Are stabilization programs expansionary?
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(2) 66. E S T U D I O S ECONÓMICOS. of o u t p u t , due to rigidities i n n o m i n a l contracts ( F i s c h e r , 1988; T a y lor 1980, a m o n g others). In recent years, this t r a d i t i o n a l view has been challenged. A large n u m b e r of case studies a n d several c o m p a r a t i v e studies have concluded that s t a b i l i z a t i o n p r o g r a m s t h a t use the exchange rate as the n o m i n a l anchor to reduce h i g h levels of i n flation are i n i t i a l l y e x p a n s i o n a r y rather t h a n c o n t r a c t i o n a r y ( K i g u e l and L i v i a t a n , 1992; V e g h , 1992; R e i n h a r t and V e g h , 1994; a n d R e i n h a r t a n d V e g h , 1995; a m o n g others). A c c o r d i n g to t h i s l i t e r a t u r e , exchange rate based s t a b i l i z a t i o n , E R B S , programs cause a n i n i t i a l " b o o m " , followed by a recession. In this view, only the p r o g r a m s that use the q u a n t i t y of money as the n o m i n a l anchor e x h i b i t recessions f r o m the very b e g i n n i n g . E a s t e r l y (1996) went further i n the r e v i s i o n of the s t y l i z e d facts associated w i t h the s t a b i l i z a t i o n p r o g r a m s . H e presents evidence i n s u p p o r t of the p r o p o s i t i o n t h a t s t a b i l i z a t i o n programs are always expansionary, not only i n their i n i t i a l phase. T h e e m p i r i c a l p r o p o s i t i o n that price s t a b i l i z a t i o n p r o g r a m s have s y s t e m a t i c real effects - i n c l u d i n g real a p p r e c i a t i o n of t h e domestic currency, current account deficits and o u t p u t cycles - s t i m u l a t e d the t h e o r e t i c a l research. A s a result, there is a growing t h e o r e t i c a l l i t erature a i m e d at i d e n t i f y i n g the mechanisms b e h i n d these " s t y l i z e d facts" ( C a l v o , 1986; H e l p m a n a n d R a z i n , 1987; C a l v o a n d V e g h , 1993; R o l d o s 1995a a n d b; U r i b e , 1995; a m o n g others). T h e purpose of the present paper is to challenge the e m p i r i c a l p r o p o s i t i o n t h a t E R B S programs have been expansionary. U s i n g d a t a f r o m L a t i n A m e r i c a n countries, we have found no evidence of o u t p u t b o o m s caused by the E R B S programs. R a t h e r , external shocks e x p l a i n the o u t p u t b o o m s that have been ascribed to the s t a b i l i z a t i o n p r o grams i n previous studies. In a d d i t i o n , we present evidence t h a t the E R B S programs were to some extent a n endogenous response to the external shocks. O t h e r things equal, L a t i n A m e r i c a n governments seem to have been more w i l l i n g to l a u n c h E R B S programs w h e n e x t e r n a l conditions were r e l a t i v e l y more favorable, and hence the coincidence of b o o m s a n d s t a b i l i z a t i o n programs. M o s t of the e m p i r i c a l evidence that has been presented to support the p r o p o s i t i o n t h a t the E R B S programs have been i n i t i a l l y exp a n s i o n a r y refers to L a t i n A m e r i c a . Therefore, it seems a p p r o p r i a t e to focus on the same region to revise this hypothesis. F u r t h e r m o r e , there is no other region i n the w o r l d that has experienced two a n d three digit a n n u a l rates of i n f l a t i o n for more t h a n three decades. S t a b i l i z a t i o n policies have been at the top of the policy agenda i n L a t i n A m e r i c a t h r o u g h o u t this p e r i o d , and several comprehensive s t a b i l i z a t i o n programs have been i m p l e m e n t e d . Hence, the region e x h i b i t s the.
(3) STABILIZATION P R O G R A M S. 67. p o l i c y v a r i a b i l i t y t h a t is necessary to identify s t a t i s t i c a l r e l a t i o n s h i p s . A t the same t i m e , even t h o u g h L a t i n A m e r i c a n countries are not h o mogeneous, they have often been subject to s i m i l a r e x t e r n a l shocks. T h i s helps to c o n t r o l for other sources of v a r i a t i o n w h e n e v a l u a t i n g the effects of the s t a b i l i z a t i o n policies. T h e i d e n t i f i c a t i o n of the episodes that s h o u l d be classified as s t a b i l i z a t i o n p r o g r a m s is not always clear. Indeed, d e c i d i n g w h e n a p r o g r a m is a c t u a l l y i n place, w h e n it starts a n d w h e n it finishes involves some degree of d i s c r e t i o n . E a s t e r l y (1996) has recently e m p h a s i z e d this p o i n t , a r g u i n g t h a t the recession-now-versus recession-later h y pothesis fails to h o l d if the s t a b i l i z a t i o n programs are identified u s i n g objective c r i t e r i a based o n i n f l a t i o n performance. H e proposes a n o b jective c r i t e r i o n for the selection of the s t a b i l i z a t i o n episodes: i n f l a t i o n of over forty percent for two years or more followed by a p e r i o d of two years or m o r e of i n f l a t i o n below forty percent. U s i n g this c r i t e r i o n , E a s t e r l y identifies 28 s t a b i l i z a t i o n episodes i n the 1960-1994 p e r i o d , all over the w o r l d . H e t h e n shows t h a t no recessions were associated w i t h these episodes, the p a t t e r n b e i n g the same for exchange-rate based a n d money-based s t a b i l i z a t i o n programs. E v e n t h o u g h the idea of u s i n g an objective c r i t e r i o n to date t h e s t a b i l i z a t i o n p r o g r a m s is a p p e a l i n g , E a s t e r l y ' s procedure a n d the r e sults o b t a i n e d are h i g h l y controversial. A b o v e a l l , there seems to be a c o n t r a d i c t i o n i n defining the programs a c c o r d i n g to t h e i r results (the i n f l a t i o n rate) i n order to analyze t h e i r results. T h e r e are episodes i n w h i c h i n f l a t i o n went d o w n m a i n l y because of favorable e x t e r n a l shocks, w i t h o u t the government h a v i n g i m p l e m e n t e d a specific s t a b i l i z a t i o n policy. T h e r e are also m a j o r s t a b i l i z a t i o n a t t e m p t s t h a t failed to reduce i n f l a t i o n . T h i s methodology biases the selection against unsuccessful programs. Hence, it is not s u r p r i s i n g t h a t t h e list of s t a b i l i z a t i o n programs that emerges from E a s t e r l y ' s a l g o r i t h m is controversial. F o r instance, only one s t a b i l i z a t i o n p r o g r a m is f o u n d i n A r g e n t i n a i n the p e r i o d 1960-1994. A l s o , a m o n g m a n y a t t e m p t s i n the S o u t h e r n cone to c o n t r o l i n f l a t i o n v i a the use of t a b l i t a s , o n l y the U r u g u a y a n one appears i n this list. So, w h i l e the point raised b y E a s t e r l y cannot be dismissed, the proposed s o l u t i o n for i d e n t i f y i n g episodes looks worse t h a n the p r o b l e m it was designed to solve. E m p i r i c a l studies of the business cycles associated w i t h the E R B S programs face serious problems w h e n t r y i n g to i d e n t i t y the relevant episodes. W h a t e v e r the merits of E a s t e r l y ' s solution, the questions he raises a b o u t the c r i t e r i a for selecting s t a b i l i z a t i o n episodes cannot be dismissed. Nevertheless, this p a p e r pursues a different line of c r i t i c i s m of this l i t e r a t u r e , n a m e l y t h a t the b o o m hypothesis may not be robust.
