This paper analyzes the successful stabilization of the Korean economy. In particular, we examine the main variables that have contributed to the deceleration of inflation. For this purpose, we formulate and estimate, a small quarterly econometric model of inflation in a semi-open economy. The estimated model is then used to perform counterfactual simulations to ascertain the contribution to the deceleration of inflation of (a) the collapse in international commodity prices, (b) the slowdown in the real price of agricultural goods, and (c) less expansionary fiscal and monetary policies. We conclude that successful control of inflation resulted from the slowdown in the price of imported materials that followed the collapse of international commodity markets, the slowdown in agricultural prices after 1980, a disastrous year for Korea's agriculture, and moderate aggregate demand policies that resulted in moderate adjustment in the nominal effective exchange rates without loss of international competitiveness.