STABILIZATION UNDER CAPITAL CONTROLS

This paper considers a stabilization program consisting of a fixed exc hange rate rule and a delayed fiscal adjustment. In contrast to the ex isting literature, it is assumed that there is no private capital mobi lity. The effects of such a program are substantially different than u nder capital mobility, since the access to international capital marke ts affects the ability of the private sector to smooth consumption pri or to the fiscal component of the program. (JEL F31). Copyright (C) 19 96 Elsevier Science Ltd