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International Monetary Fund. External Relations Dept.
For the latest thinking about the international financial system, monetary policy, economic development, poverty reduction, and other critical issues, subscribe to Finance & Development (F&D). This lively quarterly magazine brings you in-depth analyses of these and other subjects by the IMF’s own staff as well as by prominent international experts. Articles are written for lay readers who want to enrich their understanding of the workings of the global economy and the policies and activities of the IMF.
Mr. Carlos A. Végh Gramont
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
CARLOS A.VÉGH

The evidence on stopping high inflation is interpreted in terms of an analytical framework. The evidence suggests that, by using the exchange rate as the nominal anchor, hyperinflations have been stopped almost overnight with relatively minor output costs. In contrast, exchange rate-based stabilizations in chronic-inflation countries have typically resulted in a sluggish adjustment of the inflation rate, sustained real appreciation of the domestic currency, current account deficits, and an initial expansion in economic activity followed by a contraction. These stylized facts are shown to be consistent with the predictions of a staggered-prices, cash-in-advance model. [JEL F41]