Cover IMF Working Papers
Stabilization and Growth in Transition Economies: The Early Experience
Author: Mr. Stanley Fischer, Mr. Carlos A. Végh Gramont, and Ms. Ratna Sahay
Series:
IMF Working Papers
Volume/Issue:
Volume 1996: Issue 031
Language:
English
Publication Date:
01 Apr 1996
DOI:
https://doi.org/10.5089/9781451980042.001
ISBN:
9781451980042
ISSN:
1018-5941
Pages:
32
Keywords:
WP; country; economy; government; transition economy; inflation estimation result; inflation stabilization; stabilization package; output decline; inflation regression; FSU country; Inflation; Exchange rate arrangements; Government debt management; Purchasing power parity; Fiscal stance; Eastern Europe; Baltics
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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 analyzes the growth and stabilization experience in 26 transition economies in eastern Europe, the former Soviet Union, and Mongolia for the period 1989-1994. Inflation rates have declined significantly in most countries following an inflation stabilization program. Growth resumes after stabilization occurs, typically with a lag of about two years. Reducing inflation thus appears to be a precondition for growth. An econometric analysis of the short-run determinants of inflation and growth illustrates the key roles of fixed exchange rates, improved fiscal balances, and structural reforms in spurring growth and lowering inflation, and confirms that inflation stabilization programs have been beneficial for growth even after controlling for structural reforms.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund

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