WPS 671 Lessons from the

Heterodox stabilization programs are more successful in chronic high inflation countries because only there can the benefits from achieving a rapid initial reduction in inflation outweigh the costs of tampering with price and wage controls. While the heterodox phase is effective in blocking inflation initially, success depends on a long-term commitment to the orthodox part of the program and the readiness to accept the unavoidable costs of disinflation. ThePolicy, Research, and Extemal Affairs Complcx distributes PRE Working Papers to disseminate the findings of work in progress and to encourage the cxchange of ideas among Bank staff and all others interested in dcvclopment issues. These papers carry the names of the authors, reflect only their views, and should be used and cited accordingly. The findings, interpretations, and conclusions are the authors ' own. They should not be attributed to the World Bank, its Board of Directors, its managemcnt, or any of its member countries. Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz e