Exchange Rate-Based Stabilization in Western Europe: Greece, Ireland, Italy and Portugal

Enrica Detragiache () and A. Javier Hamann ()

No 1997/075, IMF Working Papers from International Monetary Fund

Abstract: This paper compares the experience with exchange-rate–based stabilization (ERBS) of four Western European countries with that of high-inflation developing countries. In general, the behavior of key macroeconomic variables—inflation, output, demand, the real exchange rate and the current account—in the four countries examined did not correspond to the pattern observed in developing countries, although some resemblance to this pattern could be found in Italy in 1987–92 and Greece in 1994–96. The experience with ERBS in Western Europe highlights the importance of incomes policy as an ingredient of a successful stabilization program and shows that the adoption of a looser anchor does not necessarily reduce the output cost of disinflation.

Keywords: WP; exchange rate; current account; inflation stabilization; stabilization program; Western Europe; inflation differential; Irish pound; inflation country; Inflation; Exchange rates; Real exchange rates; Fiscal consolidation; Disinflation (search for similar items in EconPapers)
Pages: 29
Date: 1997-06-01
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: EXCHANGE RATE‐BASED STABILIZATION IN WESTERN EUROPE: GREECE, IRELAND, ITALY, AND PORTUGAL (1999)
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