(4) 68. ESTUDIOS ECONÓMICOS. to the i n c l u s i o n of some a d d i t i o n a l controls. T o this e n d , i t seems n a t u r a l to stick to the " c o n v e n t i o n a l " list of s t a b i l i z a t i o n p r o g r a m s ( R e i n h a r t and V e g h , 1994, 1995). T h e r e m a i n d e r of the p a p e r is organized as follows. S e c t i o n 2 presents a p r o b i t m o d e l for the E R B S programs. T h e a n a l y s i s of the effects of the programs o n G D P g r o w t h is presented i n s e c t i o n 3. Sect i o n 4 ends the p a p e r w i t h some c o n c l u d i n g r e m a r k s .. 2. M a j o r P r i c e S t a b i l i z a t i o n P r o g r a m s i n L a t i n A m e r i c a T h e set of programs used i n a l l estimations was t a k e n f r o m R e i n h a r t a n d V e g h (1995), w i t h the exception of the B r a z i l i a n " P l a n R e a l " , w h i c h was not i n c l u d e d i n their sample. T h e m a i n c h a r a c t e r i s t i c s of these programs are s u m m a r i z e d i n table 1. F o l l o w i n g previous l i t e r a t u r e , o n l y m a j o r programs t h a t the p u b lic c o u l d clearly identify have been i n c l u d e d . A s C a l v o a n d V e g h (1998) have p o i n t e d out, this approach has the d i s a d v a n t a g e of bei n g subjective a n d o m i t t i n g lesser-known episodes. B u t , at the same t i m e they note t h a t " i t makes sense to select episodes i n w h i c h the p h e n o m e n o n i n question - relative to m a n y other factors w h i c h are difficult to c o n t r o l for - was of o v e r r i d i n g i m p o r t a n c e . " T h e focus is o n d i s i n f l a t i o n programs i n chronic i n f l a t i o n c o u n tries. A s Pazos (1972) first noticed, chronic i n f l a t i o n is a different p h e n o m e n o n from b o t h low i n f l a t i o n a n d h y p e r i n f l a t i o n . T h e h y pothesis t h a t E R B S programs cause o u t p u t booms refers specifically to countries e x p e r i e n c i n g chronic i n f l a t i o n . S t a b i l i z i n g f r o m low i n flation a p p a r e n t l y causes recessions ( B a l l , 1994, G o r d o n , 1982), w h i l e s t a b i l i z i n g from h y p e r i n f l a t i o n may have no effects on o u t p u t (Sargent, 1982). These considerations have some b e a r i n g o n the choice of the d i s i n f l a t i o n episodes that are i n c l u d e d i n the s a m p l e . F o r i n stance, the B o l i v i a n experience i n the mid-eighties is not i n c l u d e d , since i t is not a s t a b i l i z a t i o n - f r o m - c h r o n i c - i n f l a t i o n p r o g r a m ( C a l v o and V e g h , 1998). Six d u m m i e s were defined to identify different phases of the s t a b i l i z a t i o n programs i n the regression analysis (table 2). E l takes value one i n the first year of a n E R B S p r o g r a m a n d zero otherwise. A calendar year was considered to be the first year of the p r o g r a m if t h e p r o g r a m s t a r t e d i n any m o n t h from J u l y of the i m m e d i a t e previous year to J u n e of t h a t calendar year. T h i s m a p p i n g of the calendar i n t o p r o g r a m years is intended to p r o x y the first twelve m o n t h s of t h e programs u s i n g a n n u a l d a t a . E 2 and £ 3 take value one i n the second.
