01876cas a2200265 a 4500 AALejournalIMF003038 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451853506 1018-5941 BD-DhAAL BD-DhAAL Gelos, R. Obstacles to Disinflation : What is the Role of Fiscal Expectations? / R. Gelos, Alessandro Prati, Oya Celasun. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Is backward-looking behavior in pricing or imperfect credibility of stabilization efforts responsible for the failure of inflation rates to decline to targeted levels during many disinflation programs? This paper assesses the relative importance of these two factors during a number of disinflation attempts in developing and transition economies. Using survey data, we find that expectations of future inflation play a much more important role than past inflation in shaping the inflation process. We also find that an improvement in primary fiscal balances significantly reduces inflation expectations. This suggests that during stabilization episodes, priority should be given to building fiscal credibility by strengthening public finances. Mode of access: Internet Celasun, Oya. Prati, Alessandro. IMF Working Papers; Working Paper ; No. 2004/111 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/111/001.2004.issue-111-en.xml IMF e-Library