Overview
- Explains chronic inflation by means of a Keynesian model, in which public deficits are financed by money
- Shows that the origin of hyperinflation is an unsustainable intertemporal government budget constraint due to a fiscal crisis
- Explains the three types of hyperinflation: i) bubble; ii) weak and iii) strong; and tests them using the inflation tax curve
- Includes supplementary material: sn.pub/extras
Part of the book series: SpringerBriefs in Economics (BRIEFSECONOMICS)
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Table of contents (9 chapters)
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Front Matter
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Back Matter
Keywords
About this book
This book presents a theoretical framework to explain chronic inflation and hyperinflation. The roots of these two phenomenon are a fiscal monetary regime in which money issues finance the public deficit. Chronic inflation is modeled by using both the old and the new Keynesian model, with a different policy rule. Instead of using the Taylor rule, the central bank policy rule states that money is issued to finance the public deficit. The chronic inflation models take into account the fact that indexation mechanisms adjust prices and wages, yielding the inertial component of inflation. The dynamics of these models can be very unstable under parameter changes or shocks that hit the economy. The previous hyperinflation models surveyed in this book attempt to explain hyperinflation as a bubble phenomenon because they assume a constant real deficit financed by money. The mechanics of hyperinflation models in this book explains hyperinflation by a fiscal crisis, characterized by an increasing fiscal deficit. This fiscal crisis yields an intertemporal budget constraint that is not sustainable. The analysis of the pathology of hyperinflation uses the same tools employed to understand the pathologies of public debt and external debt crises. The hyperinflation model allows a taxonomy of hyperinflations, namely bubble, weak and strong, that can be tested with the inflation tax revenue curve.
Authors and Affiliations
Bibliographic Information
Book Title: Exploring the Mechanics of Chronic Inflation and Hyperinflation
Authors: Fernando de Holanda Barbosa
Series Title: SpringerBriefs in Economics
DOI: https://doi.org/10.1007/978-3-319-44512-0
Publisher: Springer Cham
eBook Packages: Economics and Finance, Economics and Finance (R0)
Copyright Information: The Author(s) 2017
Softcover ISBN: 978-3-319-44511-3Published: 24 October 2016
eBook ISBN: 978-3-319-44512-0Published: 17 October 2016
Series ISSN: 2191-5504
Series E-ISSN: 2191-5512
Edition Number: 1
Number of Pages: X, 116
Number of Illustrations: 37 b/w illustrations
Topics: Macroeconomics/Monetary Economics//Financial Economics, Public Finance, Business Taxation/Tax Law