This paper presents a model of a high-inflation economy. The model includes the government budget constraint and money … demand equation of Cagan's 1956 model; an accelerationist Phillips curve that captures inflation inertia; and an aggregate …-spending equation that accounts for the effects of the inflation tax. The paper derives the dynamic effects of fiscal policy, incomes …

A specification for the demand for money in economies where inflation is high and stochastic is presented. It uses a … generalized functional form and includes the variance of the inflation rate as an explanatory variable, and is estimated for … Brazil in the period 1974/94 under the assumption that the monetary policy is passive and that expectations are adaptive. The …