This paper studies the experience of several heterodox stabilization plans that not only failed to achieve price stability but that induced the economy to accelerating inflation. The income policy approach to stabilization, of the sort followed by populist governments, also failed to improve the well being of low income people.

The cases analyzed indicates that temporary stabilization, to buy time, and later on undertake fundamental reforms, does not work. When inflation is high, the badly needed reforms in the public sector must be introduced at the very beginning. Also, when inflation is high, a careful attention should be paid to domestic debt dynamics. Real interest accruals on domestic debt may seriously jeopardize any serious attempt to stabilization.