89 Pages Posted: 9 Jun 1998
Date Written: January 1998
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: 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