Inflation, Credibility, and the Role of the International Monetary Fund

September 1, 1998

Preview Citation

Format: Chicago

Curzio Giannini, and Carlo Cottarelli. Inflation, Credibility, and the Role of the International Monetary Fund, (USA: International Monetary Fund, 1998) accessed December 26, 2024

Summary

This paper argues that many developing countries may find it difficult to buttress disinflation programs purely through the adoption of traditional credibility-enhancing devices (such as monetary anchors and central bank independence), owing to “technical problems” (for example, high instability of money demand, increased capital mobility) and an insufficient endowment of credibility in the political institutions. In these cases, borrowing credibility from an outside agency like the International Monetary Fund may be the most effective solution. The paper discusses the different options that would allow the Fund to support programs aimed not at external adjustment—the Fund’s traditional role—but at disinflation.

Subject: Balance of payments, Balance of payments need, Disinflation, Inflation, Inflation targeting, Monetary policy, Price stabilization, Prices

Keywords: Balance of payments need, Credibility, Disinflation, Disinflation program, Disinflation strategy, Fund lending, Fund program, Fund resource, Fund support, Fund's involvement, Fund-supported disinflation program, Fund-supported program, Global, Inflation, Inflation expectation, Inflation targeting, International Monetary Fund, PDP, Price stabilization, Stamp of approval

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 1998/012
Stock No:

PPIEA0121998
ISBN:

9781451969337
ISSN:

1564-5193

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