INFLATION AND THE COSTS OF STABILIZATION: Historical and Recent Experiences and Policy Lessons

This article reviews various experiences with stabilization.It first examines stabilization programs in the context of hyperinflation—lookingat the experiences of Austria and Germany in the early 1920sand Bolivia in 1985—and then reviews and interprets theresults of orthodox stabilization plans (applied in Argentina,Chile, and Uruguay during the mid-1970s and early 1980s) andthose of heterodox programs (the austral plan in Argentina andthe cruzado plan in Brazil, with a glance at the Mexican andIsraeli experiences). The paper concludes with a discussionof conceptual issues and implications for the design of stabilizationpolicies.