Why Do Many Disinflations Fail?: The Importance of Luck, Timing, and Political Institutions
Many inflation stabilizations succeed only temporarily. Using a sample of 51 episodes of stabilization from inflation levels above 40 percent, we show that most of the failures are explained by bad luck, unfavorable initial conditions, and inadequate political institutions. The evolution of trading...
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
International Monetary Fund
2002
|
| Schriftenreihe: | IMF Working Papers
Working Paper No. 02/228 |
| Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 URL des Erstveröffentlichers |
| Zusammenfassung: | Many inflation stabilizations succeed only temporarily. Using a sample of 51 episodes of stabilization from inflation levels above 40 percent, we show that most of the failures are explained by bad luck, unfavorable initial conditions, and inadequate political institutions. The evolution of trading partners'' demand and U.S. interest rates captures the effect of bad luck. Past inflation affects the outcome in two different ways: a long history of high inflation makes failure more likely, while a high level of inflation prior to stabilization increases the chances of success. Countries with short-lived political institutions, a weak executive authority, and proportional electoral rules also tend to fail. After controlling for all these factors, we find that exchange-rate-based stabilizations are more likely to succeed. These findings are robust across measures of failure (two dichotomous and one continuous), sample selection criteria, and estimation techniques, including Heckman''s correction for the endogeneity of the anchor |
| Beschreibung: | 1 Online-Ressource (64 p) |
| ISBN: | 1451875452 9781451875454 |
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| index_date | 2024-07-03T20:13:22Z |
| indexdate | 2024-07-10T09:35:30Z |
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| record_format | marc |
| series2 | IMF Working Papers |
| spelling | Hamann, A. Javier Verfasser aut Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions Hamann, A. Javier Washington, D.C International Monetary Fund 2002 1 Online-Ressource (64 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 02/228 Many inflation stabilizations succeed only temporarily. Using a sample of 51 episodes of stabilization from inflation levels above 40 percent, we show that most of the failures are explained by bad luck, unfavorable initial conditions, and inadequate political institutions. The evolution of trading partners'' demand and U.S. interest rates captures the effect of bad luck. Past inflation affects the outcome in two different ways: a long history of high inflation makes failure more likely, while a high level of inflation prior to stabilization increases the chances of success. Countries with short-lived political institutions, a weak executive authority, and proportional electoral rules also tend to fail. After controlling for all these factors, we find that exchange-rate-based stabilizations are more likely to succeed. These findings are robust across measures of failure (two dichotomous and one continuous), sample selection criteria, and estimation techniques, including Heckman''s correction for the endogeneity of the anchor Online-Ausg Prati, Alessandro Sonstige oth http://elibrary.imf.org/view/IMF001/07934-9781451875454/07934-9781451875454/07934-9781451875454.xml Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Hamann, A. Javier Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions |
| title | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions |
| title_auth | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions |
| title_exact_search | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions |
| title_exact_search_txtP | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions |
| title_full | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions Hamann, A. Javier |
| title_fullStr | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions Hamann, A. Javier |
| title_full_unstemmed | Why Do Many Disinflations Fail? The Importance of Luck, Timing, and Political Institutions Hamann, A. Javier |
| title_short | Why Do Many Disinflations Fail? |
| title_sort | why do many disinflations fail the importance of luck timing and political institutions |
| title_sub | The Importance of Luck, Timing, and Political Institutions |
| url | http://elibrary.imf.org/view/IMF001/07934-9781451875454/07934-9781451875454/07934-9781451875454.xml |
| work_keys_str_mv | AT hamannajavier whydomanydisinflationsfailtheimportanceoflucktimingandpoliticalinstitutions AT pratialessandro whydomanydisinflationsfailtheimportanceoflucktimingandpoliticalinstitutions |