 The old and the new in heterodox stabilization programs: lessons from the 1960s and the 1980sMiguel A. Kiguel and Nissan Liviatan No 323, Policy Research Working Paper Series from The World Bank Abstract: The objective of this paper is to gain new insights about the strengths and weaknesses of the heterodox approach for stopping inflation based on the experience of programs implemented in some Latin American countries and Israel in the sixties and eighties. The most important income policies supported stabilization programs in recent years were those launched in Argentina in June 1985, in Israel in July 1985, in Brazil in February 1986 and most recently by Mexico in 1987 - 88. The authors point out that tight fiscal policy is critical to the success of a heterodox program, particularly during the flexibilization period in which price and wage controls are removed. In the failures of the 1960s and the 1980s, the budget situation had already deteriorated when controls were removed. A relaxed fiscal stance during the freeze led to a sharp acceleration of inflation later. Heterodox programs fail not because income policies are poorly designed but because the fiscal effort does not persist. Keywords: Environmental Economics&Policies; Economic Theory&Research; Insurance&Risk Mitigation; Insurance Law; Financial Intermediation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:323 Access Statistics for this paper More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC. |
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