(5) 69. STABILIZATION P R O G R A M S. and t h i r d years of a n E R B S p r o g r a m , respectively, p r o v i d e d t h e p r o g r a m d i d not end before. E 4 takes value one i n the f o u r t h a n d f i f t h years of a n E R B S p r o g r a m , p r o v i d e d it d i d not end before. M o s t E R B S p r o g r a m s failed, a n d thus have a n identifiable final date (see table 1). It is more difficult to identify the end of a successful p r o g r a m . P r e v i o u s l i t e r a t u r e suggests t h a t the late recessions i n E R B S programs t e n d to show u p a r o u n d the f o u r t h a n d fifth years ( R e i n h a r t a n d V e g h , 1995). M E , for "money e a r l y " , is equal to one i n the first y e a r a n d , M L , for "money l a t e " , is equal to one i n the l a s t year of a m o n e y - b a s e d s t a b i l i z a t i o n p r o g r a m . In the case of successful p r o g r a m s , M L is equal to one i n the fifth year of the p r o g r a m . T h e s e conventions are t a k e n f r o m R e i n h a r t and V e g h (1994). A r g u a b l y , the p r o g r a m d u m m i e s c o u l d have been denned differently. Different m o n t h s c o u l d have been chosen to m a p the c a l e n d a r i n t o the p r o g r a m years. C a l v o a n d V e g h (1998), for instance, c o n sider t h a t a p r o g r a m s t a r t e d i n year t if it was l a u n c h e d i n any of the first three quarters of the year, rather t h a n i n the first two as we d i d . A l s o , there is no clear-cut c r i t e r i o n to say w h e n p r o g r a m s enter t h e i r " l a t e " phase. T h e choice of the f o u r t h a n d fifth years of an E R B S p r o g r a m a n d the fifth year of a money-based s t a b i l i z a t i o n p r o g r a m to c a p t u r e the performance of m a t u r e programs is also m o r e an e m p i r i c a l issue t h a n a m a t t e r of principles. O u r results are r o b u s t to reasonable v a r i a t i o n s i n the definitions of the d u m m y v a r i a b l e s . 1. 3. E x p l a i n i n g t h e E R B S P r o g r a m s G i v e n the h i g h rates of i n f l a t i o n t h a t m a n y countries i n L a t i n A m e r ica e x h i b i t e d from the sixties to the nineties, i t is not s u r p r i s i n g t h a t several m a j o r s t a b i l i z a t i o n programs were i m p l e m e n t e d i n the r e g i o n d u r i n g this p e r i o d . W h a t is less obvious is that regional shocks affected the decision to l a u n c h such programs. T h e E R B S programs i n L a t i n A m e r i c a were i m p l e m e n t e d more-or-less s i m u l t a n e o u s l y i n sev2 r a l countries. A b a t c h of p l a n s were i m p l e m e n t e d i n the m i d sixties, the t a b l i t a s i n the late seventies, the "heterodox" plans i n the m i d iighties a n d t h e n the plans of the late eighties a n d first h a l f of t h e l i n e t i e s . N o t only were t h e programs often launched at the same ;ime i n different countries, they were also a b a n d o n e d at the same ;ime. A p a r t f r o m c o n t a g i o n effects, this suggests t h a t the s t a b i l i z a ion p r o g r a m s were endogenous responses to a set of d e t e r m i n a n t s ; o m m o n to various countries i n the region. T h e analysis t h a t follows nakes this p o i n t more formally. 1. T o save space, we discuss only the results of the regression analysis obtained. vith the dummies reported i n table 2, b u t other estimations are available u p o n equest..
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(10) 74. ESTUDIOS ECONÓMICOS. LO 03. 03. O. CN. 00 05 en o : 00 so SO CO. 05. i-H. Oí. OI. so 00 OI. OI. e 3 o. Q ^.
(11) STABILIZATION PROGRAMS. 75. A p r o b i t m o d e l was e s t i m a t e d u s i n g p a n e l d a t a for the L a t i n A m e r i c a n countries that i m p l e m e n t e d E R B S programs d u r i n g the past t h r e e decades. T h e dependent v a r i a b l e is the d u m m y E l , w i c h takes v a l u e one, if an E R B S p r o g r a m s t a r t e d i n the c o u n t r y i n t h a t year, a n d zero otherwise. T h e domestic e x p l a n a t o r y variables are the lagged l o g a r i t h m of t h e rate of i n f l a t i o n , L P I , the lagged l o g a r i t h m of the r a t i o of i n t e r n a t i o n a l reserves to G D P , L I R , a n d a d u m m y for p a r l i a m e n t a r y elections, P A R E L E , lagged two periods. T h e foreign e x p l a n a t o r y variables are the percent increase i n U S stock prices, represented b y S t a n d a r d a n d P o o r s 500 Index, 5 P 5 0 0 , a n d the rate of g r o w t h of G D P i n i n d u s t r i a l countries, I G D P G (see the a p p e n d i x for a d e s c r i p t i o n of the d a t a ) . T h e results are r e p o r t e d i n table 3. T h e coefficients are s t a t i s t i c a l l y significant at five percent at least, a n d e x h i b i t the " r i g h t " signs. A s to the domestic d e t e r m i nants, E R B S programs are more likely to be l a u n c h e d w h e n i n f l a t i o n i n the p r e v i o u s year was larger, w h e n foreign reserves were h i g h e r , and i n the second year after p a r l i a m e n t a r y elections. T h e first r e s u l t is n a t u r a l , robust a n d self e x p l a n a t o r y . T h e finding t h a t larger f o r eign reserves favored the l a u n c h i n g of an E R B S p r o g r a m is consistent w i t h the fact t h a t fixed exchange-rate regimes require a h i g h level of reserves. T h e t h i r d seems to i n d i c a t e that p o l i t i c i a n s are more w i l l i n g to l a u n c h a n E R B S p r o g r a m d u r i n g the early phases of the legislative session. B o t h t h e rate of g r o w t h of G D P i n i n d u s t r i a l countries a n d t h e r e t u r n o n U S stocks, as measured by the rate of g r o w t h of 5 P 5 0 0 , are p o s i t i v e l y associated w i t h the b e g i n n i n g of E R B S programs i n L a t i n A m e r i c a . T h e q u a l i t a t i v e results are robust to changes i n the s a m p l e . T h e r e l a t i o n s h i p between several U S interest rates a n d E R B S p r o g r a m s were also tested, b u t were either not significant or not robust to s m a l l changes i n the sample. These results seem to c o n f i r m t h a t , other things equal, p o l i c y makers were more w i l l i n g to l a u n c h E R B S programs w h e n the i n t e r n a t i o n a l e n v i r o n m e n t was r e l a t i v e l y more favorable. T a b l e 3 provides some s u p p o r t to the o p t i m a l w a i t i n g theory, a c c o r d i n g to w h i c h governments w a i t u n t i l c o n d i t i o n s are r e l a t i v e l y g o o d to i n i t i a t e a s t a b i l i z a t i o n p r o g r a m ( O r p h a n i d e s , 1996). It does not m e a n , of course, t h a t only w h e n facing g o o d e x t e r n a l conditions d i d L a t i n A m e r i c a n governments start a s t a b i l i z a t i o n p r o g r a m : several domestic variables also proved i m p o r t a n t i n the decision. O u r result is indeed consistent w i t h the l a u n c h i n g of some s t a b i l i z a t i o n programs u n d e r u n f a v o r a b l e 2. T h i s interpretation is very tentative. M i l i t a r y governments i m p l e m e n t e d some of the analyzed programs, the lenght of parliamentary sessions varies f r o m one country to another, a n d the p o l i t i c a l costs of the programs could also be very different in different circumstances. Nevertheless, the coefficients m u l t i p l y i n g the other regressors do not vary significantly if this variable is omitted. 2.
