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Inflation CrisesAfter excluding countries with high-inflation crisesperiods and Long-Run Growth when annual inflation is above 40 percentthe data reveal no evidence of a Michael Bruno William Easterly consistent relationship between growth and inflation, at any frequency. But growth does tend to fall sharply during discrete crises of high inflation and to recover surprisingly strongly after inflation falls. Perhaps inflation crises are purely cyclical, or perhaps in the long run they have a favorable purgative effect.

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It is not speed that kills, it is the sudden stop. Bankers' adage THE COLLAPSE of the Mexican peso in late 1994 remains a topic of controversy. To some observers it appeared that the bungling of a new administration had brought about a disaster where there was no problem and every reason to expect stability and prosperity. In fact, some even argue that the damage could be undone by raising the peso to its initial level. The notion that the devaluation was a blunder or worse was shared by the Wall Street Journal's editorial board, some members of the U.S. Congress, and other advocates of hard money, including exposed investors. In the Financial Times Jude Wanniski referred to "currency devaluationists," and "currency debauchery" at the hands of Lawrence Summers and Stanley Fischer. ' To others, the ultimate collapse seemed inevitable and the only issue was one of timing. In this view currency alignment-devaluation or floating-was long overdue and had it been accomplished earlier, much We are indebted to our discussants on the Brookings Panel, and to Stanley Fischer and Robert Barro, for helpful comments and suggestions. 1. On raising the peso, see David Malpass, "

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