This paper investigates the relationship between real credit and growth in an inflationary context. The main issue treated here is the role of different financial reforms in anti inflationary programs. First, a macroeconomic short-run model is formulated, and then different anti-inflationary policies are analyzed with it. The results found are that financial liberalizations are a useful device to reduce inflation without inducing deep recessions, as a contrast with the more orthodox anti-inflationary policies that reduce inflation, but at the necessary cost of reductions in growth and employment. Finally the link of monetary and fiscal policy in inflationary LDC's is brought into the analysis explicitly. The "intermediation” effects of this “fiscal” kind of policy, are clearly presented here, as well as its "monetary" side effects and anti-inflationary features.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
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