(12) 76. ESTUDIOS ECONÓMICOS. e x t e r n a l c o n d i t i o n s , as was the case of the A r g e n t i n i a n A u s t r a l p l a n i n 1985. T h e e x t e r n a l conditions were very negative for A r g e n t i n a at t h a t t i m e , b u t a n i n f l a t i o n a r y process t h a t was r u n n i n g o u t o f c o n t r o l left the government w i t h few options (Canavese a n d D i T e l i a 1988).. Table 3 Probit Model Dependent variable: E \. Variables. Estimate. Error. LPh,t-i. 0.615 0.551 0.945. 0.166 0.269 0.417. 5P500 -5P500 _!. 2.559. I G D P G t Constant. 40.874 3.366. 1.198 16.777 4.193. LIR t-2 P A R E L E _ i t. i. ¡. t. t. 2. t. i. t. t. P. statistic. value. 3.704 ** 2.045 * 2.267 * 2.137 *. [.000] [.041] [.023] [.033]. 2.436 * 0.803. [.015] [.422]. N u m b e r of observations. 160. N u m b e r of positive observations. 12. P s e u d o R Squared ( C r a g g a n d U h l e r , 1970) a /. 0.388. P s e u d o R S q u a r e d ( M c F a d d e n , 1974) a /. 0.328. Notes: P e r i o d of estimation: 1963 to 1994. Countries: A r g e n t i n a , B r a z i l , C h i l e , M e x i c o a n d Uruguay, a / See M a d d a l a (1983). Sources: see the appendix.. 4. T h e S t a b i l i z a t i o n P r o g r a m s a n d the Business. Cycle. T h e purpose of this section is to review the e m p i r i c a l evidence o n t h e business cycle associated w i t h the B R B S programs i n t h e light of t h e evidence presented i n t h e previous section, that t h e E R B S p r o g r a m s were m o s t l y l a u n c h e d u n d e r favorable e x t e r n a l c o n d i t i o n s . R e i n h a r t a n d V e g h (1994) s u b m i t the s t a b i l i z a t i o n - p r o g r a m s business-cycle hypothesis to s t a t i s t i c a l scrutiny, using d a t a f r o m L a t i n A m e r i c a d u r i n g the last three decades (1964-1993). T h e y p e r f o r m r e gression analysis w i t h panel d a t a o n the seven L a t i n A m e r i c a n c o u n tries t h a t i m p l e m e n t e d s t a b i l i z a t i o n programs i n the p e r i o d . T h e r a t e of g r o w t h of real G D P is the dependent variable a n d several d u m m i e s.
(13) STABILIZATION PROGRAMS. 77. are designed to capture different stages of the s t a b i l i z a t i o n p r o g r a m s . O n e such regression is r e p o r t e d i n c o l u m n 1 i n table 4 . W e detected some extreme values i n our dataset that s i g n i f i c a n t l y affected t h e results. A c c o r d i n g to the I M F , B r a z i l i a n real G D P grew at a rate of 23 p e r cent d u r i n g 1965, the second year of the 1964 E R B S p r o g r a m . In order to avoid h a v i n g the results d i s t o r t e d by t h i s extreme o b s e r v a t i o n , the B r a z i l i a n 1964 p r o g r a m was e x c l u d e d f r o m the sample. Hence, the analysis that follows is based o n the five m o n e y - b a s e d a n d eleven of the twelve exchange-rate-based s t a b i l i z a t i o n p r o g r a m s i m p l e m e n t e d i n L a t i n A m e r i c a since 1964. 3. T h e R e i n h a r t - V e g h - l i k e regression reproduces very w e l l the s t y l ized business cycle t h a t has been ascribed to the s t a b i l i z a t i o n p r o grams. I n p a r t i c u l a r , a n early b o o m followed by a recession is f o u n d i n the E R B S p r o g r a m s , w h i l e money-based s t a b i l i z a t i o n p r o g r a m s are associated w i t h recessions f r o m the very b e g i n n i n g . However, the p r o b i t m o d e l shows t h a t the i n i t i a t i o n of the E R B S programs is associated w i t h p a r t i c u l a r circumstances t h a t are likely to have an i n d e p e n d e n t influence on g r o w t h . Hence, there is a p o t e n t i a l selection b i a s i n regression 1 of table 4, p r o d u c e d by the s t a t i s t i c a l a s s o c i a t i o n between the p r o g r a m d u m m i e s a n d the e x p l a n a t o r y v a r i ables i n o u r p r o b i t m o d e l . T h e second regression i n table 4 controls for stock prices i n t h e U n i t e d States a n d G D P g r o w t h i n i n d u s t r i a l countries, b o t h lagged one period, a n d for lagged domestic G D P g r o w t h . T h e first two regressors proved i m p o r t a n t i n e x p l a i n i n g t h e l a u n c h i n g of E R B S programs, a n d are hence p o t e n t i a l sources of bias if o m i t t e d . T h e i n c l u s i o n of lagged GIDP g r o w t h i n the regression s h o u l d i m p r o v e the efficiency of t h e estimation. T h e e s t i m a t e d coefficient associated w i t h the second year of a n E R B S p r o g r a m is m u c h lower once these a d d i t i o n a l variables are i n cluded, a n d not significantly different from zero (at a 10 percent of confidence). N o t e t h a t the rate of G D P g r o w t h of i n d u s t r i a l countries, m d the percent increase of U S stock prices, explains a significant p a r t )f current G D P g r o w t h i n L a t i n A m e r i c a n countries. A p p a r e n t l y , at east p a r t of the o u t p u t booms observed i n the region at the b e g i n ning of the E R B S p r o g r a m s c o u l d a c t u a l l y be ascribed to the e x t e r n a l actors. T h e d u m m y variables used i n this regression and defined i n section 2 are lot exactly the R e i n h a r t - V e g h dummies. T h e y included just two dummies for he E R B S programs, one for the first, "exchange early" and one for the last year, 'exchange l a t e " . A d d i n g the other two renders the estimation more robust, a n d ispecially increases the ability of the regression to capture the o u t p u t booms, for ome of these booms became visible d u r i n g the second calendar year after the n i t i a t i o n of the E R B S programs 3.
