Virtual Deficits and the Patinkin Effect
AbstractThe paper develops a model of inflationary finance that defines the fiscal deficit as a function of the virtual deficit—a deficit that would be observed if inflation were zero. It studies the negative relationship between the inflation rate and real government expenditures—the Patinkin effect. The model outperforms others in explaining four-digit inflation rates that never explode into hyperinflation. It also explains how apparently expansionist fiscal policies end in real deficits that are small and compatible with the small amount of seigniorage that can be collected at high inflation rates. Finally, it applies the model to the case of Brazil.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 98/41.
Date of creation: 01 Mar 1998
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Pekarski, Sergey, 2011.
"Budget deficits and inflation feedback,"
Structural Change and Economic Dynamics, Elsevier,
Elsevier, vol. 22(1), pages 1-11, February.
- Sergey Pekarski, 2007. "Budget deficits and inflation feedback," Working Papers, Laboratory for Macroeconomic Analysis WP13_2007_12, Laboratory for Macroeconomic Analysis.
- PEKARSKI, Sergei, 2008. "Budget deficits and inflation feedback," CORE Discussion Papers, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2008054, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- PÃ¤r Ã–sterholm & Erik Hjalmarsson, 2007.
"Testing for Cointegration Using the Johansen Methodology When Variables Are Near-Integrated,"
IMF Working Papers
07/141, International Monetary Fund.
- Erik Hjalmarsson & Par Osterholm, 2007. "Testing for cointegration using the Johansen methodology when variables are near-integrated," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 915, Board of Governors of the Federal Reserve System (U.S.).
- Nauro F. Campos & Armando Castellar Pinheiro & Fabio Giambiagi & Maurício M. Moreira, 2002. "Does it Take a Lula to go to Davos? A Brief Overview of Brazilian Reforms, 1980-2000," William Davidson Institute Working Papers Series 2003-580, William Davidson Institute at the University of Michigan.
- Enrique Alberola & Manuel Montero, 2006.
"Debt Sustainability and Procyclical Fiscal Policies in Latin America,"
JOURNAL OF LACEA ECONOMIA,
LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Enrique Alberola & José M. Montero, 2006. "Debt sustainability and procyclical fical policies in Latin America," Banco de Espaï¿½a Working Papers 0611, Banco de Espa�a.
- Erik Hjalmarsson & Pär Österholm, 2010. "Testing for cointegration using the Johansen methodology when variables are near-integrated: size distortions and partial remedies," Empirical Economics, Springer, Springer, vol. 39(1), pages 51-76, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.