Macroeconomic Experiences of the Transition Economies in Indochina

Chi Pham, Ajai Chopra, John Dodsworth and Hisanobu Shishido

No 1996/112, IMF Working Papers from International Monetary Fund

Abstract: This paper examines stabilization policies in Vietnam, Cambodia, and Laos since the late 1980s. Compared with other transition economies, the Indochinese countries avoided an output collapse and moved quickly to strong GDP growth and low inflation. Each adopted a similar mix of policies centered on flexible exchange rates, high real interest rates, fiscal adjustment through expenditure cuts, and the imposition of hard budget constraints on public enterprises. In none of the countries was an exchange rate anchor considered feasible, and money-based stabilization proved effective, despite evident instability in the demand for money.

Keywords: WP; firm; state enterprise reform; public enterprise sector; nominal exchange rate; state enterprise sector; enterprise closure; run enterprise; enterprise profitability; operated company; budget constraint; budgetary contribution; enterprise account; inflation rate; state enterprise transfer; Exchange rates; Currency markets; Commercial banks; Currencies; Eastern Europe (search for similar items in EconPapers)
Pages: 44
Date: 1996-10-01
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