(14) 78. ESTUDIOS ECONÓMICOS. Table 4 Real G D P Growth Seven Latin American Countries,. 1964-1995. Variables. (1). (2). El. 0.006. 0.005. (0.341). (0.353). 0.029 *. 0.024. (1.786). (1.512). 0.007. -0.002. E2 E3 E4. t. t. ME M L. t. t. 5P500 _i t. (0.374). (-0.126). 0.031 **. -0.032 **. (-2.059). (-2.138). -0.068 * * *. -0.047 * * *. (-3.058). (-2.124). 0.021. 0.025. (0.904). (1.117). —. 0.039 * (1.640). IGDPGt-i. —. 0.330 (1.730). GDPGt-i. 0.255 * * * (3.698). Adj.. R2. 0.033. 0.105. Notes, t values i n parentheses. One, two a n d three stars indicate significance at 10, 5 and 1 per cent, respectively. F i x e d Effects estimations. Sources: see the appendix. In order to check the robustness of our results, we performed a s e n s i t i v i t y analysis along the lines of Learner (1985), a n d L e v i n e a n d R e n e l t (1995). T h e s e n s i t i v i t y of the estimations of the effects of the programs is a n a l y z e d r u n n i n g regressions that include the p r o g r a m d u m m i e s , the lagged endogenous variable, a n d v a r y i n g sets of controls. T h e control variables are organized into two subsets. T h e first includes the rate of g r o w t h of S P 5 0 0 , the Federal Reserve discount rate, D I S C , the Federal F u n d s rate F F , the Treasury B i l l s rate, T B , the P r i m e R a t e , P R , a n d the rate of r e t u r n o n U S government 3 -.
(15) STABILIZATION PROGRAMS. 79. year b o n d s G B . T h e s e variables are expected to c a p t u r e e x t e r n a l t o - t h e - r e g i o n c o n d i t i o n s w h i c h affect c a p i t a l flows to L a t i n A m e r i c a ( C a l v o , L e i d e r m a n a n d R e i n h a r t , 1992 a n d 1993). T h e second subset of controls includes i n d u s t r i a l countries' G D P g r o w t h I G D P G , i n d u s t r i a l c o u n t r i e s ' i n v e s t m e n t - G D P ratio I I N V , a n d the percent change i n the t e r m s of t r a d e of each c o u n t r y T O T . W e s t a r t e d e s t i m a t i n g all the c o m b i n a t i o n s of these two subsets, t a k i n g one c o n t r o l v a r i a b l e f r o m each subset a n d l a g g i n g t h e m one p e r i o d . T h e n , we e s t i m a t e d the same c o m b i n a t i o n s u s i n g the contemporaneous a n d lagged values of the controls (except for the T O T where we used a one a n d a t w o year lag, a v o i d i n g the contemporaneous value). T h u s , we r a n 36 d i f ferent c o m b i n a t i o n s for each e s t i m a t i o n m e t h o d (fixed a n d r a n d o m effects). T a b l e 5 s u m m a r i z e s the i n f o r m a t i o n f r o m the regressions y i e l d i n g the highest a n d lowest t-value for the p a r a m e t e r of interest. " B a s e " r e fers to the regression w i t h o u t controls. T h e H a u s m a n test s y s t e m a t i c a l l y rejected the hypothesis of c o r r e l a t i o n between the i n d i v i d u a l effects a n d the regressors, so the r a n d o m effects-estimations s h o u l d be consistent a n d more efficient t h a n the fixed-effects e s t i m a t i o n s . Nevertheless, since the test has low power i n s m a l l samples b o t h est i m a t i o n s are r e p o r t e d . T h e E 2 coefficient is positive i n a l l the regressions, b u t i t is n o t robust. S o m e sets of controls y i e l d e d a p o s i t i v e a n d significant coefficient for this d u m m y , at least w h e n fixed- effects e s t i m a t i o n is chosen, b u t other plausible controls render this coefficient n o n significant It is not s u r p r i s i n g t h a t some sets of controls do not m o d i f y the e s t i m a t i o n of t h i s coefficient. If our " s t o r y " is right, these c o n trols should, c a p t u r e the c o m m o n e x t e r n a l shocks t h a t s i m u l t a n e o u s l y affect the business cycle a n d the economic policy. T h i s is a c o m p l e x D h e n o m e n o n t h a t we c a n exDect to c a p t u r e onlv i m p e r f e c t l y a n d i t seems n a t u r a l t h a t some sets of controls work better t h a n others. Hence even t h o u g h there seems to be larger t h a n average rates of g r o w t h at the b e g i n n i n g of the E R B S programs it is not Possible to sav t h a t these rates of e r o w t h are reallv larger t h a n expected riven previous g r o w t h a n d external shocks T h e E A coefficient is 'alwavs negative, w i t h a lowest i - v a l u e of -1.846, c o r r e s p o n d i n g to a P - v a l u e 4. G a l v o and V e g h (1998) have recently reported results of regressions i n which the early booms remain after including some controls for external shocks. W e obt a i n similar results when we choose regressors, samples, and methods of estimation similar to theirs. However, tables 2 and 3 show that these results are not robust. 4.
(16) El. Variable. 2.092 1.768 1.462. 0.016 0.017 0.016 0.018 0.018 0.018. 0.034 0.029 0.023 0.008 0.007 0.000. High Base Low High Base Low. r. ^. Ü. ^ 7 q. feS a, fe. q. ^ co o •-i. (M q. rt. g. r j fe. ü ^ h-, CO Ü §. S q q ü ^. i. q. 0.163 0.033 0.146. q. i. 0.482 0.370 0.012. £ 8. i í. 0.033 0.146. Controls. 7. 0.132. 0.033 0.146. 0.342 0.250. 0.016 0.015. 0.006 0.004. Base Low. - R2. 0.125. Adj 0.630. 0.016. Error 0.010. High. Standard. Coeff. Extremes. ESTUDIOS ECONÓMICOS. r-,. 1. - ^. o ^ q S K( Ü fe, 7 q fe, q fe: rj. CO q. r-,. 1. ^. q. Ü. i-.. Gi. 7. ^ q q. £.
(17) -0.053 -0.068 -0.041 0.034 0.020 0.012. High Base Low. High. Base Low. ME. ML. o. -0.037 -0.031 -0.027. Extremes Ü. High Base Low. Variable. fe^ lO. 0.033 0.146. •-s. 7. ^. 0.874. £ S. « £^. O q q rj s Ü co q o ^ Q O. 0.023 0.022. 7 CD. ¿ 7. 0.132. " rH. 1.507. a,. 0.157 0.033 0.130. Controls co 7. 0.022. R2. 0.092 0.033 0.163. é s. -2.499 -3.045 -1.816. -2.454 -2.039 -1.846. Adj. ï 1. 0.021 0.022 0.022. 0.015 0.015 0.015. Error. Standard. STABILIZATION PROGRAMS. 1 rH. •M. V. 1. l g jo q te S § a.. Ü q q ' rj ^ >~H q e> £ q ^ q. « 7. fei. 81.
