Guillermo Calvo | Columbia University (original) (raw)

Uploads

Papers by Guillermo Calvo

Research paper thumbnail of Inflation Inertia and Credible Disinflation - The Open Economy Case

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Optimal Maximin Accumulation with Uncertain Future Technology

Econometrica, Mar 1, 1977

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Uncertain Duration of Reform: Dynamic Implications

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Nominal Exchange Rate Anchoring Under Inflation Inertia

IMF working paper, 2002

Bookmarks Related papers MentionsView impact

Research paper thumbnail of A Theory of Rational Inflationary Inertia

Princeton University Press eBooks, Jan 12, 2021

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation inertia and credible disinflation

Journal of International Economics, Sep 1, 2007

Bookmarks Related papers MentionsView impact

Research paper thumbnail of 1A Theory of Rational Inflationary Inertia

Bookmarks Related papers MentionsView impact

Research paper thumbnail of A Delicate Equilibrium: Debt Relief and Default Penalties in an International Context

IMF Working Papers, 1989

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Controlling Inflation: The Problem of Non-Indexed Debt

IMF Working Papers, 1988

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Sudden Stop and Sudden Flood of Foreign Direct Investment: Inverse Bank Run, Output, and Welfare Distribution

The Scandinavian Journal of Economics, 2013

In this paper, I focus on a phenomenon that has not received much attention in the literature, na... more In this paper, I focus on a phenomenon that has not received much attention in the literature, namely that the mere expectation of foreign direct investment (FDI) incentivizes long‐maturity investment projects by domestic residents, and a Sudden Stop when expectations are frustrated. Long‐maturity investment projects enhance productivity but increase the economy's vulnerability to Sudden Stop. The discussion is framed in a context in which a Sudden Stop follows a surge of capital inflows (Sudden Flood), and FDI is concentrated on ongoing projects. A Sudden Stop episode can trigger a fire sale of long‐term assets, output collapse, and welfare redistribution, which is another ignored phenomenon.

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Trade Openness and Exchange Rate Misalignments

ABSTRACT

Bookmarks Related papers MentionsView impact

Research paper thumbnail of In ation Inertia and Credible Disin - ation: The Open Economy Case

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation Inertia and Credible Disinflation - The Open Economy Case

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Currency Substitution in High Inflation Countries

finance and development, 1993

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Disinflation and Interest-Bearing Money

The Economic Journal, Nov 1, 1996

ABSTRACT In high inflation countries, policymakers often end up paying interest on part of the mo... more ABSTRACT In high inflation countries, policymakers often end up paying interest on part of the money supply. Higher interest rates on money have been used as a disinflationary policy. This paper analyzes the effectiveness of such a policy in the context of a closed-economy, staggered-prices model. Both a permanent and a temporary rise in the interest rate on money provoke an inflation at the expense of a recession. When the rise is temporary, however, the initial inflation slowdown is eventually followed by an upsurge of inflation over the level prevailing before the policy was implemented. Copyright 1996 by Royal Economic Society.

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation Stabilization and BOP Crises in Developing Countries

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Currency Substitution in Developing Countries: An Introduction

IMF working paper, 1992

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Credibility and the dynamics of stabilisation policy: a basic framework

Cambridge University Press eBooks, Dec 2, 2008

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Fighting Inflation with High Interest Rates: The Small Open Economy Case under Flexible Prices

Journal of Money, Credit and Banking, Feb 1, 1995

... study of interest rate targeting has faced the problem that it results in price level indeter... more ... study of interest rate targeting has faced the problem that it results in price level indeterminacy under flexible prices (Sargent and Wallace 1981), or in multiple inflation rate equilibria ... 6. In Calvo and Vegh (199Oa), we study the predetermined exchange rate case. ...

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Chapter 24 Inflation stabilization and bop crises in developing countries

Handbook of Macroeconomics, 1999

ABSTRACT High and persistent inflation has been one of the distinguishing macroeconomic character... more ABSTRACT High and persistent inflation has been one of the distinguishing macroeconomic characteristics of many developing countries since the end of World War II. Countries afflicted by chronic inflation, however, have not taken their fate lightly and have engaged in repeated stabilization attempts. More often than not, stabilization plans have failed. The end of stabilizations — particularly those which rely on a pegged exchange rate — has often involved dramatic balance-of-payments crises. As stabilization plans come and go, a large literature has developed trying to document the main empirical regularities and to understand the key issues involved. This chapter undertakes a critical review and evaluation of the literature related to inflation stabilization policies and balance-of-payments crises in developing countries.The chapter begins by trying to rationalize the existence of chronic inflation in a world of rational agents. It then offers an empirical analysis of the main stylized facts associated with stopping chronic inflation. It is shown that the real effects of disinflation depend on the nominal anchor which is used. Exchange-rate-based stabilizations lead to an initial output and consumption boom — which is particularly evident in the behavior of durable goods — real exchange rate appreciation, and current account deficits. The contractionary costs typically associated with disinflation emerge only later in the program. In contrast, in money-based stabilizations, the contraction occurs in the beginning of the program. The chapter then proceeds to review several explanations for these puzzling phenomena, emphasizing the real effects of lack of credibility, inflation inertia, and consumption cycles generated by durable goods purchases.The chapter also documents the fact that most exchange-rate-based stabilizations end up in balance-of-payments crises. The Mexican crisis of December 1994 brought back to life some of the key questions: Do exchange-rate-based stabilizations sow the seeds of their own destruction by unleashing “unsustainable” real exchange rate appreciations and current account deficits? Or are credibility problems and self-fulfilling prophecies at the root of these crises? The remainder of the chapter is devoted to analyzing the main ideas behind this unfolding literature.

