The paper discusses simple microfoundations for Liquidity Deflation (Calvo 2016, Chapter 2), which gives rise to liquidity trap under perfectly flexible prices/wages. Unlike Keynes (1936), this is a Supply Side Liquidity Trap, SSLT, not resolved by a fall in prices /wages, or massive helicopter...

The 1989 crisis in Cuba translated into the accumulation of real internal disequilibria, with large impacts in both the fiscal and the monetary environments. As in most transition economies, monetary manifestations included a repressed inflation in the regulated market; price increase in the...