(18) Variable. 0.016 0.015. 0.016 0.015 0.017. -0.000 -0.000 0.029 0.023 0.018 -0.013 -0.001 0.000. Base Low. High. Base Low. High. Base Low. 1 1. 0.015. ,—i. q Û H. *~i. CM. q. q. 0.033 0.153. I L ". i. Or? q q H. ^ H O. Ü ^ 7 ~ q q ¡5 q ^ q. r. -U.UU I. 0. ^ s to q - O g 1 O, S q O y co. «. -0.040. O. ^. i. 0.018 0.017. a. g. ï. 0.137. ¿ o. ,-,. -0.788. 3. 0.033 0.180. S;. ï. 1.415. rH. 0.142. 1. tú. 1.929. ^ to. H Ci 0. 0.033 0.172. Controls. -. «. -U.UUo. 0.137. - R2 h. -0.003. 0.454. Adj. 1. 0.015. Error 0.007. High. Standard. Coeff. Extremes. ESTUDIOS ECONÓMICOS. 1. CL. V. ^1 £. o o.
(19) -0.051 -0.068 -0.039 0.035 0.023 0.013. High. Base Low. T.. ML. o. High Base Low. o. ME. - R2. 0.142 0.033 0.155. 1.637 0.986 n fii ï. 0.021 0.023 0.021. Controls. TH. 7. §. q. io. q. CO K _. H. in CJ tt,. a, § fe. CO. £. ri I. CL,. S co rj co Q 7 i-H. o. o, 5. CO «. fq. rj £> g q q co ^ Ü .-u s. q. jo. o. to. ° q *°. U. U J L 1. 0.132 0.033 0.141. -2.430 -3.044 -1.841. 0.108 0.033 0.142. Adj. 0.021 0.022 0.021. e -2.901 -2.529 -2.444. e. 0.014 0.015 0.014. 3. -0.040 -0.038 -0.034. TS. High Base Low. •«-.. Error. Standard. iß. Extremes. o. Variable. STABILIZATION PROGRAMS. rt. r-i. q i rj q q rj tC q ^ q Ü. 13. o 2. 83.
(20) 84. ESTUDIOS ECONÓMICOS. of 0.067. T h e negative M E coefficient is robust i n this set of regressions. I n s u m m a r y , recessions are generally more robust t h a n b o o m s i n this a n a l y s i s . 5. 5. C o n c l u d i n g R e m a r k s T h e e m p i r i c a l evidence presented i n this paper casts serious d o u b t s o n the by now w i d e l y accepted "fact" t h a t E R B S p r o g r a m s are expansionary. It was s h o w n that previous c o m p a r a t i v e studies lacked a p p r o p r i a t e controls, a n d thus overestimated the p o s i t i v e effects of t h e s t a b i l i z a t i o n policies o n o u t p u t . N o significant p o s i t i v e effects of the E R B S p r o g r a m s were found w h e n other variables t h a t c a p t u r e the e x t e r n a l shocks were i n c l u d e d , while the recessions r e m a i n e d . A related " f a c t " , t h a t has been largely neglected i n the l i t e r ature, is t h a t , other things equal, an E R B S p r o g r a m is m o r e l i k e l y to be l a u n c h e d w h e n the region faces favorable e x t e r n a l c o n d i t i o n s . Some recent t h e o r e t i c a l l i t e r a t u r e provides p l a u s i b l e e x p l a n a t i o n s of this l i n k ( A l e s i n a a n d D r a z e n , 1991; C a s e l l a and E i c h e n g r e e n , 1994; and O r p h a n i d e s , 1996). It is precisely this "fact" t h a t e x p l a i n s the o v e r e s t i m a t i o n of the effects of the s t a b i l i z a t i o n p r o g r a m s i n previous empirical studies. A t the very least, the analysis i n this p a p e r suggests t h a t the evidence t h a t the b o o m s were caused by the s t a b i l i z a t i o n p r o g r a m s s h o u l d be carefully reassessed. E v e n if, after some m o r e e m p i r i c a l research, it is f o u n d t h a t the E R B S programs can have s o m e p o s i t i v e independent effects on o u t p u t , the order of m a g n i t u d e of those effects is likely to be significantly smaller t h a n w h a t has been assumed so far. It is interesting to note, i n this respect, t h a t recent a t t e m p t s to c a l i b r a t e models of the real effects of s t a b i l i z a t i o n p r o g r a m s have 6. We estimated a set of regressions with country-standardized series to e l i m i nate country-wise heteroscedasticity. T h e results are q u a l i t a t i v e l y the same. We prefer to present the estimations with the original variables, because point estimates on the effects of the plans do not have a simple i n t e r p r e t a t i o n w i t h standardized series. O t h e r results are available upon request. 5. It should be mentioned here that K i g u e l and L i v i a t a n (1992) have already noticed that most E R B S programs were i n i t i a t e d under favorable external conditions. A l s o Simonsen (1988) and O r t i z (1988) identified external conditions that were favorable to B r a z i l when the Gruzado program was launched. A similar point was made by B r u n o and P i t e r m a n (1988) a n d by C u k i e r m a n (1988) for the 1985 Israeli stabilization program. However, somehow surprisingly, these observations seem not to have been applied to analysis of the "stylized facts" associated w i t h 6. the E R B S. programs..
