Trade Reform and Inflation Stabilization

November 1, 1994

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Format: Chicago

Manmohan S. Kumar, and Vivek B. Arora Trade Reform and Inflation Stabilization, (USA: International Monetary Fund, 1994) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Inflation, Real exchange rates, Tariffs, Trade balance, Trade liberalization

Keywords: WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/130
Stock No:

WPIEA1301994
ISBN:

9781451933819
ISSN:

1018-5941

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