Kiguel & Liviatan, 1995.

The recent hyperinflations in Argentina, Brazil, and Peru defy much of the widely accepted views regarding the origins and ends of hyperinflations. These “classical” views essentially state that hyperinflations have clear causes, exceptionally large budget deficits financed by money creation, and are brought to a sudden end, through a comprehensive stabilization program. In addition, the stabilization is achieved without much cost in terms of growth and unemployment. Sargent (1982) provides convincing empirical evidence for these propositions based on the European hyperinflations in the midtwenties. The more recent hyperinflation and stabilization in Bolivia by and large conforms with this view.

Kiguel and O’Connell, 1995.

Dual exchange rates and black markets for foreign exchange are common in developing countries, and a body of evidence is beginning to emerge on the effects that such parallel foreign exchange systems have on macro-economic performance. This article presents a simple typology of parallel systems, discusses their emergence, and looks at why countries prefer these arrangements to the main alternatives. The article examines the ability of parallel markets to insulate international reserves and domestic prices from shocks to the balance of payments.

Kiguel and Neumeyer, 1995.

Very high inflations are usually explained by the need to raise revenue from money creation (that is, seigniorage) to finance the budget deficit. The literature on inflationary finance [as presented, for example, in Friedman (1971), Sargent and Wallace (1973) and Bruno and Fischer (1990) among others] provides the analytical underpinnings to study this issue. The models in this literature give rise to a Laffer curve between inflation and seigniorage, and show that in general there are two steady-state equilibria. There are essentially three alternative explanations of very high inflations within this approach.

Kiguel, 1994.

Exchange rate policy is usually driven by two different, and many times conflicting objectives.

Kiguel & Liviatan, 1994.

An exchange rate based stabilization is one designed to reduce inflation by using the exchange rate as the main nominal anchor. This does not mean necessarily a fixed exchange rate. A crawling peg with a low rate of depreciation or a preannounced gradual reduction in the rate of devaluation are alternative ways of using the exchange rate as a nominal anchor.

Bouton, Jones & Kiguel, 1994.

Many African countries initiated reform programs in the mid 1980s to remedy their severe balance of payments problems and reverse their economic decline. 

Kiguel & Nita Ghei, 1993.

We live in a period characterized by devaluation pessimism. As the world became more tolerant of inflation, following the collapse of the Bretton Woods era, inflation rates have been higher, and maxi-devaluations have been more frequently eroded by increases in domestic prices. Devaluations are now seen more often as an instrument to accommodate inflation instead of one that can be effective in changing the real exchange rate and support external balance. Recent empirical work on this topic by Kamin (1988) and Edwards (1989) by and large support this view. But is this skepticism about devaluations right? Has it always been this way?

Ades, Kiguel & Liviatan, 1993.

In high inflation economies exchange-rate-based stabilizations typically start with a boom, with the recession coming later. In contrast, in similar programs in the moderate inflation European economies, the recession generally appears upfront. When such programs result in a boom, it is driven by different forces than in the high inflation economies.

Cukierman, Kiguel & Liviatan, 1992.

The cost of reneging is a key reason policymakers hold back from strong commitments in their exchange rate policy. The stronger the commitment to an exchange rate rule, the more costly it is to deviate from it.

Kiguel and Liviatan, 1992.

This article examines the effects of disinflation on economic activity in countries characterized by chronic inflation. Such countries have a long history of inflation at rates exceeding those in industrial countries as well as labor and capital markets that have adjusted to function in an inflationary environment. A sample of disinflation programs in several Latin American countries and in Israel demonstrates that stabilization efforts in countries with chronic inflation often do not induce the usual Phillips curve tradeoff in the medium run. Specifically, stabilization programs that use the exchange rate as the main nominal anchor are often associated with a business cycle that begins with a boom and ends with a recession.