Inflation and Stabilization in Latvia: 1918-1922
Posted: 27 Nov 2000
The central European stabilization efforts of the interwar period have become the prototype for 'orthodox stabilization programs'; its components - fiscal cuts coupled with the adoption of a pegged exchange rate and external support - are often portrayed as necessary conditions for successful stabilizations. While prevalent, the orthodox package was not universal. We examine one exception to the archetype. The Latvian stabilization of 1921/22 commenced from a background of multiple circulating currencies, was money-based, implemented without external assistance and followed rather than accompanied by exchange rate stabilization.
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