Credibility and Stabilization

Dornbusch, Rudiger

Abstract

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Credibility and Stabilization

Rudiger Dornbusch

Massachusetts Institute of Technology (MIT) (Deceased)

October 1991

NBER Working Paper No. R1630

Abstract:
The paper deals with stabilization as a one-shot problem to ask what "credibility" means in a world where programs will succeed with probability one. A model is spelled out where the equilibrium program has some ex ante probability of failure. The model draws attention to the factors that raise or lower the probability of success of a stabilization program and thus offers a positive theory of stabilization. Reputation that emerges as a central element in repeated games has no role in this model.

Number of Pages in PDF File: 13

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Date posted: April 27, 2000

Suggested Citation

Dornbusch, Rudiger W., Credibility and Stabilization (October 1991). NBER Working Paper No. R1630. Available at SSRN: http://ssrn.com/abstract=227190

Contact Information

Rudiger W. Dornbusch (deceased) (Contact Author)

Massachusetts Institute of Technology (MIT) (Deceased)

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