ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Fiscalist Approach to Inflation

There has been increasing advocacy of expansionary fiscal and monetary policy as the inflation rate has been at a historical low. It is argued here, however, that with the private sector's absorption of public debt having reached an upper limit, monetary financing of the fiscal deficit has become endogenous. The current low rate of inflation is shown to be the result of the prevailing mode of financing the fiscal deficit.

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