NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Interactions Between Inflation and Trade-Regime Objectives in Stabilization Programs

Anne O. Krueger

NBER Working Paper No. 475
Issued in May 1980
NBER Program(s):   ITI   IFM

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.

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Document Object Identifier (DOI): 10.3386/w0475

Published: 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.

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