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Inflation and stabilization in Yugoslavia

Author

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  • Rocha, Roberto de Rezende

Abstract

This paper shows that inflation in Yugoslavia shares common elements with inflation in other highly indebted countries, despite appearances other-wise. These common elements include a large transfer of resources abroad unmatched by an internal adjustment, resulting in a large internal redistribution of real resources through inflation. The author argues that Yugoslavia differs from other countries in that these internal conditions are not transparent. Instead of an open fiscal deficit, there were complex interactions among enterprises, commercial banks, and the central bank, involving, among other things, the absorption and servicing of a large stock of foreign exchange liabilities by the central bank. Events in the second half of 1990 also indicate that, for a stabilization program to succeed in Yugoslavia, there must be much greater political resolve to cope with wage indiscipline and loss-making enterprises than was observed in 1990. And the question remains whether financial discipline can be imposed in the system only at the macroeconomic level and without introducing private ownership of capital. The ultimate question may be whether stabilization can succeed without a comprehensive privatization program.

Suggested Citation

  • Rocha, Roberto de Rezende, 1991. "Inflation and stabilization in Yugoslavia," Policy Research Working Paper Series 752, The World Bank.
  • Handle: RePEc:wbk:wbrwps:752
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    References listed on IDEAS

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    1. Helpman, Elhanan & Leiderman, Leonardo, 1988. "Stabilization in high inflation countries: Analytical foundations and recent experience," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 28(1), pages 9-84, January.
    2. 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.
    3. Andrew C. Harvey, 1990. "The Econometric Analysis of Time Series, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 026208189x, January.
    4. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    5. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    6. Helpman, Elhanan & Leiderman, Leonardo, 1990. "Real wages, monetary accommodation, and inflation," European Economic Review, Elsevier, vol. 34(5), pages 897-911, July.
    7. Barbosa, Fernando de Holanda & Pereira, Pedro L. Valls, 1987. "Insucesso do plano cruzado : a evidência empírica da inflação 100% inércia para o Brasil," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 98, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    8. Peter J. Montiel, 1989. "Empirical Analysis of High-Inflation Episodes in Argentina, Brazil, and Israel," IMF Staff Papers, Palgrave Macmillan, vol. 36(3), pages 527-549, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. de Rezende Rocha, Roberto & Saldanha, Fernando, 1992. "Fiscal and quasi - fiscal deficits, nominal and real : measurement and policy issues," Policy Research Working Paper Series 919, The World Bank.
    2. Kiguel, Miguel A., 1992. "Exchange rate policy, the real exchange rate, and inflation : lessons from Latin America," Policy Research Working Paper Series 880, The World Bank.
    3. Coricelli, Fabrizio & Rocha, Roberto de Rezende, 1991. "Stabilization programs in Eastern Europe : a comparative analysis of the Polish and Yugoslav programs of 1990," Policy Research Working Paper Series 732, The World Bank.

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