The Dynamics of High Inflation

38 Pages Posted: 26 Jun 2000 Last revised: 7 Jul 2022

See all articles by Laurence Ball

Laurence Ball

Johns Hopkins University - Department of Economics; National Bureau of Economic Research (NBER); International Monetary Fund (IMF)

Date Written: December 1993

Abstract

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 policies, and supply shocks, and uses the results to interpret high-inflation episodes of the 1970s and 1980s.

Suggested Citation

Ball, Laurence M., The Dynamics of High Inflation (December 1993). NBER Working Paper No. w4578, Available at SSRN: https://ssrn.com/abstract=226754

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