Budget deficits, stability, and the dynamics of hyperinflation.: An article from: Journal of Money, Credit & Banking

This digital document is an article from Journal of Money, Credit & Banking, published by Ohio State University Press on May 1, 1989. The length of the article is 4494 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

From the supplier: Hyperinflationary processes usually occur in countries with extremely large budget deficits. In models of inflationary finance with rational expectations (e.g., Buiter, 1987) large budget deficits cannot lead to hyperinflation. The purpose of this paper is to reconcile the standard theoretical model with the stylized facts. It shows that by introducing a lag in the adjustment of the money market into the standard inflationary finance model, large budget deficits are indeed the main reason for hyperinflation. The paper also provides an explanation for the ineffectiveness of moderate reductions in the deficit in reducing inflation and argues that fiscal lags can be destabilizing. (Printed by permission of the publisher.)

Citation Details
Title: Budget deficits, stability, and the dynamics of hyperinflation.
Author: Miguel A. Kiguel
Publication:Journal of Money, Credit & Banking (Refereed)
Date: May 1, 1989
Publisher: Ohio State University Press
Volume: v21 Issue: n2 Page: p148(10)

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