Inflation and Stabilization in Latvia : 1918-1922

The central European stabilization efforts of the interwar period have become the prototype for 'orthodox stabilization programs'; its components - fiscal cuts coupled with the adoption of a pegged exchange rate and external support - are often portrayed as necessary conditions for successful stabilizations. While prevalent, the orthodox package was not universal. We examine one exception to the archetype. The Latvian stabilization of 1921/22 commenced from a background of multiple circulating currencies, was money-based, implemented without external assistance and followed rather than accompanied by exchange rate stabilization