Inflation, Credibility, and the Role of the International Monetary Fund

Curzio Giannini and Carlo Cottarelli

No 1998/012, IMF Policy Discussion Papers from International Monetary Fund

Abstract: This paper argues that many developing countries may find it difficult to buttress disinflation programs purely through the adoption of traditional credibility-enhancing devices (such as monetary anchors and central bank independence), owing to “technical problems” (for example, high instability of money demand, increased capital mobility) and an insufficient endowment of credibility in the political institutions. In these cases, borrowing credibility from an outside agency like the International Monetary Fund may be the most effective solution. The paper discusses the different options that would allow the Fund to support programs aimed not at external adjustment—the Fund’s traditional role—but at disinflation.

Keywords: PDP; disinflation program; Fund resource; Fund program; Fund support; Fund lending; inflation; International Monetary Fund; credibility; Fund's involvement; disinflation strategy; inflation expectation; Fund-supported program; Fund-supported disinflation program; stamp of approval; Disinflation; Balance of payments need; Price stabilization; Inflation targeting; Global (search for similar items in EconPapers)
Pages: 26
Date: 1998-09-01
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=2766 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfpdp:1998/012

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Policy Discussion Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().