Inflation Stabilization under External Constraint

Paul Beckerman

Chapter 7 in The Economics of High Inflation, 1992, pp 108-125 from Palgrave Macmillan

Abstract: Abstract This chapter considers the policy problems of stabilizing an economy that has both high inflation and an external payments deficit it is unwilling or unable to cover through borrowing. During the 1980s, under the pressure of surging debt service, many Latin American nations dramatically increased their trade surpluses in stabilization programs supported by credit from the International Monetary Fund. Their inflation rates, however, either responded disappointingly or increased significantly. This chapter discusses this experience. It first explains how “IMF-type programs” should work, emphasizing the role inflation plays in them. It then discusses the intricate reasons why inflation has been a stubbornly persisting concomitant of the “debt crisis.”

Keywords: Interest Rate; Central Bank; Money Supply; Real Interest Rate; Inflationary Pressure (search for similar items in EconPapers)
Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-21713-7_7

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DOI: 10.1007/978-1-349-21713-7_7

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