Inflation Stabilization and Bop Crises in Developing Countries

91 Pages Posted: 12 Sep 2000 Last revised: 5 Jun 2022

See all articles by Guillermo A. Calvo

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

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Date Written: February 1999

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 payment 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 payment crises in developing countries.

Suggested Citation

Calvo, Guillermo A. and Vegh, Carlos A. and Vegh, Carlos A., Inflation Stabilization and Bop Crises in Developing Countries (February 1999). NBER Working Paper No. w6925, Available at SSRN: https://ssrn.com/abstract=226394

Guillermo A. Calvo (Contact Author)

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

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Carlos A. Vegh

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

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University of Maryland - Department of Economics ( email )

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