(21) STABILIZATION PROGRAMS. 85. failed to o b t a i n the h i g h rates of g r o w t h observed d u r i n g the E R B S p r o g r a m s ( R e i j i h a r t a n d V é g h , 1994; R e b e l o a n d V é g h , 1995). The results of t h i s p a p e r m i g h t help to e x p l a i n those failures i n a s i m p l e way: the m o d e l s c a n n o t r e p r o d u c e s u c h b o o m s s i m p l y because t h e y were not c a u s e d by the s t a b i l i z a t i o n p r o g r a m s . T h u s , m a y b e the m o d els are b a s i c a l l y c o r r e c t w h e n t h e y p r e d i c t at m o s t m o d e s t increases i n p r o d u c t i o n a n d c o n s u m p t i o n associated w i t h i m p l e m e n t a t i o n of s t a b i l i z a t i o n policies.. References A l e s i n a , A . a n d A . D r a z e n (1991). " W h y are Stabilizations Delayed?", A m e r i c a n E c o n o m i c R e v i e w 81(5), pp. 1170-1188. B a l l , L . (1994). " W h a t Determines the Sacrifice R a t i o " , i n N . G . M a n k i w (ed.), M o n e t a r y P o l i c y . Chicago, U n i v e r s i t y of Chicago Press, pp. 155-182. B r u n o , M . a n d S. P i t e r m a n (1988). "Israel's Stabilization: A T w o Year Review, in M . B r u n o et al (eds.), I n f l a t i o n S t a b i l i z a t i o n , t h e E x p e r i e n c e o f I s r a e l , A r g e n t i n a , B r a z i l , B o l i v i a a n d M e x i c o , T h e M I T Press, pp. 3-47. C a l v o , G . (1986). " T e m p o r a r y S t a b i l i z a t i o n : Predetermining Exchange R a t e s " , J o u r n a l o f P o l i t i c a l E c o n o m y , 94 (6), pp. 1319-1329. C a l v o , G , L . L e i d e r m a n and C . Reinhart (1993) T h e C a p i t a l I n f l o w s P r o b l e m : C o n c e p t s a n d I s s u e s , I M F Paper on Policy A n a l y s i s a n d Assessment, PPAA/93/10. (1992). C a p i t a l I n f l o w s t o L a t i n A m e r i c a : t h e 1 9 7 0 s a n d t h e 1 9 9 0 s , I M F W o r k i n g Paper 92-85. C a l v o , G . a n d C . Végh (1998). "Inflation S t a b i l i z a t i o n a n d Balance of P a y m e n t s Crises i n Developing Countries", i n J . Taylor a n d M . W o o d f o r d (eds.), H a n d b o o k o f M a c r o e c o n o m i c s , North-Holland. (1993). "Exchange Rate Based S t a b i l i z a t i o n under Imperfect C r e d i b i l i t y " , in H . F r i s c h a n d A . Worgotter, O p e n E c o n o m y M a c r o e c o n o m i c s , L o n d o n , M a c M i l l a n , pp. 3-28. Canavese, A . a n d G . D i T e l i a (1988). "Inflation S t a b i l i z a t i o n or H y p e r i n f l a t i o n A v o i d a n c e ? T h e Case of the A u s t r a l P l a n i n A r g e n t i n a : 1985-1987", in M . B r u n o et a l ( e d s . ) , I n f l a t i o n S t a b i l i z a t i o n , t h e E x p e r i e n c e o f I s r a e l , A r g e n t i n a , B r a z i l , B o l i v i a a n d M e x i c o , T h e M I T Press, pp. 153-190. Casella, A . a n d B . Eichengreen (1994). C a n F o r e i g n A i d A c c e l e r a t e S t a b i l i z a t i o n ? , N B E R working paper 4694. C u k i e r m a n , A . (1988). "The E n d of H i g h Israeli Inflation: A n E x p e r i m e n t i n Heterodox S t a b i l i z a t i o n " , i n M . B r u n o et al (eds.), I n f l a t i o n S t a b i l i z a t i o n , t h e E x p e r i e n c e o f I s r a e l , A r g e n t i n a , B r a z i l , B o l i v i a a n d M e x i c o , The M I T Press, pp. 48-94. Easterly, W . (1996). " W h e n is Stabilization Expansionary? Evidence F r o m H i g h I n f l a t i o n " , E c o n o m i c P o l i c y - A E u r o p e a n F o r u m 0 (22), pp. 65-98. Fischer, S. (1988). " R e a l Balances, the Exchange Rate, and Indexation: R e a l Variables i n D i s i n f l a t i o n " , Q u a r t e r l y J o u r n a l o f E c o n o m i c s , 103 (1), pp. 27-49..
(22) 86. ESTUDIOS ECONÓMICOS. G o r d o n , R. J . (1982). " W h y Stopping Inflation M a y Be Costly: E v i d e n c e from Fourteen H i s t o r i c a l Episodes", in R. E . H a l l (ed.), I n f l a t i o n : C a u s e s a n d E f f e c t s , Chicago, U n i v e r s i t y of Chicago Press, pp. 11-40. H e l p m a n , E . and A . R a z i n (1987). "Exchange Rate Management: Intertemporal Trade-offs", A m e r i c a n E c o n o m i c R e v i e w , 77, pp. 107-123. K i g u e l , M . a n d N . L i v i a t a n (1992). T h e Business Cycle A s s o c i a t e d w i t h E x change Rate-based Stabilizations, T h e W o r l d B a n k E c o n o m i c R e v i e w , 6(2), pp. 279-305. Learner, E . (1985). "Sensitivity A n a l y s i s W o u l d H e l p " , A m e r i c a n E c o n o m i c R e v i e w , 75, pp. 308-313. Le vine, R . a n d D . Renelt (1995). " A Sensitivity A n a l y s i s of C r o s s - C o u n t r y G r o w t h Regressions", A m e r i c a n E c o n o m i c R e v i e w , vol. 82, no. 4, pp. 942¬ 963. M a d d a l a , G . (1983). L i m i t e d D e p e n d e n t a n d Q u a l i t a t i v e V a r i a b l e s i n E c o n o m e t r i c s , Cambridge U n i v e r s i t y Press. Orphanides, A . (1996). " T h e T i m i n g of Stabilizations", J o u r n a l o f E c o n o m i c D y n a m i c s a n d C o n t r o l , 20, pp. 257-279. O r t i z , G . (1988). " C o m m e n t to Simonsen", i n M . B r u n o et al (eds.), I n f l a t i o n Stabilization, t h eExperience of Israel, A r g e n t i n a , Brazil, B o l i v i a a n d M e x i c o , T h e M I T Press, pp. 298-302. Pazos, F . (1972). C h r o n i c Inflation i n L a t i n A m e r i c a , N e w Y o r k , Prager P u b lishers. Rebelo, S. and C . Végh (1995). R e a l E f f e c t s o f E x c h a n g e - R a t e - B a s e d S t a b i l i z a t i