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.
This book examines the phenomenon of the high inflation processes of the 1970s and 1980s as exemplified by Argentina, Brazil, and Israel. It explores the common characteristics of such processes and their possible cures--with some emphasis on the lessons of the Israeli experience in respect of the role of incomes policy and the political economy of stabilization. The discussion of the theoretical underpinnings of "shock" treatments provides a good example for the blending of a number of disciplines: lessons of economic history, open economy monetary and macro theory, game-theory applications to economic policy design (concepts such as dynamic inconsistency, government reputation, and credibility) and the rationalization of incomes policy.
