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Basevi, Giorgio
Giavazzi, Francesco
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Quaderni - Working Paper DSE No. 2
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.
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Working Paper

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