publication . Preprint . Article . Report . 1984

The Capital Inflows Problem Revisited: A Stylized Model of Southern Cone Disinflation

Maurice Obstfeld;
Open Access
  • Published: 01 Sep 1984
Abstract
In the late 1970s countries in Latin America's Southern Cone attempted to lower domestic inflation rates through the progressive reduction of a preannounced rate of exchange-rate devaluation. The stabilization programs gave rise to massive capital inflows, real exchange-rate appreciation, and current-account deficits. This paper develops a stylized intertemporal framework in which the effects of a preannounced exchange-rate oriented disinflation scheme can be studied. It is shown that even when agents have perfect foresight and markets clear continuously, the "capital inflows" problem and the associated real appreciation may result.While unanticipated, permanent...
Subjects
free text keywords: Economics and Econometrics, Market liquidity, Domestic interest rate, Monetary economics, Inflation, media_common.quotation_subject, media_common, Futures studies, Disinflation, Microeconomics, Economics, Stylized fact, Consumption (economics), Devaluation
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publication . Preprint . Article . Report . 1984

The Capital Inflows Problem Revisited: A Stylized Model of Southern Cone Disinflation

Maurice Obstfeld;