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This chapter examines stabilization programmes and social costs associated with humanitarian emergencies. It analyses the direct impacts of a stabilization programme and its indirect effects as they related to political turmoil. It considers the impacts of structure adjustment and evaluates social costs caused by the refusal to adjust. It concludes that the most frequent results of stabilization programmes consist of social and human costs with a certain degree of confrontation which may entail repression, but almost never a limited humanitarian emergency.

This chapter compares the Russian economic transition in the 1990s with the level of economic control in Britain following two world wars. It considers four economic systems in the UK, the USSR, and Russia during times of peace and war. The transition from a war economy in Britain after 1918 and Russia in the 1990s was primarily governed by liberal economic policies and a ‘big bang’ stabilization programme. Their rapid transitions were associated with disorganization in the economic system and problems in the reallocation of resources and the restructuring of industry. In contrast, the successful transitions in the British economy in the post-World War II period were based on continued government intervention and control. The British government pursued a gradualist policy in which wartime rationing and exchange controls were removed sequentially.

This chapter notes that Inoue Junnosuke's policies were part of a worldwide stabilization movement in which Morgan and Company institutionally and Thomas W. Lamont personally played a leading role. The central place of American finance stands out as a novel feature of the times, and the stabilization programs carried out around the world under Morgan and Company auspices form the prehistory of the stabilization policies of the IMF in more recent times.

This chapter investigates an important historical stabilization episode in Chile, a country with one of the longest histories of chronic inflation in the world, and which, starting in the late nineteenth century, suffered recurrent and increasingly frequent inflationary outbursts. Of the many stabilization programs adopted to tackle this problem, the 1955–1958 package implemented with the advice of the United States consulting firm Klein-Saks, is, undoubtedly, one of the most fascinating. The chapter argues that the foreign advisors of the Klein-Saks Mission gave initial credibility to the stabilization program launched in 1955, playing the role of independent, nonpartisan technocratic arbiters. However, providing initial credibility was not enough to ensure success. In spite of supporting trade reform, foreign exchange rate reform, and the deindexation of wages, Congress failed to act decisively on the fiscal front.

This chapter examines the output costs of participating in International Monetary Fund (IMF)-supported stabilization programs following a currency or balance-of-payment crisis. The analysis of the 1997 East Asian crisis reveals that participation in an IMF program is associated with a 0.75 percentage point reduction in gross domestic product growth and that participation in an IMF-supported program following a balance-of-payments or currency crisis does not appear to mitigate the output loss associated with such events. The study also found that the country that did not have an IMF program suffered more than those countries with programs.

This chapter examines the role of the stabilization programs of the International Monetary Fund (IMF) in the twin crises in the 1990s. These are the balance-of-payments-cum-financial crisis in Mexico in 1994 and the Asian financial crises of 1997–98. This chapter explains that the magnitude and severity of these crises led many to question the role of the IMF both in failing to anticipate and prevent the difficulties and in overseeing programs intended to address the crisis situations. It also considers the types of programs that must be developed when the financial and exchange rate crises occur simultaneously.

This chapter examines Argentina's relationship with the International Monetary Fund (IMF) during the period 1985–2002. It first considers the new policy team formed by Argentine President Raúl Alfonsín and its plan to solve the country's spiraling inflation problem before discussing the successive failed stabilization programs, including Plan Austral and Plan BB, that culminated in Alfonsín's resignation and the transformation of the Argentine economy under a group of neoliberals in the Peronist government of Carlos Menem. It also analyzes the politics surrounding the series of IMF programs that preceded the economic collapse of 2001–2002, along with the United States's influence on the decision making of the Fund. Finally, it assesses the aftermath of the Argentine crisis.

This chapter explains the coverage of book, which is about the role war, hunger, and displacement as the main causes of humanitarian emergencies. This book examines the political and economic causes of humanitarian emergencies, water scarcity as a source of crises, and the conflict over natural and environmental resources. It also discusses social costs and stabilization programmes related to humanitarian emergencies. It concludes that in every complex humanitarian emergency there is an interaction between factors, with group perceptions and identity, being enhanced by sharp group differentiation in political participation, economic assets and income and social access and well-being.

Israel's high inflation calamity amounted to a crisis of political and economic institutions. Failing economic governance made it essential for the government to raise revenue through money expansion. At the time when the newly elected government was catering to populistic demands, the printing press was used to finance the fast-expanding government spending and transfers. The central lesson from the Friedman (1971) is that steady-state seigniorage from revenue maximizing central bank is small. However, Israel, as well as previous historical episodes, offer a counter example. Inflation spikes can be a significant source for government revenue. Following almost 8 years of the hyperinflation economic chaos, the Israeli voters brought about some major political rebalancing towards the political center. Sargent (2009) argues that high inflation can be stopped quickly, and at a low cost. His argument is that inflationary expectations are quick to adjust when the economic regime shifts considerably. The temptation not to stop inflation in its tracks may be irresistible. Similarly, if the government surprise market participants by abrupt stopping of hyperinflation in the presence of entrenched inflation expectations, the fiscal burden of public sector wage bill and subsidies to basic food must rise. Therefore, the government may hesitate to do so. To overcome this difficulty there must be a full-fledged social agreement between the government, savers (who hold government bonds), public sector wage earners, and recipients of food subsidies. To fix the inflated outlays on debt service, wage bill, and subsidies, some major redistribution of income must accompany the inflation-halting step. This is in essence the lesson from Israel’s inflation stabilization policy.