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Crisis, Stabilization, and Economic Reform : Therapy by Consensus - Michael Bruno

Crisis, Stabilization, and Economic Reform

Therapy by Consensus

Hardcover Published: 5th August 1993
ISBN: 9780198286639
Number Of Pages: 320

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This book provides an analysis of severe economic crises, involving high inflation and negative growth, and comprehensive reform programmes that have been tried. A detailed first hand account and explanation is given of the protracted crisis and the successful heterodox stabilization programme of the Israeli economy, which was also followed in Mexico and Eastern Europe. Professor Bruno writes with authority on the Israeli experience, having been Governor of the Central Bank of Israel from 1986-91, and thus is able to give a rare insight into the role of economists and the politics of policy formulation and implementation.
As well as providing a first hand account of the Israeli experience, Professor Bruno makes a systematic attempt to reveal the policy lessons of economic crises and reform across heterogeneous country groups. The analysis of the Israeli experience is combined with a comparative policy-oriented analysis of failures and successes in Latin American reforms (Chile, Argentina, Bolivia, Brazil, and Mexico) as well as a preliminary evaluation of recent stabilizations and reform attempts in several East European economies.
The approach of this book is analytical but non-technical, with emphasis placed upon the interface of economic policy design with the institutional constraints and the political environment. Readily accessible to economists and students alike, parts of this book were first given as the Clarendon Lecture in Economics.

`Professor Michael Bruno ... is one of those few academics who speak with real authority about the real world, and can draw on practical experience when giving policy advice ... Drawing heavily on his first-hand experience as governor of the Bank of Israel between 1986 and 1991, but not skimping on the economic analysis, Mr Bruno provides a powerful and comprehensive analysis of why some countries get into hyperinflationary difficulties.' Financial Times `a most useful general introduction to the problems examined in subsequent chapters ... This is a lucid and useful book, informed by shrewd political judgement and welcome awareness of the real importance of individual freedom. Its judicious and reasonable tone, with careful use of evidence from a wide range of settings, contrasts notably with the other volume reviewed here.' Economic Affairs

List of Figures
List of Tables
High Inflation, Growth Crisis, and Reform: Historical Perspective and Brief Overviewp. 1
Recent Comparative International Experiencep. 1
Explosive Hyperinflations of the 1920sp. 3
Chronic High Inflation in Recent Historyp. 6
Emergence of the 'Heterodox' Approach to Stabilizationp. 11
Structural Crisis and Reform as Protracted Processes: An Overview of the Issuesp. 14
The Gathering Storm: Israel's Structural Crisis in the 1970sp. 23
Growth and Productivity: A Historical Perspectivep. 25
International Comparison of Growth and Inflationp. 27
The Government Budget: From Growth to Redistributionp. 30
Ballooning Internal and External Debtp. 34
Implications for the Structure of Employmentp. 36
Savings, Investments, and Rates of Returnp. 38
The Self-Reinforcing Nature of the Structural Crisis: A Partial Summaryp. 40
Shocks and Accommodation: The Dichotomy and Mechanics of High Inflationp. 42
Budget Finance, Seigniorage, and Average Inflationp. 44
From Single- to Three-Digit Inflation: The Changing Trade-off between Real GDP, Inflation, and the Current Accountp. 49
Aggregate Supply and Demand, and the Analytics of Nominal Anchorsp. 59
Time-Invariance of the Basic Inflation Equationp. 63
Backward Indexation and Changing Inflation Dynamicsp. 67
Mathematical Appendixp. 76
Preparing for a Comprehensive Stabilization Programme 1981-1985: Doctrinal Debates, Politics, and Trial by Errorp. 78
Introduction: Ideas, Economists, and Politiciansp. 78
Economists' Changing Views on Exchange Rates, Inflation, and Stabilizationp. 80
A Digression on the Players in the Political Gamep. 84
Deepening Crisis, Lebanon, and a Dollarization Fiasco, 1981-1984p. 87
The National Unity Government in its First Year (1984-1985), or The Fine Art of Muddling Throughp. 92
Economists are Finally Given a Chancep. 96
Outline of the July Programmep. 102
Politics and the Social Wage Contractp. 106
The Fight over Stabilization and the Structural Adjustment Process, 1985-1991p. 108
Phase 1: Early Tests of Fiscal and Exchange-Rate Credibilityp. 112
Phases 2 and 3: The Post-Stabilization Business Cyclep. 119
Establishing Fiscal Credibilityp. 128
The Struggle over the Establishment of a Nominal Anchor: Credibility and Learningp. 134
A Digression on the Role of Price Controls and their Removalp. 143
Structural Adjustment and the Reform Processp. 147
Latin American Comparisons: Failures, Successes, Heterogeneityp. 156
Chile: From Democracy to a Socialist Experimentp. 158
The Military Government and the Lessons of Pure Orthodoxyp. 162
From Tablita to Confidence Crisisp. 164
Recovery and Normalization: Reaping the Benefits of Reformp. 168
How Different was Argentina from Chile in the 1970s?p. 171
Argentina and Bolivia in 1985: Why was the Austral Plan Short-Lived?p. 175
Price Controls without Fundamentals: Brazil and Argentina in 1986-1990p. 182
Argentina's 1991 Convertibility Plan: Has the Turning-Point Finally Come?p. 188
Mexico's Successful Heterodox Stabilization and Reformp. 190
Stabilization and Reform in Eastern Europep. 200
Yugoslavia's Inflation in the 1980s and the 1989-1990 Reform Effortp. 207
Poland and the East European Economies: Initial Conditions and Country Programmesp. 211
Stabilization: Was the Initial Price Shock Necessary?p. 218
Was the Output Collapse Unavoidable?p. 224
Was the Fiscal Balance Sustainable?p. 230
What to Do with Bad Loan Portfolios and Enterprise Arrears?p. 234
Privatization of Large State-Owned Enterprises: What to Do during the (Long) Transition?p. 238
The Ingredients of Macro-Policy during the Transitionp. 241
Synthesis, Policy Lessons, and Open Questionsp. 248
Common Factors in Crisis Entry or Avoidancep. 250
Crisis, Macro-Policy, and Reform: A Diagrammatic Expositionp. 256
Why are Stabilizations and Reforms Delayed?p. 262
Components of a Stylized Stabilization and Structural Reformp. 268
The Sequencing and the Speed of Implementationp. 273
Referencesp. 280
Index of Subjectsp. 291
Index of Namesp. 298
Table of Contents provided by Blackwell. All Rights Reserved.

ISBN: 9780198286639
ISBN-10: 0198286635
Series: Clarendon Law
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 320
Published: 5th August 1993
Country of Publication: GB
Dimensions (cm): 21.59 x 13.97  x 2.24
Weight (kg): 0.54