IDEAS home Printed from https://ideas.repec.org/a/kap/iaecre/v5y1999i1p37-4710.1007-bf02295029.html
   My bibliography  Save this article

Monetary stabilization in countries in transition

Author

Listed:
  • Axel Jochem

Abstract

The best way to prevent hyperinflation when domestic prices are liberalized is to initiate the transition from a planned economy to a market economy with a currency reform. In the following period, moderate inflation and flexible exchange rates are suitable to facilitate relative price adjustments. Only after the bulk of alignments has been accomplished can a switch in the exchange rate regime be convenient. The nominal peg of a stable reference currency lowers the level and the variance of domestic inflation rates. The credibility of an exchange rate target may best be achieved by combining a currency board (objective sustainability) with a crawling peg (political sustainability). Price stability can be realized in the long run by reducing the annual depreciation rate in regular, preannounced steps. Copyright International Atlantic Economic Society 1999

Suggested Citation

  • Axel Jochem, 1999. "Monetary stabilization in countries in transition," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 5(1), pages 37-47, February.
    • Handle: RePEc:kap:iaecre:v:5:y:1999:i:1:p:37-47:10.1007/bf02295029
    DOI: 10.1007/BF02295029
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF02295029
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF02295029?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    2. Caporale, Guglielmo Maria & Pittis, Nikitas, 1995. "Nominal exchange rate regimes and the stochastic behavior of real variables," Journal of International Money and Finance, Elsevier, vol. 14(3), pages 395-415, June.
    3. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
    4. Paul R. Krugman, 1990. "Equilibrium Exchange Rates," NBER Chapters, in: International Policy Coordination and Exchange Rate Fluctuations, pages 159-196, National Bureau of Economic Research, Inc.
    5. Laurence Ball & Stephen G. Cecchetti, 1990. "Inflation and Uncertainty at Long and Short Horizons," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 215-254.
    6. Mussa, Michael, 1986. "Nominal exchange rate regimes and the behavior of real exchange rates: Evidence and implications," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 25(1), pages 117-214, January.
    7. Danziger, Leif, 1987. "Inflation, Fixed Cost of Price Adjustment, and Measurement of Relative-Price Variability: Theory and Evidence," American Economic Review, American Economic Association, vol. 77(4), pages 704-713, September.
    8. Hasan, Shahriar & Wallace, Myles, 1996. "Real exchange rate volatility and exchange rate regimes: Evidence from long-term data," Economics Letters, Elsevier, vol. 52(1), pages 67-73, July.
    9. Volker Hofmann & Friedrich Sell, 1993. "Credibility, currency convertibility and the stabilisation of the rouble," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 28(1), pages 11-16, January.
    10. Stockman, Alan C. & Stockman, Alan C., 1983. "Real exchange rates under alternative nominal exchange-rate systems," Journal of International Money and Finance, Elsevier, vol. 2(2), pages 147-166, August.
    11. Taylor, John B., 1981. "On the relation between the variability of inflation and the average inflation rate," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 15(1), pages 57-85, January.
    12. Ball, Laurence, 1992. "Why does high inflation raise inflation uncertainty?," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 371-388, June.
    13. Savvides, Andreas, 1990. "Real exchange rate variability and the choice of exchange rate regime by developing countries," Journal of International Money and Finance, Elsevier, vol. 9(4), pages 440-454, December.
    14. Williamson, John, 1982. "A survey of the literature on the optimal peg," Journal of Development Economics, Elsevier, vol. 11(1), pages 39-61, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nora Abu Asab & Juan Carlos Cuestas & Alberto Montagnoli, 2018. "Inflation targeting or exchange rate targeting: Which framework supports the goal of price stability in emerging market economies?," PLOS ONE, Public Library of Science, vol. 13(8), pages 1-21, August.
    2. Daniel Aromi & Marcos Dal Bianco, 2014. "Un analisis de los desequilibrios del tipo de cambio real argentino bajo cambios de regimen," Working Papers 1431, BBVA Bank, Economic Research Department.
    3. Mr. Jonathan David Ostry & Ms. Anne Marie Gulde & Mr. Atish R. Ghosh & Holger C. Wolf, 1995. "Does the Nominal Exchange Rate Regime Matter?," IMF Working Papers 1995/121, International Monetary Fund.
    4. Karras, Georgios, 2017. "Is the relationship between inflation and its volatility asymmetric? US evidence, 1800–2016," The Journal of Economic Asymmetries, Elsevier, vol. 16(C), pages 79-86.
    5. Brian O'Reilly, 1998. "The Benefits of Low Inflation: Taking Shock "A nickel ain't worth a dime any more" [Yogi Berra]," Technical Reports 83, Bank of Canada.
    6. Luca Dedola & Sylvain Leduc, 2002. "Why are business cycles alike across exchange-rate regimes?," Working Papers 02-11, Federal Reserve Bank of Philadelphia.
    7. Levent, Korap, 2009. "Enflasyon ve enflasyon belirsizliği ilişkisi için G7 ekonomileri üzerine bir inceleme [An investigation for the inflation and inflation uncertainty relationship upon the G7 economies]," MPRA Paper 19478, University Library of Munich, Germany.
    8. Broto Carmen & Ruiz Esther, 2009. "Testing for Conditional Heteroscedasticity in the Components of Inflation," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 13(2), pages 1-30, May.
    9. John H. Rogers, 1995. "Real shocks and real exchange rates in really long-term data," International Finance Discussion Papers 493, Board of Governors of the Federal Reserve System (U.S.).
    10. SCHELLEKENS, Philip, 1999. "Optimal monetary policy delegation to conservative central banks," Working Papers 1999009, University of Antwerp, Faculty of Business and Economics.
    11. Salah A Nusair, 2017. "On the Nominal and Real Currency Devaluation Nexus in European Transition Economies," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(4), pages 677-698, September.
    12. Fountas, Stilianos, 2001. "The relationship between inflation and inflation uncertainty in the UK: 1885-1998," Economics Letters, Elsevier, vol. 74(1), pages 77-83, December.
    13. Charles Engel & Feng Zhu, 2019. "Exchange rate puzzles: evidence from rigidly fixed nominal exchange rate systems," BIS Working Papers 805, Bank for International Settlements.
    14. Canepa, Alessandra, 2024. "Inflation dynamics and persistence: The importance of the uncertainty channel," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    15. John Simon, 1996. "A Markov-switching Model of Inflation in Australia," RBA Research Discussion Papers rdp9611, Reserve Bank of Australia.
    16. Erica Groshen & Mark Schweitzer, 1999. "Identifying Inflation's Grease and Sand Effects in the Labor Market," NBER Chapters, in: The Costs and Benefits of Price Stability, pages 273-314, National Bureau of Economic Research, Inc.
    17. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    18. Ouyang, Alice Y. & Rajan, Ramkishen S., 2013. "Real exchange rate fluctuations and the relative importance of nontradables," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 844-855.
    19. Dedola, Luca & Leduc, Sylvain, 2001. "Why Is the Business-Cycle Behaviour of Fundamentals Alike across Exchange-Rate Regimes?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 401-419, October.
    20. Ball, Laurence, 1995. "Time-consistent policy and persistent changes in inflation," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 329-350, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:iaecre:v:5:y:1999:i:1:p:37-47:10.1007/bf02295029. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.