Monetary stability or more devaluation

Abstract

Currency instability, periodic inconvertibility, higher inflation and interest rates?all products of the currency crisis?all damage incentives to investment, growth and performance of the real economy. Nominal devaluation may lead to long-term improve-ment in competitiveness but large improvements require other steps as well: removal of protection, improved efficiency and reduction of the costs of law and order, public administration, public utilities and other infrastructure, and improvements in the quality of the workforce. The currency depreciation will only be a step on the long path to development if it is supported by a return to disciplined expenditure and monetary stability. Show more