, Inc, number diaz76-1, January.
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