indexation in accounting for the unique features of inflation dynamics in Brazil. …Brazil has had a long period of high inflation. It peaked around 100 percent per year in 1964, decreased until the … crisis in the early 1980s. We show that the high-inflation period (1960-1994) was characterized by a combination of fiscal …

We exploit a hidden Markov model where inflation is determined by government deficits financed through money creation … and/or by destabilizing expectations dynamics (expectations can potentially divorce inflation from fundamentals). The … baseline model, proposed by Sargent et al. (2009), is used to analyze the interaction between fiscal deficits, inflation …

movements with little inflation response; yet, at some point, something snaps, and a sudden inflation takes off that is strongly …

adjustments episodes. Such episodes rely fundamentally on increasing tax rates and bases of indirect taxes (such as the VAT) that …

also detrimental consequences but these tend to be smaller and short-lived, especially for taxes and monetary policy. About …