Stabilization Policies in an Explosive Economy: Announcements and Expectations

Giorgio Basevi () and Francesco Giavazzi ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The article studies policy options in an economy which is unstable under bond-financing of a predetermined government deficit. We analyze policies based on pre-announced changes in monetary control or on confi-scation of that part of the Government debt which could only be retired through a prolonged period of high inflation. The dynamics of the economy is characterized by the interplay between policy announcements and private agents' behaviour in reply to them.

Date: 1983-10
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:2

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