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Inflation stabilization in chronic inflation countries: The empirical evidence

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  • Reinhart, Carmen
  • Vegh, Carlos

Abstract

There is a rich history of stabilizations in chronic inflation countries, which spans more than three decades. This provides a unique opportunity to identify the main patterns of adjustment and examine econometrically some of the main features of disinflation in chronic inflation countries. Our study is based on 17 stabilization plans from 1964 to the present in 7 countries: Argentina, Brazil, the Dominican Republic, Israel, Mexico, Peru, and Uruguay. Twelve of these programs were based on the use of the exchange rate as the nominal anchor, while 5 were based on the use of a monetary aggregate. In addition to reviewing the main "stylized facts" for these 17 stabilization plans we resort to different econometric exercises and thus are able to provide some rigorous econometric basis for several key features of disinflation in chronic inflation countries.

Suggested Citation

  • Reinhart, Carmen & Vegh, Carlos, 1994. "Inflation stabilization in chronic inflation countries: The empirical evidence," MPRA Paper 13689, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13689
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    More about this item

    Keywords

    inflation stabilization exchange rates mone crises consumption boom;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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    1. Krooniline inflatsioon in Wikipedia Estonian
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