Sunspots, currency substitution, and inflationary finance

• 成果类型: Article
• 署名作者: Barnett, RC; Ho, MS
• 署名单位: State University of New York (SUNY) System; University at Buffalo, SUNY; Harvard University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/0022-1996(95)01417-9
• 发表日期: 1996
• 页码: 73-93
• 关键词: Exchange rates; sunspots; Currency substitution

摘要

This paper explores some issues surrounding inflationary finance of government deficits in a two-country world with currency substitution. Each country's monetary policy is assumed to be subordinate to fiscal policy. Private agents, knowing that the monetary authorities cannot commit themselves to fixed policy rules, substitute among the two monies. Each monetary authority is then forced to accomodate the actions of the fiscal authorities and private agents by setting monetary growth rates consistent with their decisions. This framework offers some interesting insights into,he behavior of nominal exchange rates and their co-movements with relative money supplies and government deficits.