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation Inertia and Credible Disinflation - The Open Economy Case

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Optimal Maximin Accumulation with Uncertain Future Technology

Econometrica, Mar 1, 1977

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Uncertain Duration of Reform: Dynamic Implications

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Nominal Exchange Rate Anchoring Under Inflation Inertia

IMF working paper, 2002

Bookmarks Related papers MentionsView impact

Research paper thumbnail of A Theory of Rational Inflationary Inertia

Princeton University Press eBooks, Jan 12, 2021

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation inertia and credible disinflation

Journal of International Economics, Sep 1, 2007

Bookmarks Related papers MentionsView impact

Research paper thumbnail of 1A Theory of Rational Inflationary Inertia

Bookmarks Related papers MentionsView impact

Research paper thumbnail of A Delicate Equilibrium: Debt Relief and Default Penalties in an International Context

IMF Working Papers, 1989

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Controlling Inflation: The Problem of Non-Indexed Debt

IMF Working Papers, 1988

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Sudden Stop and Sudden Flood of Foreign Direct Investment: Inverse Bank Run, Output, and Welfare Distribution

The Scandinavian Journal of Economics, 2013

In this paper, I focus on a phenomenon that has not received much attention in the literature, na... more In this paper, I focus on a phenomenon that has not received much attention in the literature, namely that the mere expectation of foreign direct investment (FDI) incentivizes long‐maturity investment projects by domestic residents, and a Sudden Stop when expectations are frustrated. Long‐maturity investment projects enhance productivity but increase the economy's vulnerability to Sudden Stop. The discussion is framed in a context in which a Sudden Stop follows a surge of capital inflows (Sudden Flood), and FDI is concentrated on ongoing projects. A Sudden Stop episode can trigger a fire sale of long‐term assets, output collapse, and welfare redistribution, which is another ignored phenomenon.

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Trade Openness and Exchange Rate Misalignments

ABSTRACT

Bookmarks Related papers MentionsView impact

Research paper thumbnail of In ation Inertia and Credible Disin - ation: The Open Economy Case

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation Inertia and Credible Disinflation - The Open Economy Case

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Currency Substitution in High Inflation Countries

finance and development, 1993

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Disinflation and Interest-Bearing Money

The Economic Journal, Nov 1, 1996

ABSTRACT In high inflation countries, policymakers often end up paying interest on part of the mo... more ABSTRACT In high inflation countries, policymakers often end up paying interest on part of the money supply. Higher interest rates on money have been used as a disinflationary policy. This paper analyzes the effectiveness of such a policy in the context of a closed-economy, staggered-prices model. Both a permanent and a temporary rise in the interest rate on money provoke an inflation at the expense of a recession. When the rise is temporary, however, the initial inflation slowdown is eventually followed by an upsurge of inflation over the level prevailing before the policy was implemented. Copyright 1996 by Royal Economic Society.

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Inflation Stabilization and BOP Crises in Developing Countries

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Currency Substitution in Developing Countries: An Introduction

IMF working paper, 1992

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Credibility and the dynamics of stabilisation policy: a basic framework

Cambridge University Press eBooks, Dec 2, 2008

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Fighting Inflation with High Interest Rates: The Small Open Economy Case under Flexible Prices

Journal of Money, Credit and Banking, Feb 1, 1995

... study of interest rate targeting has faced the problem that it results in price level indeter... more ... study of interest rate targeting has faced the problem that it results in price level indeterminacy under flexible prices (Sargent and Wallace 1981), or in multiple inflation rate equilibria ... 6. In Calvo and Vegh (199Oa), we study the predetermined exchange rate case. ...

Bookmarks Related papers MentionsView impact

Research paper thumbnail of Chapter 24 Inflation stabilization and bop crises in developing countries

Handbook of Macroeconomics, 1999

ABSTRACT High and persistent inflation has been one of the distinguishing macroeconomic character... more ABSTRACT High and persistent inflation has been one of the distinguishing macroeconomic characteristics of many developing countries since the end of World War II. Countries afflicted by chronic inflation, however, have not taken their fate lightly and have engaged in repeated stabilization attempts. More often than not, stabilization plans have failed. The end of stabilizations — particularly those which rely on a pegged exchange rate — has often involved dramatic balance-of-payments crises. As stabilization plans come and go, a large literature has developed trying to document the main empirical regularities and to understand the key issues involved. This chapter undertakes a critical review and evaluation of the literature related to inflation stabilization policies and balance-of-payments crises in developing countries.The chapter begins by trying to rationalize the existence of chronic inflation in a world of rational agents. It then offers an empirical analysis of the main stylized facts associated with stopping chronic inflation. It is shown that the real effects of disinflation depend on the nominal anchor which is used. Exchange-rate-based stabilizations lead to an initial output and consumption boom — which is particularly evident in the behavior of durable goods — real exchange rate appreciation, and current account deficits. The contractionary costs typically associated with disinflation emerge only later in the program. In contrast, in money-based stabilizations, the contraction occurs in the beginning of the program. The chapter then proceeds to review several explanations for these puzzling phenomena, emphasizing the real effects of lack of credibility, inflation inertia, and consumption cycles generated by durable goods purchases.The chapter also documents the fact that most exchange-rate-based stabilizations end up in balance-of-payments crises. The Mexican crisis of December 1994 brought back to life some of the key questions: Do exchange-rate-based stabilizations sow the seeds of their own destruction by unleashing “unsustainable” real exchange rate appreciations and current account deficits? Or are credibility problems and self-fulfilling prophecies at the root of these crises? The remainder of the chapter is devoted to analyzing the main ideas behind this unfolding literature.

Bookmarks Related papers MentionsView impact