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| Author: | Mondino, G. Sturzenegger, F. Tommasi, M. |
| Title: | Recurrent high inflation and stabilization: a dynamic game |
| Journal: | International Economic Review
1996 : NOV, VOL. 37:4, p. 981-996 |
| Index terms: | INFLATION ECONOMICS STABILIZATION |
| Language: | eng |
| Abstract: | The authors analyze the dynamics of inflation that arise from fiscal deficits caused by the noncooperative behavior of interest groups. The "state" variable is the degree of financial adaptation, a proxy for the share of wealth agents hold in alternatives to domestic currency. As financial adaptation becomes widespread, the costs of financing a given budget deficit rise. In this context, there can be fully rational cycles of increasing inflation and financial adaptation, followed by stabilization and remonetization. |
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