Ecuador and Peru have adopted different strategies in coming to terms with domestic inflation and encouraging long term development. Ecuador was remarkably successful in achieving stabilization while Peru\'s economy, under IMF stand-by agreements, went from crisis to chaos. Paul McNelis, SJ examines the reasons for these two widely differing results. The author, who is attached to the Department of Economics, Georgetown University, Washington DC, wrote this article while on a year\'s sabbatical at Trinity College, Dublin, and the Central Bank of Ireland.