View Full Document

Establishing Credibility: The Role of Foreign Advisors



View the full content.
View Full Document
View Full Document

9 views

Unformatted text preview:

NBER WORKING PAPER SERIES ESTABLISHING CREDIBILITY THE ROLE OF FOREIGN ADVISORS Sebastian Edwards Working Paper 11429 http www nber org papers w11429 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge MA 02138 June 2005 This is a revised version of a paper presented at the National Bureau of Economic Research s Inter American Seminar on Economics to be held at the Colegio de Mexico December 2 4 2004 I thank Roberto Alvarez for his comments and assistance The views expressed herein are those of the author s and do not necessarily reflect the views of the National Bureau of Economic Research 2005 by Sebastian Edwards All rights reserved Short sections of text not to exceed two paragraphs may be quoted without explicit permission provided that full credit including notice is given to the source Establishing Credibility The Role of Foreign Advisors Sebastian Edwards NBER Working Paper No 11429 June 2005 JEL No F30 F32 ABSTRACT In this paper I analyze the role of foreign advisors in stabilization programs I discuss from an analytical perspective why foreigners may help a developing country s government put in place a successful stabilization program This framework is used to analyze Chile s experience with antiinflationary policies in the mid 1950s In 1955 58 Chile implemented a stabilization package with the advice of the U S consulting firm of Klein Saks The Klein Saks program took place in a period of acute political confrontation After what was considered to be an initial success inflation declined from 85 in 1955 to 17 in 1957 the program failed to achieve durable price stability I argue that the foreign advisors of the Klein Saks Mission gave initial credibility to the stabilization program launched in 1955 But providing initial credibility was not enough to ensure success Congress failed to act decisively on the fiscal front Consequently the fiscal imbalances that had plagued Chile for a long time were reduced but not eliminated I present



Access the best Study Guides, Lecture Notes and Practice Exams

Loading Unlocking...
Login

Join to view Establishing Credibility: The Role of Foreign Advisors and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Establishing Credibility: The Role of Foreign Advisors and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?