Exchange-Rate-Based Stabilization: A Critical Look at the Stylized Facts

A. Javier Hamann ()

No 1999/132, IMF Working Papers from International Monetary Fund

Abstract: Do exchange-rate-based stabilizations generate distinctive economic dynamics? To address this question, this paper identifies stabilization episodes using criteria that differ from those in previous empirical studies of exchange-rate-based stabilizations. We find that, while some differences can be detected between exchange-rate-based stabilizations and stabilizations where the exchange rate is not the anchor, the behavior of important variables does not appear to differ—especially output growth, which is good in both cases. There is also no evidence that fiscal discipline is enhanced by adopting an exchange-rate anchor, or that there are any systematic differences in the success records of stabilizations that use the exchange rate as a nominal anchor and those that do not.

Keywords: WP; ERBS; exchange rate; ERBS syndrome; inflation stabilization; exchange-rate-based stabilization; stabilization episode; stabilization program; ERBS literature; inflation stabilization strategy; Inflation; Exchange rates; Current account balance; Exchange rate anchor; Real exchange rates; Africa; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 28
Date: 1999-10-01
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Citations: View citations in EconPapers (17)

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Journal Article: Exchange-Rate-Based Stabilization: A Critical Look at the Stylized Facts (2001)
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