Macroeconomic Experiences of the Transition Economies in Indochina
October 1, 1996
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Summary
This paper examines stabilization policies in Vietnam, Cambodia, and Laos since the late 1980s. Compared with other transition economies, the Indochinese countries avoided an output collapse and moved quickly to strong GDP growth and low inflation. Each adopted a similar mix of policies centered on flexible exchange rates, high real interest rates, fiscal adjustment through expenditure cuts, and the imposition of hard budget constraints on public enterprises. In none of the countries was an exchange rate anchor considered feasible, and money-based stabilization proved effective, despite evident instability in the demand for money.
Subject: Commercial banks, Currencies, Currency markets, Exchange rates, Financial institutions, Financial markets, Foreign exchange, Money
Keywords: budget constraint, budgetary contribution, Commercial banks, Currencies, Currency markets, Eastern Europe, enterprise account, enterprise closure, enterprise profitability, Exchange rates, firm, inflation rate, nominal exchange rate, operated company, public enterprise sector, run enterprise, state enterprise reform, state enterprise sector, state enterprise transfer, WP
Pages:
44
Volume:
1996
DOI:
Issue:
112
Series:
Working Paper No. 1996/112
Stock No:
WPIEA1121996
ISBN:
9781451853551
ISSN:
1018-5941
