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Inflation and the costs of stabilization : country experiences, conceptual issues, and policy lessons


  • Solimano, Andres


The macroeconomic effects and the actual costs of different anti-inflationary programs is a subject of great importance for the design of stabilization policies. This paper reviews several historical anti-inflationary programs and some of the recent past. The purpose of the paper is to help understand current difficulties with stabilization, especially in Latin America. The emphasis of each experience reviewed is on the cost of stabilization and the role played by fiscal reform, the availability of foreign resources, the stabilization of the exchange rate and the distributive conflict, relating to the success or failure of the particular anti-inflationary program studied. In addition special attention is given to the existing controversies on the causes and cures of inflation in the literature on stabilization.

Suggested Citation

  • Solimano, Andres, 1989. "Inflation and the costs of stabilization : country experiences, conceptual issues, and policy lessons," Policy Research Working Paper Series 226, The World Bank.
  • Handle: RePEc:wbk:wbrwps:226

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    References listed on IDEAS

    1. Taylor, Lance, 1987. "El Plan Austral (y otros choques heterodoxos): Fase II," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(número es), pages 155-175, septiembr.
    2. Vittorio Corbo & Jaime de Melo & James Tybout, 2015. "What Went Wrong with the Recent Reforms in the Southern Cone," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 2, pages 21-54, World Scientific Publishing Co. Pte. Ltd..
    3. Rudiger Dornbusch & Stanley Fischer, 1986. "Stopping hyperinflations past and present," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 122(1), pages 1-47, March.
    4. Rudiger Dornbusch & Mario Henrique Simonsen, 1987. "Inflation Stabilization with Incomes Policy Support: A Review of the Experience in Argentina, Brazil and Israel," NBER Working Papers 2153, National Bureau of Economic Research, Inc.
    5. Ocampo, José Antonio, 1987. "Una evaluación comparativa de cuatro planes antinflacionarios recientes," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(número es), pages 7-51, septiembr.
    6. Meller, Patricio & Solimano, Andres, 1987. "A simple macro model for a small open economy facing a binding external constraint (Chile)," Journal of Development Economics, Elsevier, vol. 26(1), pages 25-35, June.
    7. Cardoso, Eliana A & Dornbusch, Rudiger, 1987. "Brazil's Tropical Plan," American Economic Review, American Economic Association, vol. 77(2), pages 288-292, May.
    8. Diaz-Alejandro, Carlos, 1985. "Good-bye financial repression, hello financial crash," Journal of Development Economics, Elsevier, vol. 19(1-2), pages 1-24.
    9. Kiguel, Miguel A & Liviatan, Nissan, 1988. "Inflationary Rigidities and Orthodox Stabilization Policies: Lessons from Latin America," World Bank Economic Review, World Bank Group, vol. 2(3), pages 273-298, September.
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    Cited by:

    1. Vegh, Carlos, 1991. "Stopping High Inflation: An Analytical Overview," MPRA Paper 20175, University Library of Munich, Germany.
    2. Kiguel, Miguel A. & Liviatan, Nissan, 1989. "The old and the new in heterodox stabilization programs : lessons from the 1960s and the 1980s," Policy Research Working Paper Series 323, The World Bank.


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