The authors used the policy game approach to gain insight into a problem that has puzzled analysts of high inflation economies. Why are programs based on tight fiscal and monetary policies slow at reducing inflation in high inflation countries? Distinguishing between regimes of rule and...

Exchange-rate-based stabilization is designed to reduce inflation by using the exchange rate as the main nominal anchor. This does not necessarily mean a fixed exchange rate. A crawling peg with a low rate of depreciation or a pre-announced gradual reduction in the rate of devaluation are...

Much existing literature fails to recognize that high inflation (annual rates in three digits) is a distinctly different phenomenon from moderate inflation and hyperinflation. The failure to understand the specific features of the inflation process in the chronic high inflation economies has...

This paper deals with the effects of disinflation on economic activity in"chronic inflation"countries -- countries with a long inflationary history above the rates in industrialized countries, where labor and capital markets are adjusted to function in the inflationary environment. The sample is...

In order to combat inflation, Israel launched a stabilization program in July 1985 which resulted in inflation decreasing to a low 20 percent annually as compared with more than 400 percent in 1984. What contributed to this decline? This paper attempts to analyze the major factors which made the...

This paper draws lessons from the advantages and disadvantages of the heterodox stabilization approach in chronic high inflation countries. Heterodox stabilization programs make temporary use of some income policies - price and wage controls - to support orthodox policies. Heterodox programs...

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...

The Austral plan in Argentina and the Cruzado plan in Brazil were major stabilization attempts with lasting effects on the inflation process in both countries. The purpose of this paper is to understand the reasons that led to the large instability in inflation in both countries, and to explain...

The purpose of this paper is to identify the factors which determine the strength of commitment that policymakers choose to back up a fixed exchange rate system. In practice the commitment level is achieved by choosing a particular set of monetary and exchange rate arrangements. The authors...

There is convincing empirical evidence that the cycle for exchange-rate-based disinflation in high-inflation Latin American economies typically begins with expansion and ends in recession - a surprising pattern. The authors explore whether a similar cycle can be observed in exchange-rate-based...