A Fiscal Theory of Hyperdeflations? Some Surprising Monetarist Arithmetic
14 Pages Posted: 17 May 2001 Last revised: 23 Feb 2023
Date Written: November 1985
Abstract
The note mines an unsuspected lode in the Sargent-Wallace "Unpleasant Monetarist Arithmetic" deposit. While that model is shown to be incapable of generating hyperinflations as a result of large monetized public sector deficits, it can generate hyperdeflations or perhaps more accurately, the first stages of an unsustainable process of hyperdeflation. The drawing of policy conclusions is left as an exercise for the reader.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Price Level Determinacy Without Control of a Monetary Aggregate
-
Money and Interest in a Cash-in-Advance Economy
By Robert E. Lucas and Nancy L. Stokey
-
Monetary Policy and Multiple Equilibria
By Jess Benhabib, Stephanie Schmitt-grohé, ...
-
Is the Price Level Determined by the Needs of Fiscal Solvency?
By Matthew B. Canzoneri, Robert E. Cumby, ...