The paper develops a model of inflationary finance that defines the fiscal deficit as a function of the virtual deficit a deficit that would be observed if inflation were zero. It studies the negative relationship between the inflation rate and real government expenditures the Patinkin effect....

This note summarizes the outline of "money-financed policy." We review some policies for improving fiscal balance, and insist that money-financed policy has the greatest potential to increase social welfare as compared to other policies.Also, we show the effect of money-financed policy on GDP...

The present work estimates collected seigniorage levels in the Venezuelan economy from 1994Q1 to 2018Q2 and tries to determine when and if a seigniorage-maximizing inflation rate occurred and this way provide a rational on the development of hyperinflation in the country. Results suggest that...

This article discusses the relationships between populism, economic policy design and central bank independence (CBI). Assuming that 1) a macro (banking) shock can occur, 2) the incumbent government can face a trade-off between bail-out and bail-in and can finance its public spending choosing...

Unlike most hyperinflations, during Zimbabwe's recent hyperinflation, as in Revolutionary France, the currency ended before the regime. The empirical results here suggest that the Reserve Bank of Zimbabwe operated on the correct side of the inflation tax Laffer curve before abandoning the...

Central banks are viewed as having a demonstrated ability to lower long-run inflation. Since the Financial Crisis, however, the central banks in some jurisdictions seem almost powerless to accomplish the opposite. In this article, we offer an explanation for why this may be the case. Because...

Central banks are viewed as having a demonstrated ability to lower long-run inflation. Since the financial crisis, however, the central banks in some jurisdictions seem almost powerless to accomplish the opposite. In this article, we offer an explanation for why this may be the case. Because...

We study aggregate, distributional, and welfare effects of a permanent reduction in the capital tax rate in a dynamic equilibrium model with capital-skill complementarity. Such a tax reform leads to expansionary long-run aggregate effects, but is coupled with an increase in the skill premium....

This study analyses the aspect of inflation expectations management in the context of inflation targeting by particularly focusing on the impact of exchange rate pass-through to inflation expectations in a small open economy. We also augment the inflation expectations function with GDP,...

This study analyzes the effect of a money-financed policy for fiscal reform. We introduce a realistic setting in which real output is not given by an exogenous variable, but is determined by effective demand in a monetary growth model. Using this model, we compare the effects of the...