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Stopping High Inflation: An Analytical Overview

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  • Vegh, Carlos

Abstract

This paper reviews the evidence on stabilization plans in high inflation countries within a unified theoretical framework. The evidence suggests that hyperinflations have been stopped almost instantaneously with no major output costs, while stabilization programs in chronic inflation countries have resulted in an initial expansion followed by a later recession, in addition to a sustained real exchange rate appreciation and current account deficits. These outcomes turn out to be consistent with the predictions of the analytical model.

Suggested Citation

  • Vegh, Carlos, 1991. "Stopping High Inflation: An Analytical Overview," MPRA Paper 20175, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:20175
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kamin, Steven B. & Rogers, John H., 1996. "Monetary policy in the end-game to exchange-rate based stabilizations: the case of Mexico," Journal of International Economics, Elsevier, vol. 41(3-4), pages 285-307, November.
    2. Sergio Rebelo & Carlos A. Vegh, 1995. "Real Effects of Exchange-Rate-Based Stabilization: An Analysis of Competing Theories," NBER Chapters,in: NBER Macroeconomics Annual 1995, Volume 10, pages 125-188 National Bureau of Economic Research, Inc.
    3. Bordo, Michael D. & Jonung, Lars, 1994. "Monetary Regimes, Inflation and Monetary Reform: An Essay in Honor of Axel Leijonhufvud," SSE/EFI Working Paper Series in Economics and Finance 16, Stockholm School of Economics.
    4. Martin Uribe, 1996. "The Tequila effect: theory and evidence from Argentina," International Finance Discussion Papers 552, Board of Governors of the Federal Reserve System (U.S.).
    5. Edwards, Sebastian & Vegh, Carlos A., 1997. "Banks and macroeconomic disturbances under predetermined exchange rates," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 239-278, October.
    6. Laurence Ball, 1993. "The Dynamics of High Inflation," NBER Working Papers 4578, National Bureau of Economic Research, Inc.
    7. Dariusz K. Rosati, 1994. "Output decline during transition from plan to market: a reconsideration," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(4), pages 419-441, December.
    8. Sulo Haderi & Harry Papapanagos & Peter Sanfey & Mirela Talka, 1999. "Inflation and Stabilisation in Albania," Post-Communist Economies, Taylor & Francis Journals, vol. 11(1), pages 127-141.
    9. Emilio Ocampo, 2017. "Fighting inflation in Argentina: A brief history of ten stabilization plans," CEMA Working Papers: Serie Documentos de Trabajo. 613, Universidad del CEMA.
    10. Chetan Subramanian & Jungsoo Park, 2004. "Exchange Rate Based Stabilization with Sudden Restrictions on Capital Flows," Econometric Society 2004 Far Eastern Meetings 748, Econometric Society.
    11. Marc Hofstetter, 2007. "Disinflating From Moderate Inflation," DOCUMENTOS CEDE 002373, UNIVERSIDAD DE LOS ANDES-CEDE.
    12. Chris Canavan & Mariano Tommasi, 1997. "Visibility and Credibility in the Political Economy of Reform," Boston College Working Papers in Economics 346., Boston College Department of Economics.
    13. anonymous, 2003. "Joint Federal Reserve and Treasury report on global counterfeiting," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue May, pages 204-205.
    14. repec:fip:feddgm:00008 is not listed on IDEAS
    15. Calvo, Guillermo & Vegh, Carlos, 1991. "Exchange rate stabilization under imperfect credibility," MPRA Paper 20486, University Library of Munich, Germany.
    16. Steven B. Kamin, 1996. "Real exchange rates and inflation in exchange-rate based stabilizations: an empirical examination," International Finance Discussion Papers 554, Board of Governors of the Federal Reserve System (U.S.).
    17. Amartya Lahiri, 1996. "Macroeconomic Effects of Devaluation Rate Changes: Dynamic implications under alternative regimes of capital mobility," UCLA Economics Working Papers 760, UCLA Department of Economics.

    More about this item

    Keywords

    inflation; stabilization;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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