What causes the failure of inflation stabilization plans?

Article Abstract:

A Balance-of-Payments crises model that is based on stylized facts of inflation stabilization is presented. The objective was an analysis of the key reasons of the failure of 34 inflation stabilization plans across nine different countries. Results are in good agreement with a plan failure model and credibility models which provide evidence that total foreign reserves, accumulate real exchange rate appreciation and government surplus or deficit are significant factors influencing the failure of stabilization plans.

Models, Balance of payments

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Convertibility risk and dollarization in Mexico: a vectorautoregressive analysis

Article Abstract:

A study was made to determine the relation between the dollarization ratio and the rate of devaluation of the Mexican peso. A significant negative relationship was found contrary to expecations based on currency substitution studies. Additional analysis on proposed alternative explanations failed to disprove the relationship. A vectorautoregressive analysis on Mexdollars resulted in the negative relationship. A suggestion is made concerning fiscal policy regarding substitution currency.

Analysis, Economic policy, Mexico, Currency devaluation, Devaluation (Currency), Peso (Mexico)

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Output, inflation and stabilization: a counterfactual analysis

Article Abstract:

A study was made to compare actual and counterfactual stabilization programs, using data from the Bolivian and Brazilian experiences in the 1980s. Results show that the 'fiscal view' of inflation was behind the success of Bolivian stabilization in 1985. Meanwhile, the Brazilian results are more in tune with the balance of payments view than those for Bolivia.

Economic aspects, Brazil, Bolivia

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