IMF Working Papers

Stabilization Programs and External Enforcement: Experience From the 1920's

By Julio A. Santaella

January 1, 1993

Preview Citation

Format: Chicago

Julio A. Santaella Stabilization Programs and External Enforcement: Experience From the 1920's, (USA: International Monetary Fund, 1993) accessed November 21, 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

Credibility and financing problems are important reasons why countries may seek to involve external institutions in the design and implementation of stabilization programs. In particular, governments may rely on external institutions to ‘enforce’ programs that would otherwise lack credibility. This paper analyzes six European currency stabilizations sponsored by the League of Nations in the 1920s. It emphasizes the means by which the League provided a ‘commitment technology’ and enforced compliance, thereby helping to ensure successful stabilizations. Empirical evidence indicates that countries with greater credibility problems relied more heavily on external enforcement to stabilize their currencies.

Subject: Banking, Currencies, Exchange rates, Financial institutions, Foreign exchange, Inflation, Loans, Monetary expansion, Monetary policy, Money, Prices

Keywords: Central bank, Commitment regime, Credibility problem, Currencies, Eastern Europe, Europe, Exchange rate, Exchange rates, Inflation, Inflation rate, Loans, Macroeconomic stabilization effort, Monetary expansion, Price level, Rate of depreciation, WP

Publication Details

  • Pages:

    48

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1993/003

  • Stock No:

    WPIEA0031993

  • ISBN:

    9781451841824

  • ISSN:

    1018-5941

Notes

Analyzes six European currency stabilizations sponsored by the League of Nations in the 1920s, namely Austria, Hungary, Greece, Bulgaria, Estonia and Danzig. Also published in Staff Papers, Vol. 40, No. 3, September 1993.

You May Also Be Interested In...

Kiribati: Agricultural Subsidies for Copra: Improving Efficiency and Equity and Balancing Trade-offs

November 21, 2024

EBA-Lite 3.0 Model and Methodology

November 18, 2024

Quarterly Projection Model for the Bank of Ghana: Extensions and Applications

November 15, 2024

Foreign Exchange Intervention Under the Integrated Policy Framework: The Case of India

November 15, 2024