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Fighting Inflation in Latin America
Author(s) -
Dijkstra A.
Publication year - 1997
Publication title -
development and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.267
H-Index - 93
eISSN - 1467-7660
pISSN - 0012-155X
DOI - 10.1111/1467-7660.00053
Subject(s) - latin americans , inflation (cosmology) , economics , exchange rate , balance (ability) , capital (architecture) , monetary economics , keynesian economics , international economics , macroeconomics , political science , geography , medicine , physics , archaeology , theoretical physics , law , physical medicine and rehabilitation
Inflation has been a chronic problem for Latin American economies since the Second World War. In the 1980s, inflation ran out of control in many countries. This article analyses the causes of these high inflation rates and discusses the experiences of Latin American countries in fighting (hyper‐) inflation in the 1980s and 1990s. Particular attention is given to the relative merits of orthodox versus heterodox approaches, and to the use of the exchange rate as an inflation stabilizer. The article concludes, among other things, that achieving fiscal balance is crucial, whatever method is used, and that a fixed exchange rate can help to stabilize inflation but contains many risks, in particular with open capital accounts.