The Output-Inflation Tradeoff And Central Bank Reform: Evidence From New Zealand  

Oleh:

Edwards, Sebastian

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 108 no. 448 (May 1998), page 703-725.
Fulltext: 703.pdf (338.01KB)

Isi artikel

This paper provides a comparative analysis of the Mexican currency crisis of 1994 and the Chilean crisis of 1982 to assess to what extent exchange-rate-based stabilisation programmes are successful in reducing ± or even eliminating ± in¯ationary inertia. The paper provides a brief overview of the Chilean and Mexican reform and stabilisation programmes. A theoretical model that emphasises the role of credibility is developed to analyse the effects of exchangerate based stabilisation programmes on in¯ationary inertia. According to the model, less than credible stabilisations will not eliminate inertia and will generate major real exchange rate overvaluation. Detailed data are used to test the hypothesis.

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