Inflation Stabilization and BOP Crises in Developing Countries

89 Pages Posted: 9 Jun 1998  

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Carlos A. Vegh

University of Maryland - Department of Economics; University of California at Los Angeles; National Bureau of Economic Research (NBER); Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS)

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Date Written: January 1998

Abstract

High and persistent inflation has been one of the distinguishing macroeconomic characteristics of many developing countries since the end of World War II. Countries afflicted by chronic inflation, however, have not taken their fate lightly and have engaged in repeated stabilization attempts. More often than not, stabilization plans have failed. The end of stabilizations--particularly those which rely on a pegged exchange rate--has often involved dramatic balance of payments crises. As stabilization plans come and go, a large literature has developed trying to document the main empirical regularities and understand the key issues involved. This paper undertakes a critical review and evaluation of the literature related to inflation stabilization policies and balance of payments crises in developing countries.

JEL Classification: F41, E63

Suggested Citation

Calvo, Guillermo A. and Vegh, Carlos A., Inflation Stabilization and BOP Crises in Developing Countries (January 1998). Available at SSRN: https://ssrn.com/abstract=92554 or http://dx.doi.org/10.2139/ssrn.92554

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Carlos A. Vegh (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

University of California at Los Angeles ( email )

Box 951477
Los Angeles, CA 90095-1477
United States
310-825-7371 (Phone)
310-825-9528 (Fax)

HOME PAGE: http://vegh.sscnet.ucla.edu

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

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