Interactions Between Inflation and Trade-Regime Objectives in Stabilization Programs
This paper examines the relationship between macroeconomic objectives of controlling inflation and trade-regime objectives in stabilization programs of developing countries. It is seen that there need be, in principle, no close relationship between the two, as a crawling peg exchange-rate policy can prevent inflation from affecting the performance of the foreign sector. In practice, trade regime objectives have been linked with inflation-reducing objectives, often to the detriment of resource allocation and growth. Differences between devaluation under liberalized regimes and under exchange control are also examined.
Published Versions
Krueger, Anne O. "Interactions Between Inflation and Trade-Regime Objectives in Stabilization Programs." Economic Stabilization in Developing Countries, eds. William R. Cline and Sidney Weintraub. Washington, D.C.: The Brookings Institution, 1981.