Monetarist perspectives of Papua New Guinea's Hard Currency Strategy

Karunaratne N.D. (1988) Monetarist perspectives of Papua New Guinea's Hard Currency Strategy. World Development, 16 7: 807-820. doi:10.1016/0305-750X(88)90014-9

Author Karunaratne N.D.
Title Monetarist perspectives of Papua New Guinea's Hard Currency Strategy
Journal name World Development   Check publisher's open access policy
ISSN 0305-750X
Publication date 1988
Sub-type Article (original research)
DOI 10.1016/0305-750X(88)90014-9
Volume 16
Issue 7
Start page 807
End page 820
Total pages 14
Subject 2002 Cultural Studies
3303 Development
3305 Geography, Planning and Development
3312 Sociology and Political Science
Abstract This paper analyzes the performance of the Hard Currency Strategy (HCS) which was the centerpiece of Papua New Guinea's (PNG's) post-independence macroeconomic stabilization policies. The main aims of the HCS were the maintenance of the convertibility and the purchasing power of the domestic currency whilst averting imported inflation and excessive foreign indebtedness. The exchange market pressure variant of the monetary model augmented by a policy sensitivity variable yielded meaningful empirical results for PNG. These results differ markedly from those observed for other countries. The PNG results indicated that up to 1980 the HCS was more or less effective but thereafter a configuration of several adverse economic factors undermined the HCS. Active monetary policy failed to prop up the ailing HCS. Critics of HCS contended that HCS, although a qualified success as an inti-inflationary device failed to deliver growth and development in PNG. These adverse aspects of the HCS have led to the recent calls to abandon it.
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Unknown

Document type: Journal Article
Sub-type: Article (original research)
Collection: Scopus Import
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