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Exchange-Rate Based Stabilisation under Imperfect Credibility

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Open-Economy Macroeconomics

Part of the book series: International Economic Association Series ((IEA))

Abstract

In the late 1970s, the Southern-Cone countries comprising Argentina, Chile and Uruguay launched stabilisation programmes based on a pre-announced path for the exchange rate that exhibited a declining rate of devaluation — the Tablitas.2 Policymakers expected a stabilisation plan based on the exchange rate as the nominal anchor to act directly on inflationary expectations — which were viewed as a central determinant of short-run inflation — thus increasing the chances of lowering inflation at no significant real cost.

The authors are grateful to Pierre-Richard Agénor, José de Gregorio, Mohsin Khan, Saul Lizondo, Peter Montiel, Carmen Reinhart, Ratna Sahay, and seminar participants at MIT and Vienna for helpful comments and suggestions.

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Author information

Authors and Affiliations

  1. International Monetary Fund, Washington, DC, USA

    Professor Guillermo A. Calvo & Carlos A. Végh

Authors
  1. Professor Guillermo A. Calvo
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  2. Carlos A. Végh
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Editor information

Editors and Affiliations

  1. University of Technology, Vienna, Austria

    Helmut Frisch (Professor of Economics) (Professor of Economics)

  2. Department of Economics, Institute for Advanced Studies, Vienna, Austria

    Andreas Wörgötter (Chairman) (Chairman)

Copyright information

© 1993 International Economic Association

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Cite this chapter

Calvo, G.A., Végh, C.A. (1993). Exchange-Rate Based Stabilisation under Imperfect Credibility. In: Frisch, H., Wörgötter, A. (eds) Open-Economy Macroeconomics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12884-6_1

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