o n : A n A n a l y s i s o f C o m p e t i n g T h e o r i e s , N B E R W o r k i n g Paper 5197. R e i n h a r t , C. and C . Végh (1995). " N o m i n a l Interest Rates, C o n s u m p t i o n Booms, and L a c k of C r e d i b i l i t y : A Quantitative E x a m i n a t i o n " , J o u r n a l o f D e v e l o p m e n t E c o n o m i c s , 46, pp. 357-378. (1994). I n f l a t i o n S t a b i l i z a t i o n i n C h r o n i c I n f l a t i o n C o u n t r i e s : T h e E m p i r i c a l E v i d e n c e , I M F , (mimeo). Roldôs, J . (1995a). S u p p l y - s i d e E f f e c t s o f D i s i n f l a t i o n P r o g r a m s , I M F Staff Papers 42, pp. 158-183. (1995b). O n G r a d u a l D i s i n f l a t i o n , t h e R e a l E x c h a n g e R a t e , a n d t h e C u r r e n t A c c o u n t , working paper, I M F , September. Sargent, T . (1982). " T h e E n d s of Four B i g Inflations", i n R. E . H a l l (ed.), I n f l a t i o n : C a u s e s a n d E f f e c t s , Chicago, U n i v e r s i t y of Chicago Press, pp. 41-97. Simonsen, M . H . (1988). " P r i c e S t a b i l i z a t i o n and Incomes Policies: T h e o r y and the B r a z i l i a n Case S t u d y " , i n M . B r u n o et al (eds.), I n f l a t i o n S t a b i l i z a t i o n , t h e E x p e r i e n c e o f I s r a e l , A r g e n t i n a , B r a z i l , B o l i v i a a n d M e x i c o , The M I T Press. Taylor, J . (1980). "Aggregate Dynamics and Staggered C o n t r a c t s " , J o u r n a l o f P o l i t i c a l E c o n o m y , 88, pp. 1-23. U r i b e , M . (1995). E x c h a n g e - R a t e - B a s e d I n f l a t i o n S t a b i l i z a t i o n : T h e I n i t i a l R e a l Effects o f Credible P l a n s , B o a r d of G o v e r n o r s o f the Federal Reserve System, International Finance Discussion Papers 503, University of Pennsylvania. Végh, C. A . (1992). S t o p p i n g H i g h I n f l a t i o n , I M F Staff Papers 39, pp. 626-695.
(23) STABILIZATION PROGRAMS. Appendix Data. DISCt. U n i t e d States discount rate. Source:. EU,t. D u m m y v a r i a b l e t h a t takes v a l u e 1 d u r i n g y e a r i ,. I F S of I M F .. if c o u n t r y i s t a r t e d a n E R B S p r o g r a m f r o m j u l y o f y e a r i - 1 t o j u n e of y e a r t, a n d 0 o t h e r w i s e .. (See t h e. d a t i n g of t h e p r o g r a m s i n t a b l e A l ) .. E2. D u m m y v a r i a b l e t h a t t a k e s v a l u e 1 d u r i n g y e a r t, i f. i l t. c o u n t r y i is i n t h e s e c o n d y e a r o f a n E R B S p r o g r a m , and. E4i,t. 0 o t h e r w i s e ( a n a l o g o u s for E 3. i t t. ).. D u m m y v a r i a b l e t h a t takes v a l u e 1 d u r i n g y e a r t, if c o u n t r y i is i n t h e f o u r t h or f o l l o w i n g y e a r s o f a n E R B S p r o g r a m , a n d 0 otherwise.. F F. U n i t e d States federal funds rate. Source:. t. I F S of. IMF.. GB. U n i t e d States government bonds, 3 years maturity.. t. S o u r c e : I F S of I M F .. GDPGi,. t. R a t e o f g r o w t h of r e a l G D P i n c o u n t r y i d u r i n g y e a r t.. IGDPGt. Source:. I F S of I M F .. Industrial countries' G D P growth. Source:. I F S of. IMF.. IINVt. I n d u s t r i a l c o u n t r i e s ' i n v e s t m e n t to G D P r a t i o . Source:. LIRi,. t. I F S of I M F .. L o g a r i t h m of t h e r a t i o of n o m i n a l reserves t o n o m i n a l G D P for c o u n t r y i at t h e e n d of y e a r t. S o u r c e : I F S of I M F .. LPIi,. t. L o g a r i t h m o f i n f l a t i o n i n c o u n t r y i d u r i n g y e a r t. S o u r c e : I F S of I M F .. MEi,. t. D u m m y v a r i a b l e t h a t takes v a l u e 1 d u r i n g y e a r t , if c o u n t r y i is i n t h e first y e a r of a m o n e y b a s e d stabilization p r o g r a m , and 0 otherwise.. MLi,. t. D u m m y v a r i a b l e t h a t takes v a l u e 1 d u r i n g y e a r i , if c o u n t r y i is i n t h e last y e a r of a m o n e y b a s e d stabilization p r o g r a m , and 0 otherwise.. 87.
(24) 88. ESTUDIOS ECONÓMICOS Data. P A R E L E ^. (continued). D u m m y variable that takes value 1 if the country i had a parliamentary election during year t, and 0 otherwise. Source: International F o u n d a t i o n for Election Systems, Washington D C .. PRt. P r i m e rate. Source: I F S of I M F .. SPSOOt. First difference of the logarithm of the S t a n d a r d and. Poors 500 stock index. Source: G l o b a l. Financial D a t a , Stock Market Indexes. TBt. Treasury B i l l rate. Source: I F S of I M F .. TOTyt. Percent change i n the terms of trade for country i during year t. Source:. ECLAG.. Table A l M a j o r P r i c e S t a b i l i z a t i o n P r o g r a m s i nL a t i n Exchange. Rate. Based. America. Stabilization Programs. B r a z i l 1964. 1964:03-1968:08. Argentina 1967. 1967:03-1970:10. Uruguay 1968. 1968:06-1971:12. Argentine t a b l i t a. 1978:12-1981:02. Chilean t a b l i t a. 1978:02-1982:06. Uruguayan t a b l i t a. 1978:10-1982:10. A u s t r a l (Argentina). 1985:06-1986:09. Cruzado (Brazil). 1986:02-1986:11. Mexico 1987. 1987:12-1992:02. Convertibility Program. 1991:04-present. (Argentina) Uruguay 1991. 1991:01-present. B r a z i l 1994. 1994:04-present.
(25) STABILIZATION PROGRAMS Table A l Money-based. (continued). Stabilization. Programs. Chile 1975. 1975:04-1977:12. Bonex (Argentina). 1989:12-1991:01. Collor (Brazil). 1990:03-1991:01. D o m i n i c a n Republic. 1990:08-present. Peru. 1990:08-present Source: R e i n h a r t and Végh (1994), save for B r a z i l 1994. t h a t was added later.. 89.
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