Exchange Rate-Based Stabilization in Western Europe : Greece, Ireland, Italy and Portugal

Author/Editor:

Enrica Detragiache ; A. Javier Hamann

Publication Date:

June 1, 1997

Electronic Access:

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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 compares the experience with exchange-rate–based stabilization (ERBS) of four Western European countries with that of high-inflation developing countries. In general, the behavior of key macroeconomic variables—inflation, output, demand, the real exchange rate and the current account—in the four countries examined did not correspond to the pattern observed in developing countries, although some resemblance to this pattern could be found in Italy in 1987–92 and Greece in 1994–96. The experience with ERBS in Western Europe highlights the importance of incomes policy as an ingredient of a successful stabilization program and shows that the adoption of a looser anchor does not necessarily reduce the output cost of disinflation.

Series:

Working Paper No. 97/75

Subject:

English

Publication Date:

June 1, 1997

ISBN/ISSN:

9781451849691/1018-5941

Stock No:

WPIEA0751997

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

29

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