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Trade Reform and Inflation Stabilization
Author:
Mr. Manmohan S. Kumar
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and
Mr. Vivek B. Arora
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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 130
Language:
English
Publication Date:
01 Nov 1994
DOI:
https://doi.org/10.5089/9781451933819.001
ISBN:
9781451933819
ISSN:
1018-5941
Pages:
26
Keywords:
WP
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines two important issues for a small high-inflation open economy with trade controls where the government implements an exchange-rate based stabilization program: first, the extent to which the degree of openness of the economy influences the probability of success of the program; and second, the conditions under which a trade reform, implemented in conjunction with the stabilization program, will increase the probability that stabilization will be successful. The paper shows that in an economy with high export and import price elasticities, structural reforms to increase openness can be important in determining the success of the program.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund